VPR Mining Infrastructure Pvt Ltd V. Union of India

WP/8078/2021

AI Insights

The case involves VPR Mining Infrastructure Pvt Ltd, which faced prosecution under Section 276CC of the Income Tax Act, 1961 for failing to furnish returns. The company sought to compound these offences and also applied for benefits under the Direct Tax Vivad Se Vishwas Act, 2020. However, their applications were rejected due to the pendency of prosecution. The petitioner argued that the rejection was arbitrary and sought judicial intervention. The court examined the provisions of the Vivad Se Vishwas Act and relevant CBDT circulars, ultimately deciding in favor of the petitioner by allowing the writ petition and directing the respondents to reconsider the applications.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 721599 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 29-04-2022
• Assessment Year: misc
• Other Referred Cases: Macrotech Developers Limited Vs. Principal Commissioner of Income Tax
• Laws Referred To: Income Tax Act, 1961, Direct Tax Vivad Se Vishwas Act, 2020
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: NAIVAMAVARU RAO; B NARASIMHA SHARMA
• Assessee Lawyers: AVINASH DESAI
• Keywords: Assessment years; Compounding fees; Income Tax; Prosecution; Tax arrears; Writ of Mandamus
• Section: 132; 153A; 139(1); 139(4); 276CC

Judgement Text

"i.. HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) FRIDAY, THE TWENTY NINTH DAY OF APRIL TWO THOUSAND AND TWENTY TWO PRESENT THE HONOURABLE SRI JUSTICE UJJAL BHUYAN AND THE HONOURABLE SRI JUSTICE A.VENKATESHWARA REDDY WRIT PETITIO N NO:8078 OF 2021 Betwee n: AND 2 3 I 3 4 5 VPR lVining lnfrastructure Pvi Ltd, Having its office at D No B-2- ieiieziihz\"sg s Flooi, Ftot No. 1259, Lakshmi rowers. Road No.36, Jubilee iii.. HuOeijUaJ- SbbOOSg AIso havihg registered office at. Door No. 16-1- iia, 'Hj,iJr*Lirtrisii. t'lettore- 524001\" Represented bv its^Director ard auihorized representalive, Guduru Venkata Satyanarayana S/o venKaIa Krishnareddv Guduru. ti/r. V. prabhakar Reddy, S/o V Shivakola Reddy. Aged about 66years Having oiii.u ,t. o r.lo . a-z'ZSziBZnl125g.3'Floor, Plitt No. 1259' Lakshmi Towers' Road No. 36. Jubilee Hills, Hyderabad- 5000033, lr,4 r. A. Charan, S/o Asokan, Aged about 46 years Director of VPR Mining tntrr.irriture P!'t Ltd Havinq office at. D No. 8:2-293182tA11259' 3 Floor' Plot N; -1\"i5d'lrk.t']mi fowlrs. hoad No 36, Jubilee H ills Hvderabad- 5000033' ...PETITIONERS Union of lndia, Represented by irs Revenue Secretary,fvlinistry of .Finance, Depa,f.ent oi Rerenue. Off,ce of lVrnistry of Finance Room No 46' North Block, New Delhi 1 1 0 001 . central Board of Direct Taxes, Represented by its chairman. central Board of Direct Taxes, North Block, New Delhi-1 '10002, princroal Drrector General of lncome Tax (lnvestigatio n ), Andhra Pradesh and Telangana Aayakar Bhavan, Basheer Bagh Hyderabad- 500004' Prrncipal commissioner of lncome Tax (Central), Hyderabad 7 Floor, Aayakar Bhavan. Basheer Bagh. Hyderabad- 500004 Deoutv Commissioner of income Tax, Central Circle 1(2), Hyderaba! fnorr6rV Joint Commissioner of income Tax) 7111 Floor, Aayakar Bhavan' Basheer Bagh, Hyderabad- 500004 1 Assistant Commissioner of income Tax, Central Circle 1(2), Hyderabad 7, Floor, Aayakar Bhavan, Basheer Bagh, Hyderabad- 500004. ...RESPONDENTS Petition Under; rticle 226 ot the constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High - co'urt may be pleased to issue a writ, order or a direction, particularly one in the nature of a Writ of Mandamus. (a) declaring the action of the Respondents in erroneously computing the compounding fees for offences committed by the petitioners under section 276cc ol the lncome Tax Act. i961, for the Asseisment years 2011-12 to 2015-16 vide Letter/order dated os.o3.2o2i as being arbitrary,. iilegat, unconstitutional and iT contravention of the lncome Tax Act, i 96.1 , and the Guidelines for compornding offences under Direct Tax Laws. 2019 issued by the 2nd Respondent and consequen|y set aside the computation of the compounding fee viJe Letter/order dated 0s.03.2021 by directing the Respondents to compcund the offences under Section 276cc of the lncomle Tax Act, 1961. for the Assessment years 201 i-i2 to 2oi5-16 by collecting Rs. 36.s6,000/- as the compoundrng fee payabre by the petitioner compan\"y. 101 declaring the action rf the Respondents in not compounding the offences committed by the Petitioners under Section 276cc ol the lncomJ rax A,ct, 1961 for the Assessment year 20io-11as being arbitrary, illegal and unconstrtutional, and consequently direct the Respondents to pass an order for compounding the offences under sectior 276cc of the Income Tax Act, 1961 . for the Assess\"ment year 2010-11. (c) Direct the Respondents to grant the petitioner company the benefits under the Direct rax Vivad Se Vishwas Acl. zo2o for the disoutecr assessment for the ye€rs 2011-12 to 2015-16, 6 l.A.NO:1 OF 2021 LA.NO:2 OF 202 Petition Under Section 1s1 cpc praying that in the circumstances stated in the affidavit filed in support of the petition, the High court may be pleased to direct the Respondenls to consider the application dated 31lu l2az1 of lhe Petitioner company fc,r availing the benefits under the Direct Tax vivad se Vishwas Act, 2020 by .reating the offences under section 276cc of the lncome Tax Act, 1961 against the Petitioners for the Assessment years 2o1o-i1 to 2015- 16 as compounded for ihe purposes of the scheme. 