D R BALAKRISHNA RAJA, CHENNAI V. ACIT, CENTRAL CIR-3(3), CHENNAI

MA 32/CHNY/2023

AI Insights

The case involves Mr. D.R. Balakrishna Raja, who had initially withdrawn his appeals before the Tribunal following his application under the DTVSVS Act, 2020, which was intended to settle disputes related to tax arrears. However, due to ongoing financial issues and incomplete proceedings at the National Company Law Tribunal (NCLT), he was unable to fulfill the payment requirements under the scheme. Consequently, he filed Miscellaneous Applications to restore his appeals, which had been dismissed with the liberty to restore if the application under the DTVSVS was rejected. The Tribunal, referencing a similar case (M/s. Lifecell International Pvt Ltd), decided to restore the appeals, allowing the assessee to contest the issues on merits.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135026 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 08-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-07-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 07-02-2023
• Other Referred Cases: M/s. Lifecell International Pvt Ltd in ITA No. 3334/Chny/2019
• Laws Referred To: Income-tax Act, 1961, DTVSVS Act, 2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 254(2); 43

Judgement Text

आयकर अपीलीय अिधकरण, ‘बी’ ᭠यायपीठ, चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI ᮰ी वी दुगाᭅ राव, ᭠याियक सद᭭य एवं ᮰ी मंजुनाथ. जी, लेखा सद᭭य के समᭃ BEFORE SHRI V. DURGA RAO, HON’BLE JUDICIAL MEMBER AND SHRI MANJUNATHA. G, HON’BLE ACCOUNTANT MEMBER Misc. Application Nos. 28, 29, 30, 31 & 32/Chny/2023 [In ITA Nos. 3340, 3343, 3342, 3341 & 3344/Chny/2018] (िनधाŊरणवषŊ / Assessment Years: 2009-10, 2012-13, 2011-12, 2010- 11 & 2013-14) Mr. D.R. Balakrishna Raja, No. 9/16, Venkatesan Street, T. Nagar, Chennai – 600 017. [PAN: AGWPD-2354-E] v. ACIT, Central Circle -3(3), Chennai. (ᮧाथᭅक /Petitioner) (ᮧ᭜यथᱮ/Respondent) ᮧाथᭅक कᳱ ओरसे/ Petitioner by : Shri. K.G. Raghunath, Advocate ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri. D. Hema Bhupal, JCIT सुनवाई कᳱ तारीख/Date of Hearing : 28.07.2023 घोषणा कᳱ तारीख/Date of Pronouncement : 09.08.2023 आदेश /O R D E R PER MANJUNATHA. G, ACCOUNTANT MEMBER: The assessee has filed present Miscellaneous Applications u/s. 254(2) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) against order of the Tribunal in ITA No. 3340 to 3344/Chny/2018, dated 17.09.2021 and relevant to assessment years 2009-10 to 2013-14. :-2-: MA. Nos: 28 to 32/Chny/2023 2. The assessee has narrated facts of his case and mistakes stated to be apparent on record from the order of the tribunal dated 17.09.2021 and relevant contents of Miscellaneous Application filed by the assessee for assessment year 2009-10 are reproduced as under: “1. The appellant had withdrawn the appeal filed as the appellant had preferred an application in Form 3 under the VSV Scheme . 2. Your Honours had dismissed the appeals as withdrawn for the above mentioned reason along with grant of liberty to the appellant to restore the appeals, in case of rejection of application under the VSV Scheme. 3. The appellant states and submits that , he was anticipating the closure of proceedings under the NCLT, to enable remittance of the tax payable amount under the VSV Scheme. But, as the NCLT proceedings have not been completed, he was not able to complete the dues payable under the VSV Scheme and now prays before Your Honours to restore the appeals. 4. The appellant is enclosing herewith an affidavit explaining the reason for restoration of the Appeal - Annexure I 5. It is hereby humbly submitted before the Honourable Tribunal that the Petitioner is highly regretful of the events , and also that he has a sincere willingness to prosecute his appeal and assures that he will assist the Honourable Bench in the most appropriate and proper manner.” 3. The Ld. Counsel for the assessee, referring to petition filed by the assessee submits that the assessee has withdrawn the appeal filed before the Tribunal for the reason that the appellant had preferred an application before the designated :-3-: MA. Nos: 28 to 32/Chny/2023 authority to settle dispute under the DTVSVS Act, 2020. However, due to financial conditions on account of pending proceedings before the NCLT, the assessee could not arrange payment of taxes as determined by the designated authority and thus, the application filed by the assessee under DTVSVS Act, 2020 has been treated as dismissed. Since, the Tribunal has dismissed appeal filed by the assessee, on the request of the Ld. Counsel for the assessee, with a liberty to restore the appeals, in case of application filed by the assessee before the designated authority is rejected for any reasons, the appellant has moved present Miscellaneous Application with a request to recall the order. Therefore, submitted that the order of the Tribunal dated 17.09.2021, may be recalled to decide the issues on merits. In this regard, he relied upon the order of the ITAT, Chennai Benches in the case of M/s. Lifecell International Pvt Ltd in ITA No. 3334/Chny/2019. 