1 Petition under Section 151 cpc praying that in the circumstances stated in the affidavit filed in r;upport of the petition, the High court may be pleased to restrain the Respondents from proceeding with the prosecution'of the offences under section 276cc cf the Income Tax Act, 1961 against the petitioners for the Assessment years 2010-1 1 to 2015-16. l.A.NO:3 OF 2021 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in supporl of the petition, the High Court may be pleased t0 direct the Respondents to process the application dated 30/03/2021 under the Direct Tax Vivad Se Vishwas Act,,2O2O on its merits, without being influenced by the pending unrelated prosecution cases. LA.NO:4 OF 2021 Petrtion Under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to: (i) Permit the Petiiioner company to amend the writ affidavit by incorporating paragraph nos. 3 to 11 of the instant application after paragraph no, 27 of the writ affidavit; (ri) Substitute prayer number (c) of the writ petition which reads as \"(c) Direct the Respondents to grant the Petitioner company the benefits under the Direct Tax ivad se Vishwas Act, 2020 for the disputed assessment for the years 201I - 12 lo 2015 - 16\" to \"(c) declare the actions of the Respondents in iejecting the appiications dated 29l1Z2A2a and 3110112021 on 3110112021 and eOtOltzbZl respectively as being arbitrary, illegal and unconstitutional and in violation of the provisions of Direct Tax Vivad se Vishwas Act, 2020 and consequently direct the Respondents to grant the Petitioner company the benefits under the Direct Tax Vivad Se Vishwas Acl, 2020 for the dlsputed assessment for the years 2011 - 12 to 2015-16\". l.A.NO:5 OF 2021 Between: 1. Union of lndia, Represented by its Revenue Secretary,lr'4inistry of .F^inance, Department of Revenue, Offic6 of Ministry of Finance, Room No. 46, North Block, New Delhi 1 10 001 . 2. central Board of Direct Taxes, Represented by its chairman. central Board of Direct Taxes. Nofih Block, New Delhi-1 10002. 3. Principal Director General of lncome Tax (lnvestigation), Andhra. Pradesh and Telangana Aayakar Bhavan, Basheer Bagh. Hyderabad- 500004 4. Principal Commissioner of lncome Tax (Central)' Hyderabad 7 Floor, Aayakar Bhavan, Basheer Bagh. Hyderabad- 500004. 5. Deputy Commissioner of lncome Tax, Central Circlel (2), Hyderaba! (Formi:11y Joint Commissioner of income Tax) 7111 Floor, Aayakar Bhavan. Basheer Bagh, Hyderabad- 500004 6. Assistant Commissioner of income Tax, Central Circie 1(2), Hyderabad 7' Floor, Aayakar Bhavan, Basheer Bagh, Hyderabad- 500004. ...PETITIONERS/RESPONDENTS IN W.P AND 1. VPR l ,4ining lnfrastructure Pvt Ltd, Having its office at. D. No, B-2- 2931821A11259. 3 Floor, Plot No. 1259, Lakshmi Towers. Road No.36, Jubilee Hills, Hyderabad- 5000033 Also having registered office at. Door No. 16-1- 1782. Ramamurlhi Nagar. Neliore- 524001 Represented by its Director and authorized representative, Guduru Venkata Satyanarayana S/o. Venkata Krishnareddv Gu Juru. 2. Mr. V. Prabhakar Reddy, S/o V Shivakota Reddy. Aged about 66years Having office at. D. No. 8-2-2931821A11259. 3' Floor, Plot No. '1 259, Lakshm Towers. Road Nc. 36. Jubilee Hills, Hyderabad- 5000033. 3, Mr. A. Charan, S/o Asokan, Aged about 46 years Director of VPR lr4inrnq lnfrastructure Pv,t Ltd Having office at. D. No B-2-293182tA11259,3 Ftoor, ptot No. 1259, Lakshrnj Towers, Road No. 36, Jubilee Hills. Hyderabad- 5000033 ,..RESPONDENTS/PETITIONERS IN W.P Petition Under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to vacate the interim orde,r dated 15-04-2021 in l.A.No.s 1 to 3 of 2021 in W.p.No. B07B of 2021 in the interest of justice. Counsel for the Petitioners : SRI.AVINASH DESAI Counsel for the Respondent Nos.1 & 2 : SRI.NAIV1AVARAPU RAJESHWAR RAO (ASSGt) Counsel for the Responclent Nos.3 to 6 : SRI.B.NARASIMHA SHARMA The Court made the foilowing ORDER 1 N.Ra.;eshu,ara Rao, learned Assistar.rt Solicitor General of India for Heard 'lr. Avinash Desat. learned counsel for the petitioners; Mr. B.Mukherjee, learned counsel representing Mr. respondent Nos.1 and 2t and Mr. B.Narasimha Sarma, learned standing counsel for the Income Ta-x department lor respondent Nos.3 to 6. THE HON'BLE SRI JUSTICE UJJAL BHUYAN And THE HON'BLE SRI A,VENKATESHWARA REDDY WRIT PETITION No,8078 OF 2O2L ORDER: (Per Hon'ble Sri U.la1 Bhuyan) 2 By fi1ing this petition under Article 226 ol the Constitution of India, petitioners have prayed lor the following reliefs: \"(a) declaring the action of the Respondents in erroneously computing the compounding lees lor offences committed by the Petitioners under Section 276CC ol lhe lncome Tax Act, 1961 lor the Assessment years 2011-1,2 to 2015-16 vide Letter / Order dated 05.03.2021 as being arbitrary illegal u nconstitutional and in contravention of the Income Tax Act 1961 and the Guidelines for Compounding Oflences under Direct Tax Laws 2019 issued by the 2.d Respondent and consequentiy set aside the computation of the compounding lee vide Letter/Order dated 05.03.2021 b_ , directing the Respondents to compound the offences under Sectlon 276CC of the Income Ta- Acr 196 1 for the Assessment years 20 i 1- 12 to 20 15- 16 by collecting Rs 36,96,000/ as the compounding lee payable by the Pe tiLioner Compan,v, bi ciccl::rl:rg the act:ol ol the li e s p o r, cl c:r '- s iir r:r-'i crri--rJ].]ulding:i,e oiiences 2 3 From the above, it is seen that there are basicallv tu,o grievances of the petitioners. First grievance relates to cf,mmitted by the Petitioners under Section 276CC of the Income l'a.x Act, 1961 for the Assessment year 2010 11 as being arbitrary iliegai and u nconstitutio nal and consequenti,v direct the Respondents to pass an order for c:mpounding the offences under Section 276CC of the lncome l'a-x Act 1961 for the Assessment year 2010 - 1 1, c direc: the iiesDoltdents i:o grant [he Fetitionei Cc:npr,rnl illc bcr]cfrts under the t,irec: 'l'a;l u'r .ad Se isir as . ci. 2020 ior t)^,e displrted assessnre:1,. for,.he .ears 2011-12 to 20 i5- 16 \" computation of compounding lee by the respondents for oflences committed under Section 27 6 CC oi the Income Tax Act, 196 I (briefly, 'the Act' hereinafter) for the assessment ],ears 201. 1-12, 2Ol2-13, 2073-74, 2014-15 and 2015-16, vide the order dated 05.03.202 1. fihile the petitioners seek quashing of such Rs.36,96,000-00, they further seek a direction to the respondents computation and quantiflring the compounding fee at lor compounding ol such ollence lor the assessment vear 20 10, 1 1 as wei1. llecond grievance of the petitioners pertain s to rejection of declaration hied bv petitioner No. i r-rnder the Direct Ta-x Vivad se Vishwas Act, 2020 b1' the respondents for the assessment years 2011-12, 2012-13, 2013-14, 20i4-15 and 2075-76, -l 4 Petitioner No.1 is a company engaged in the business of mining anci inlrastructural works. Business operations of the petitioner No. 1 are spread across different states of the country. Petitioner No.2 is a former Managing Director of petitioner No. 1 who had resigned from his position on 24.12.2019. petitioner No.3 is a Director of petitioner No. 1 . 5 Petitioner No.l is an assessee under the Act. For the assessment years 2010-2011 to 20lS-2O16, petitioner No.1 filed its returns after the due c.late for filing of returns under Section 139 (1) of the Act. However, it is contended that the returns were filed within the same assessment years as permitted under Section 139 (4) oI rhe Act. Detarls oi filing of returns by petitioner No.1 for the aloresaid assessment years are mentioned in paragraph No.5 of the writ affidavit. 6 Investigation wing of the Income Tax department, Hyderabad, had conducted a search and seizure operation in the premises of petitioner No. 1 under Section 132 of the Act. This was followed by respondent No.5 issuing notice dated 29.09.2016 under Section 1 53A of the Act to reassess the tota_l income of 'petitioner No.1 for the assessment years 2010-11 to 201S-16. 7 According to the petitloners during ti-re search proceeciit'rgs, petitioner No. t had voluntarilv declared Rs.21.00 crores as its additional inconre. 8 Be that as it may, respondent No.S issued a shou' r:ause notice dated 11.01.20 17 directing petitioner No.1 to shori'cause as to why pros 3cution should not be initiated against it under Section 276 CC of the Act for failing to furnish returns pursuant to notice issued under Section 153A of the Act. 9 Petitioner No.1 repiied to the show cause notice on 23.01.2017 requesting respondent No.5 to drop the proceedings under Section 27 6 CC of the Act. lt was pointed out that petitioner No.1 rvas unable to file the returns and to pa], the ta-x on the additional income within the prescribed period as it rvas facing severe financial crunch, Hor\"t,ever, petitioner No.1 1-rad already paid taxes amourlting to Rs.5,25,00,000-00 on the admitted additional income and that it had no intention to delay' frling of returns. Thereafter, on 18.02.2017 petitioner No.1 duly frled its returns under Section 153A of the Act for the assessment years 2010-11 to 2015-16. Respondent No.4 was informed that petitioner No. t had not oniy filed the returns but had also paid the entire additional tax of Rs.9,32,59,47 1-00. ln the circumstances petitioner No 1 requested respondent No'4 to condone the deiaY filing the returns and to droP the 1n proceedings under Sectio n 27 6 CC of the Act' i0Hou,ever,respondentsfiledcomplaintson2l'03'2018 before the Court of Special Judge for Economic Offences at Hyderabad under Section 276 CC and Section 27BB of the Act against the petitioners for wilful default 1n filing of returns pursuant to notice issued under Section 153A of the Act' Separate complaints n'ere fi1ed for each of the assessment years 201O-11to 20i5-16. 11 Petitioner No.l applied before respondent No'3 vide the letter dated 03.09.2019 for compounding of the offences under Section2T6CCoftheActfortheassessmentyears20ll-12to 2015-16. Later on, when it u'as realised that due to inadvertence assessment year 2O 1O- 1 1 was not included in the compounding applicatior.r, petitioner No.l addressed a ietter dated 22'02'2021 to the lhird respondent to treat the petitioner's application for compounding dated 03.09'20 19 as an application for the assessment Year 20 10- I I as well' 12 It is stated that petitioner No 1 had also submitted declarations under the Vivad se Vishwas scheme for the 5 assessment years 20 1 -12 to 20i5-16, but those were not being considered since the offences had not been compounded. 