4. The ld. DR, present for the revenue Shri. D. Hema Bhupal, JCIT, on the other hand submitted that the assessee could not make out a case of prima facie, mistake on record from the order of the Tribunal, which can be rectified u/s. 254(2) of the Act. Further, the assessee himself had opted :-4-: MA. Nos: 28 to 32/Chny/2023 out the VSVS Scheme, after the designated authority has issued Form-3, quantifying an amount of tax to be payable. Therefore, once the assessee has filed application in Form no. 1 and designated authority has accepted the application and issued Form no.3 for payment of tax, the assessee cannot opt out of the scheme. Since, the assessee has opted out of the scheme without any valid reason, there is no ground for the appellant to file Miscellaneous Applications to recall the order and thus, Miscellaneous Applications filed by the assessee may be dismissed. 5. We have heard both the parties and considered relevant contents of Miscellaneous Application filed by the assessee for all assessment years. From the contents of Miscellaneous Applications filed by the assessee, we find that the appeals filed by the assessee for all assessment years has been dismissed by the Tribunal on the request of the assessee, but liberty has been given to the assessee to restore the appeals in case, the applications filed by the assessee before the designated authority is rejected for any reason. In this case, there is no dispute with regard to the fact that the assessee has not availed the benefit of DTVSVS Act, 2020 and paid :-5-: MA. Nos: 28 to 32/Chny/2023 taxes determined by the designated authority. Therefore, we are of the considered view that the applications filed by the assessee under VSVS Act, 2020 shall be deemed to have been revived, because of non-payment of taxes determined by the designated authority. Since, the assessee has not availed the benefit of VSVS Act, 2020, in our considered view as per liberty provided in the order dismissing appeals filed by the assessee, we are of the considered view that the appeals of the assessee for all assessment years needs to be restored. This view is supported by the order of the ITAT, Chennai Benches in the case of M/s. Lifecell International Pvt Ltd in ITA No. 3334/Chny/2019, where under identical circumstances appeals of the assessee has been restored. The relevant findings of the Tribunal are as under: 4. We have heard both the parties and considered petition filed by the Revenue in light of various provisions of the DTVSVS Act, 2020 and we find that as per sub-section (1) of section 5 of the DTVSVS Act, 2020, the designated authority shall, within a period of 15 days from the date of receipt of the declaration, by an order, determine the amount payable by the declarant in accordance with the provisions of this Act and grant a certificate to the declarant containing particulars of the tax arrear and the amount payable after such determination. The provisions of section 4(2) deals with deemed withdrawal of appeal and as per said provisions, upon filing the declaration any appeal pending before the Income-Tax Appellate Tribunal in respect of the disputed income or the tax shall be deemed to have been withdrawn from the date on which certificate under sub-section (1) of section 5 of the DTVSVS Act, 2020 issued by the designated authority. The Revenue contends that appeal :-6-: MA. Nos: 28 to 32/Chny/2023 filed by the assessee is not maintainable, because of provisions of section 4(2) of the DTVSVS Act, 2020. The Revenue had also taken support from sub-section (7) of section 4 of the DTVSVS Act, 2020 and contended that no appellate forum including Tribunal shall proceed to decide any issue relating to the tax arrear mentioned in the declaration in respect of which an order has been made under sub-section (1) of section 5 of the DTVSVS Act, 2020 by the designated authority or the payment of sum determined under that section. The assessee contends that appeal filed by the assessee is maintainable in view of sub-section (6) of section 4 of the DTVSVS Act, 2020. The assessee had also negated arguments of the Ld. CIT(DR) on sub-section (7) of section 4 of the DTVSVS Act, 2020. 5. Having heard both the sides and considered relevant provisions of the DTVSVS Act, 2020, we find that as per section 4(2) of the said Act, the moment designated authority issues Form No. 3 (certificate), any appeal pending before the appellate authorities shall be deemed to have been withdrawn from the date on which certificate under sub-section (1) of section 5 of the DTVSVS Act, 2020 is issued by the designated authority and there is no dispute on this legal position. However, the very same Act, provides amnesty to the Revenue as well as the assessee by way of section 4(6), as per which the declaration under sub-section (1) shall be presumed never to have been made, if any material particulars furnished in the declaration is found to be false at any