13 Respondent No.6, vide the impugned letter / order dated OS.03 .2027 , conveyed approval for compounding of oflences under Section 276 CC of the Act for the assessment years 2011- 12 to 2015-16. Respondent No.6 directed the petitioners ro make payment of the compounding charges in the following manner:- Asse ssment Year Amount 20tl-12 Rs.1,05 93 600-00 Rs.86 61 120-00 2013- 14 Rs.65,70,240-00 111. L ' 20 t4- 15 Rs.8,65, BO0-00 2015- 16 Rs,29.42 , 160,00 14 By way of a detailed letter dated 15.03.2021 . petitione;\" No. 1 contended before respondent No.3 that the compounciing charges were grossly erroneous being contrary to the provisions of the Act and the extant guidelines for compounding of offences. According to the petitioners, the compounding charges would be Rs.36,96,000-00 only. i5 Reverting to the declarations made by petitioner No. 1 under the Vivad se Vishwas scheme, it is stated that declarations oi petitioner No.1 dated 29.12.2O2O were not considered by the respondents on the ground of pendency of complaint against the petitioners and was rejected on 3 i.0 1.2021. It is stated that l I Sl.No. 20t2-13 1. 11. f 17 Insolar compounding lee is concerned, according to the petitioner No.1 had made another application on 31.01.2021 which was pending. 16 Aggrieved by the above, petitioners have preferred the present u,rit petition seeking the reliefs as indicated above. petitioners the amounts quantified by the respondents a_re erroneous as the compounding fee rvould only be Rs.36,96,000 - 00. in this connection petitioners have referred to and relied upon paragraph No.13.4.1 (d) ol the Guidelines for Compounding Offences under Direct Tax Laws, 20 19 which has to be read in conjunction w'ith Section 139 (4) and Section 276 CC of the Act. Petitioners have also referred to and relied upon a Circular dated 22.04.2020 issued by the Central Board of Direct Taxes (CBDT) clarifying that the benefit under the Vivad se Vishwas scheme u,ould be available to any person *.here the offences against such person have been compounded 18 This Court by order dated 15.04,2021 had issued notice and as an interim measure, had directed the respondents to keep the application (declaration) made by petitioner No. 1 under the Vivad se Vishwas scheme pending. 19 Petitione:s have filed an additional affidavit in the rorm or interlocutory application being I.A.No.4 of 2021. petitioner No.1 has enclosed the reasons for rejection of the declarations dated 29.72.2020 on 31.01.2021. As per the reasons, the declarations were rejected on the ground that provisions ol the Direct Tax Vivad se Vishwas Act, 2O2O were not applicable in vieu, of pending prosecution proceedings agajnst petitioner No. 1. 20 It is stated that subsequent to the rejection on 31.0 l.2O2l petitioner No.t had fired rresh applications on 31.0i.2021. rr,hich were rejected on 30.03.2021 on the same grounds that the provisions of the Direct Tax Vivad se vishwas Act, 2020 would not be applicable in vieu,. of the pending prosecution proceedings against petitioner No. 1. 21 Thereafter, petitioner No.1 had fired fresh declarations dated 30.03.202 1 as the deadline for frling declarations u,as 31.03.20221 and there being no limitation as to the number of declarations that could be filed under the Direct Tax Vir.ad se Vishwas Act, 2020. It is contended that there was no basis ror rejection of the declarations filed by. petitioner No.1 uncier the Direct Tax Viva.d se Vishwas Act,2O2O. The criminal complaints pertain to alleged delay in filing of returns under Section 153A or 9 the Act whereas declarations of petitioner No. 1 dated 29 .12,2020 , 3l.OL2O21 and 30.03.2021 re ate to resolving disputed tax arrears. Therefore, the t'\"r,o are totally unrelated. Pending criminal cases do not relate to subject matter of the declarations. In this connection petitioners have placed reliance on a decision of a Division Bench of the Bombay High Court in Macrotech Developers Limited Vs. Principal Commissioner of Income Taxl. In the circumstances petitioners seek a direction to the respondents to grant the benefits under the Direct Tax Vivad se Vishrvas Act, 2020 for the assessment years 2011-12 to 2015-16. 22 Respondents have filed a common counter affidavit through Sri Susheel Agarwal, Principal Commissioner ol Income Tax (Central), Hyderabad. Stand taken in the affidavit is that petitioner No.1 had filed an application on O4.O9.2079 for compounding of offences under Section 27 6CC of the Act for the assessment years 2011-12 to 20 15-16. It is stated that the said application was considered by the committee constituted for compounding of offences, comprising of Principal Chief Commissioner of Income Tax, Andhra Pradesh and Telangana, Hvderabad; Director General of Income Tax (lnvestigation), Hyderabad; and Chiel Commissioner of Income Tax, Hyderabad. r 2021 SCC Online Bombay, 459 ln the meeting held on 19.02'2021 the committee accepted the compounding petition subject to payment of compounding fee of Rs.2,96,32,920-00 to be paid within one month from the end of themonthorireceiptoftheintimation;theintirnation 'aSSent by the assessing officer to petitioner No 1 o1'1 05'03'2021' Answering responclents have denied t1-re contentiotl ol the petitioners that the compounding fee for the assessmellt years 2O1l-12 to 20 15- 16 was erroneously computed and have asserted tha.t the compounding fee was determined by the committee in accordance w'ith the guidelines of the CBDT dated 1.4.06.2019 on compounding of offences rvhich are binding on the committee.PetitionerNo.lhadalsofiledaSeparateapplication on 22.O1.2021 for compounding of offence under Section' 276CC of the Act for the assessment year 20 10- 1 1. After considering the applicatlon. ,lommittee rejected the same for the reasons provided in the minutes of the meeting held on 19 '02 '2O2 1 t0 23 It is further stated that petitioner No 1 had liled declarations under the Direct Ta-. < Vivacl se Vishu'as Act, 2020 rejected orr 31.01.2021 in accordance with Section 9 of the Direct Tax Vivad se Vishn'as Act, 2O2O since prosecution introducing the Vivad se Vishn'as scheme on 29 12 2020 for the assessment years 20 1 1-12 to 2015- 16 The declarations u'ere 11 proceedings instituted against the petitioners lor the assessment years 20i 1-12 to 2015-16 were pending. petitioner No. 1 liled revised declarations for the said assessment years on 31.01.2021 which were arso rejected on 3 1 .03.20 2r ror the same reasons. Therea-fter, petitioner No.1 again filed declarations for the said assessment years on 31,03.202L which are pending as no decision thereon has been taken in deference to order of this Court dated lS.O4.2O2l. 24 Answering respondents have asserted that rejection of the declarations of petitioner No. 1 fired under the vivad se Vishwas seheme was in accordance with Section 9 of the Direct Tax Vivad se Vishw.as Act, 2O2O and clarifications issued by the CBDT vide the Circular Nos.7 /2020, g/2020 and, 2l/2020. Thereafter, reference has been made to Section 9 of the aforesaid Act. Answering respondents have also referred to CBDT Circular No.7 /2020 dated 04.03.2020, more particulariy to the Frequently Asked Question (FAe) No.22 and the answer given thereto which are extracted hereunder: CBD T's Circular No,7/202O dat d 04. o3.2020. FAQ No.22: In the case of an assessee prosecutjon has been instituted and is pending in court. is assessee erigibre for the Vivad se Vishwas? Answer: No. HoB,ever, where onl1, notice for intimation o, prosecution has been issued with reference to ta_x arrears, the taxpayer ias a choice to compound rhe offence arrd opr for.Vrva(l se Vishwasl - 12 25 Further, reliance has been placed on FAQ No'73 contained in Circular Nct.21 /2020 of CBDT Cated 04'12'2020 and the arrs .'er given thereto' The h1'pothetical statement is 'in case of a tax payer prosecution has been instituted for the assessment year 2Ol2-13 with respect to an issue which is not in appeal'' Question is, u'hether he wouid be eligible to fi1e declaration in respect of issues for which prosecution has not been laurrched? Answer given thereto is that ineligibillty to file declaration relates to art assessment year' If prosecution for that assessment year has already been instituted, the tax payer would not be eligible to frle declaration for the said assessment year even on issues not reiating to prosecution. FAQ No'73 and the answer given thereto are extracted herennder: CBDT's Cirt:ular No,21 2o2O datcd 04.12.2020. FAQ No.73: In the case of a tzr'xptr.r er' piosccution ilars lleen lnslll'ltcd for -assessment year 2012-13 witl.r respect c[ an issue rvhich rs tlot iu \"pp\"\"f. Wiff he be eligible to file declaration for issues rvhich are in appeal for this assessrnent year and in respect of rvhich prosectttion has not been launched? Aaswei: The ineligibility to file declaration relates to an assessment year i., .\"\"p\"\", cf which-proslcution has been instituted on or before the date oi ae\"tu::^tiot. Since in this example, for the same assessment year t2o::2-|3lnrosecutionhasalreadybeeninstituted,theta-xpa}'eriSnot irigrur. il, irle decla-ration for this assessment year even on issues not relating to Prosecution. 26Thereafteravermentshavebeenmadebyanswering /respondents on the merit justifying initiation of prosecution proceedings under Section 276CC of the Act' Answering 1,1 responcients have also giverl detaiis ol calculation of compoutnding fee arrd thereafter assert that there is no error in ihc' computatiolr ol compoutnclitrg lee. Computation oi' compounding fee has been cione as per guidelines issued by the CBDT. 27 Contending that no case has been made out by the petitioners, respondents seek dismissal of the writ petition. 28 Petitioners have fi1ed a rej oinder affidavit contesting the stand taken by the respondents and asserting the averments made in the writ affidavit as well as in the interlocutory application. Insofar reliance placed by the respondents on FAQ No.73 is concerned, petitioners have stated that Bombay High Court in Macrotech Developers Limited (1 supra) has quashed the said FAQ No.73 as being in contravention of Section 9 of the Direct Tax Vivad se Vishrvas Act,2020. 29 Mr, Avinash Desat, learned counsei for the petitioner, submits that the returns for the assessment years 20 10- 1 1 to 20 1 5- 16 were filed within the sarne assessment years though after the due date of l-r1ing of returns. A conjoint reading of Section 139 (1) and Section 139 (4) of the Act would show that no adverse inference can be drawn against petitioner No'1 for fiIing 14 ol returns after the due date but u'ithin the same assessment years. 