stage and further, the declarant violates any of the conditions referred to in this Act, and in such cases, the proceedings and claims which were withdrawn u/s. 4 and all the consequences under the Income- tax Act, 1961 against the declarant shall be deemed to have been revived. In this case, clause (a) of sub-section (6) is not applicable, but as per clause (b) of sub-section (6) of section 4, if the declarant violates any of the conditions referred to in this Act, then pending proceedings shall be deemed to have been revived. That means, if assessee violates any of the conditions including tax determined by the designated authority in Form No. 3 is not paid within the specified period, then it is nothing but violation of conditions referred to in this Act. Therefore, if assessee does not make payment of taxes as determined by the designated authority, then, even if appeal filed by the assessee is dismissed or deemed dismissal of the appeal, then as per sub-section (6) of section 4 of the DTVSVS Act, 2020, all the proceedings and claims which were withdrawn u/s. 4 and all the consequences under the Income- :-7-: MA. Nos: 28 to 32/Chny/2023 tax Act, 1961 against the declarant shall be deemed to have been revived. Therefore, in our considered view, if a conjoint reading of sub-section (2) and sub-section (6) of section (4), it is clear that the moment designated authority issues Form no. 3, pending appeal shall be deemed to have been withdrawn and further, the moment declarant violates any of the conditions, the appeals which were withdrawn u/s. 4, shall be deemed to have been revived. Therefore, we are of the considered view that in the present case, the assessee has violated conditions prescribed under DTVSVS Act, 2020 and thus, even if appeal filed by the assessee is dismissed or deemed dismissal of appeal, the same can be revived the moment the Department notices any of the conditions prescribed therein are violated. 6. As regards, arguments of the Ld. CIT(DR) in light of sub- section (7) of section 4 of the DTVSVS Act, 2020, we find that sub-section (7) deals with a situation where the declarant challenges the order passed by the designated authority under sub-section (1) of section 5 on any issue relating to tax arrear and or the payment of sum determined under any section, then no appellate forum or arbitrator or conciliator or mediator shall proceed to decide said dispute. In other words, designated authority determines sum payable by declarant under DTVSVS Act, 2020, then the same becomes final and which cannot be challenged by the declarant before any appellate forum. Therefore, we are of the considered view that the Revenue cannot take shelter under sub-section (7) of section 4 of the DTVSVS Act, 2020. In so far as FAQs referred to in Circular 09 of 2020 issued by CBDT, we find that CBDT in question no. 43 & 47 has clarified the position of the law as per DTVSVS Act, 2020, and in our considered view, said clarification is only on withdrawal of appeal by the declarant after receipt of Form no. 3 (certificate) and further, the legal position of section 4(7) of the DTVSVS Act, 2020. In our considered view, as per section 4(6) of DTVSVS Act, 2020, the law is very clear, in as much as in case the declarant violates any of the conditions, then all the proceedings and claims which were withdrawn u/s. 4 and all the consequences under the Income-tax Act, 1961 against declarant shall be deemed to have been revived. In the present case, the declarant has violated the conditions of payment of tax as determined by the designated authority in Form no. 3. Therefore, appeal filed by the assessee is deemed to have been revived and thus, we are of the considered view, that since the appeal filed by the :-8-: MA. Nos: 28 to 32/Chny/2023 assessee is pending before the Tribunal for adjudication, the same needs to be decided on the issues challenged in said appeal and thus, we reject application filed by the Revenue on maintainability of appeal filed by the assessee.” 6. In this view of the matter and considering facts and circumstances of the case, we are of the considered view that all the appeals filed by the assessee for all assessment years needs to be restored and thus, Miscellaneous Applications filed by the appellant for assessment years 2009-10 to 2013-14 has been allowed and appeals of the assessee are restored and order of the Tribunal in ITA Nos. 3340 to 3344/Chny/2018, dated 17.09.2021 is hereby recalled. The Registry is directed to list the appeals for hearing in due course. 7. In the result, Miscellaneous Applications filed by the assessee are allowed. Order pronounced in the court on 09 th August, 2023 at Chennai. Sd/- (वी दुगाᭅ राव) (V. DURGA RAO) ᭠याियकसद᭭य/Judicial Member Sd/- (मंजुनाथ. जी) (MANJUNATHA. G) लेखासद᭭य/Accountant Member चे᳖ई/Chennai, ᳰदनांक/Dated: 09 th August, 2023 JPV आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy to: 1. अपीलाथᱮ/Appellant 2. ᮧ᭜यथᱮ/Respondent 3. आयकर आयुᲦ/CIT 4. िवभागीय ᮧितिनिध/DR 5. गाडᭅ फाईल/GF