30 Insofar filing of returns pursuant to notice dated 29.09.201,6 under Section 153A of the Act for the assessment years 2010-11 to 2015-16 is concerned, learned counsel for the petitioners submits that there was no '\"vilful or intentional default by petitioner No. 1. As a matter of fact, petitioner No. 1 was gorng through a severe financial crunch which caused the temporaq, default. Horvever, petitioner No.1 had paid the entire additional tax of Rs.9,112,59,471-00 and had filed the returns ol income under Section 153A ol the Act for the assessment years 2O 10- 1 1 to 2015- 16 on 18,02.2017 . It was in such circumstances that petitioner N:. t had requested respondent No.5 to clrop the proceedings under Section 276 CC of the Act. According to Mr. Desai, learned counsei for the petitioners, stand of the petitioner No.1 is fortrhed by a decision of the Bombay High Court in Trustees of Tulsldas Gopalji Charitable and Chateshwar Temple Vs. Commissioner of Income Taxz. 31 Insofar compounding of the offences under Section 276 CC of the Act is concerned, learned counsel for the petitioners 2 1993 SCC Ont,ine Bom 654 = 11994) 207 ITR 368 15 submits that there was no wilful delault by petitioner No.1 in delayed filing of returns under Section 1S3A of the Act. Petitioners had hled applications for compounding of offences to put a ciosure to the issue and also to avail the benefit of the Vivad se Vishwas scheme as one of the conditions of eligibiiity under the aforesaid scheme u,as that there should be no criminal prosecutior-r pending at the time of filing of declaration. Highlighting the need lor compour-rding of such offences, learned counsel for the petitioner has referred to a decision of the Delhi High Court dated 1L.O4.2OIT rendered in Vikram Singh Vs. Union of Indias. 32 Learned counsel for the petitioners submits that while respondent agreed to the prayer of the petitioners for compounding of the oflences, nonetheless, respondents had computed the compounding charges in a very arbitrary manner seeking a huge amount lor such compounding, virtually rendering compounding impossible. He submits that respondents had erred in qr-rantifying such stiff amount as compounding charges. As against compounding charges of Rs.36,96,000-00, respondents have quantified the compounding 3 W.P(C) 6825 of 2OL6 I I 16 charges .at Rs.2,96,32,T2O-OO which is not only irrationai but is absurd as wel.l. 33 Turning to the rejection of deciarations of the petitioners under the Vivad se Vishwas scheme, he submits that such rej ection is u'ho11y erroneous and contrary to Section 9 of the Direct Tax Vi,,ad se Vishwas Act,2O2O' That apart, this issue is squarely coverred by a Division Ber-rch decision ol the Bombal' High Court in Macrotech Developers Limited (1 sttpra)' 34 On a query by the Court, learned counsel lor the petitioners fairly submits that respondents have challenged the decision in Macrotech Developers Limited (1 supra) before the Supreme Court by filing Speciai Leave Petition, but he hastened to add that neither any notice has been issued nor any stay granted by the Supreme Court. 35 On the other hand, Mr. B.Narasimha Sarma, learned counsel for respondent Nos.3 to 6 has relied upon the counter aflidavit filed by the said respondents. while justifying initiation of criminal prosecution against the petitioners under Section 276 CCoftheAct,he,however,submitsthatrespondentsactedfairl)' and judicior,rsly in accepting the pral'er of the petitioners lor compounding of offences under Section 276 CC of the Act' 11 Thereafter, the high powered committee constituted for compounding of offences quantilied the compounding fee at Rs.2,96,32,920-00. He asserts that the compounding fee was cietermined by the committee in accordance with the guidelines of the CBDT dated 14.06.2019 regarding compounding of offences, further submittlng that such guidelines are binding on the co m mlttee . 36 Mr. Sarma has also justified rejection of the declarations of petitioner No. 1 under the Vivad se Vishwas scheme. Referring to Section 9 of the Direct Tax Vivad se Vishwas Act, 2020, he submits that as on the date of filing of the declarations by petitioner No.1, the criminal prosecutions were pending. As the offences were not yet compounded since the petitioners did not pay the compounding charges, therefore petitioner No.1 was not eligible to file the declarations. As such respondents were fully justified in rejecting the declarations of petitioner No.1. In the circumstances, he seeks dismissal of the writ petition. 37 Submissions made by learned counsel for the parties have received the due consideration of the Court. 38 We may deal with the second grievarce ol the petitioners first as the ourcome of this adjudication would have a bearing on the first grievance of the petitioners ' grievalce pertains to rejection of As alreadY noted above, this petitioner No- 1 under the Direct Ta-x Vivad se Vishu'as Act' 2020 by the responclents for the assessment years 2O Il-12' 2012-13' 2o:rg-14,201.+-15and2015.16.Thereasonsgir,enforsuch rejection is that prosecution proceedings under Section 276 CC ol the Act were i:lstituted for the aforesaid assessment years belore the date of filing of the deciarations and the proceedings u'ere pending. Therefore, provisions of the Direct Tax Vivad se Vishwas Acl, 2O2O would not be applicable in respect of tax arrearsfortheaforesaidassessmentyears.Hencethe declarations r'vere rej ected' 39 To appreciate the above, 1et us advert to and analyse relevant provisions of the Direct Tax Vivad se Vishwas Act' 2O2O (briefly referred to hereinafter as 'the Vivad se Vishwas Act') lt is an Act to provicie for resolution of disputed ta-x and for matters connected trereq'ith or incidental thereto' The statement of objects and reasons necessitating the enactment savs that over 'th\" y\"rr\" pendency of appeals fi1ed by the tax payers as u'e1l as by the Government has increased due to the fact that the number of appeals that are filed is much higher than the number of appeals that are disposed of' As a result' a huge amount of the declarations fiied bv disputed tax arrears is locked up in these appeals\" It was stated that as on 30.71.2019 the amount of disputed direct tax arrears was Rs.9.32 lakh crores, whereas actua-1 direct tax collection in the financial year 20 18-19 was Rs. 11.37 lakh crores. Therefore, it was noticed that the disputed tax arrears constituted nearly one year of direct tax collection. It was also mentioned that tax disputes consume copious amount of time, enerry and resources both on the part of the Government as well as tax payers. Those also deprive the Government from timely collection of revenue. Therefore, there was an urgent need to provide for resoiution of the pending tax disputes rvhich rvill not only benefit the Covernment by generating timely revenue but would also benefit the ta-x payers who would be able to deploy the time, enerry and resources saved by opting lor such dispute resolution towards their business activities. 40 Provisions of the Vivad se Vishwas Act relevant for the present lls may now be referred to. Section 2 provides for definition of various expressions used in the Vivad se Vishwas Act. As per Section 2 (1) (S) 'disputed income' in relation to an assessment year means, the whole or so much of the total income as is relatable to the disputed tax. 'Disputed tax' is dehned in section 2(1)(1) to mean income tax including surcharge and cess 2A 4)- 'Iax arrear' has been defined in Section 2 (1) (o) rn the in relation to an assessment vear or financial vear, as the case may be, payable by the appellant under the pror.isions of the Act in the manner computed under the saicl provision, Similarlv, 'disputed fee', 'disputed interest' and 'disputed penalty, are also defined under sections 2(f), 2(h) and 2(i). ,Disputed fee, means the fee determined under the Act in respect ol rvhich appeal has been frled by the appellant. Under section 2 ( 1)(h) , ,disputed interest' has been defined to mean the interest determined in any case under the provisions of the Act where such interest is not charged or is chargeable on disputed tax; and an appeal has been filed by the appellant in respect of such interest. ,Disputed penalty' means the penalty determined in any case under the Act where such penalty is not levied or is leviable in respect of disputed income or disputed ta- . as the case ma1, be; and arr appeal has been filed by the appellant in respect ol'such penalt-r,, follorving manrrer: \"(o) 'tax arrear' means,- (i) the aggregate amount of disputed tax, interest chargeable or charged on such disputed tax, and penalty leviable or levied on such disputed tax; or (ii) disputed interest; or (iii) disputed penalty; or (iv) disputed fee, 21 as determined under the provrsions of the Income Tax Act.,, 42 From the above, it is evident that ,ta_x arrear, would mean the aggregate amount ol dispurted tax, interest chargeable or charged on such disputed ta_r and penalty leviable or levied on such disputed tax; or disputed interest or disputed penalty or disputed fee as determined under the provisions of the Act. 43 Section 3 deals with the amount payable by a d.eclarant. It says that subject to the provisions of the Vivad se Vishwas Act, where a declarant files a declaration on or before the last date to the designated authority in respect of tax arrear, then notwithstanding anything contained in the Act or in any other law for the time berng in force, the amount payable by the declarant under the Vivad se Vishu,as Act would be as provided in Section 3. A reading of Section 3 makes it clear that where a deciarant files a declaration under the Vivacl se Vishwas Act, the same is in respect oI tax arrear. A statement is provided thereunder determining the amount payable depending upon the nature of the ta-x arrear. 44 Filing of declaration and particulars to be furnished are dealt with in section 4. Sub-section (1) says that the declaration shail be fiIed by the declarant belore the designated authority in 22 the prescribed format. As per sub-sectron (2), upor-r iiling of such declaration any appeal pending before the Income Tax Appeliate Tribunal or Commissioner (Appeais) in respect of the disputed income or dis cuted interest or disputed pena1t1, or disputed fee and tax arrear sha11 be deemed to have been q,ithdrawn from the date on which certificate is issued under section 5(1). As per sub- section (3), where the appeal or writ petition is pending in the High Court or in the Supreme Court, the declarant is reqr-rired to withdraw suclL appeal or u,rit petition ,,vith the leave ol the Court after issualce of certificate under sub-section (1) of section 5. 45 Section li provides for the time and manner ol payment. As per sub-section (1), the designated authorit,v shall within a period of fifteen days from the date of receipt of the declaration by order determine the amount payable by the declarant in accordance with the provisions of the Vivad se Vishwas Act and grant a certificate to the declarant containing particulars of the tax arrear and the amount payable after such determination. Whiie under sub-section (2), the deciarant is required to pay the amount determined under sub-section (1) within fifteen days, sub-section (3) makes it clear that once an order is passed under subsection ( 1 ) that would be conclusive as to the matters stated therein, which cannot l:e re-opened, 23 imposition of penalty or iev1,' of interest in respect of tax arrear once section 5 comes into play 17 This brings us to Seclior-r 9 of the Vivad se Vishwas Act, i.vl-iich is reievant for adir,rdication of the present lls. Section 9 Visl-nvas Act ri,ould not appll'. Section 9 (a) mentions about non- provides lor hve situations i.e. lrom (a) to (e) where the Vivad se applicabiiity of the Vivad se Vishwas Act in respect of tax arrear. Section 9 (a) reads as under: \"9. The provisions of this Act shall not apply- (a) in respect of tax arrea,r,- (i) relating to arr assessment year in respect of which an assessment has been made under sub-section (3) of section 143 or section 144 or section 153A or section 153C of the Income-ta- Act on the basis of search initiated under section 132 or section i32A ol the lncome-tax Act, if the amount of disputed ta-x exceeds hve crore rupees; (ii) reiating to an assessment year in respect of which prosecution has been instituted on or before the date of fiIing of declaration; (iii) relating to any undisclosed income lrom a source located outside India or undisclosed asset located outside India; (iv) relating to an assessment or reassessment made on the basis ol informatior.r received under ar-r agreement relerred to in section 90 or section 90A of the Income-tax Act, if it relates to any ta-r. arrear;\" .18 We lr'ill adr.ert to Sectior-r 9 (a) a 1itt1e later while '.r'e complete our reference to tl-re relevant provisions of the Vivad se Vishrvas Act\". 46 Section 6 provides for immunity from prosecution or 74 49 Section 9 (b) to 9 (e) deals nith situations where a detention order has beerr passed against a person or prosecution has been instituted against such person under various penal laws cr special laws crn or before fi1ing of declaration in which event provisions of the Vivad se Vishu,as Act rvould not app1y. 51 In exercise of the powers conferred by Sub-Section (2) of orders to the ir-rcome tax authorities from time to time, Section 12 Section (1) of Section 5 shall be in Form No.5. Form No.5 is is the rule malting provlston, Section 12 read u,ith Sub-Sections (1) and (5) of Section 4 and Sub-Sections (1) and (2) of Section 5 of the Vivad se Vishu as Act, Rules, 2020 (briefly referred to hereinafter as 'the Vivad se Vishwas Rules'). Rule 7 says that order by the designated authority undr:r Sub-Section (2) of Section 5 in respect of amount payable by the declarant as per certificate granted under Sub- appended to tl-re Vivad se Vishrvas Rules. A perusal of Porm No,5 would show ihat it is a certification certifying ful1 ancl fir-ral settlement of 1.ax arrear under Section 5 (2) read i,',ith Section 6 ol the Vivad se Vishll,as Act. Thus. immunitv granted to thc IS 50 While Section 10 empowers the CBDT to issue directions or Central Government has made the Direct Tax Vivad se Vishn,as 25 declarant lrom prosecution or lrom imposition of penalty 1n respect of the tax arrear 52 A Division Bench of the Bombay High Court in Macrotech Developers Limited (1 supra) had alalysed the provisions of Section 9 (a) and thereafter has held as follows: 27.1. As per sub-clause (i), provisions of the Viuad se Vishruas Act would not apply in respect of tax arrear relating to an assessment yeal in respect ol u,hich an assessment has been made i:-rcludrng on the basis oi search and seizure. In so far sub-clause (ri) is corrce rned, pro,,,isions ol the Viuad se Vishpas Act wouid not appl5, in respect of tax arrear re)ating to an assessment year in respect of which prosecution has been instituted on or before the date of fiiing ol declaration. Likewise in sub-clause (iii), provisions of the sard Act rvould nor be applicable in respect of tax arrear relating to any undisclosed income from a source located outside lndia or undisclosed asset located outside India. Finally, under sub-clause (iv), the exclusion would be in respect of tax a-rrear relating to an assessment or re-assessment made on the basis of information received under an agreement referred to in section 90 or section 90A of the Act. 27.2. Therefore, from a careful and conjoint reading of the various sub-clauses comprised in section 9(a), we find that the thrust of the said provision is in respect of tax arrear which appears to be lhe common thread running through aI1 the sub- clauses. Extricating clause (ii) from the above, we find that the exclusion referred to in section g(a)(ii) is in respect of tax arrear relating to an assessment yea-r in respect of which prosecution has been instituted on or before the date of liling of declaration. Thus, what section 9(a)(ii) postulates is that the provisions of tbe Viuad se Vishtuas Act would not apply in respect of tax arrear relating to an assessment year in respect ol which prosecution has been instituted on or before the date ol filing of decla-ration. Therefore, the prosecution must be in respect of ta-x arrear relating to an assessment yea,r. We are of the view that there is no ambiguity in so far the intent of this provision is concerned and as pointed out by tlre Supreme Court rn Dilip Kumar and Compang (supra), a statute must be construed according to the intention of the Lcgislature and that the courts shor.rld act upor-r the true intenlion ol the Legisiature rvhiie applying and interpreting the law. Therefore, what secuon 9(a)(ii) stipulates is that the provisions of the Viuad se Vlshpas Act shall not apply in the case of a declarant in rvhose case a prosecution has been instituted in respect of tax arrea.\" relating to a-n assessment year on or before the date of hling 26 of decla-ration. The prosecution has to be in respect of tax arrear which naturally is relatable to ai assessment year. 27.3. It .,,re look at clauses (b) to (e) ol secrion (9), we find rhat there is a clear dema-rcation in section 9 in as much as ihe exclusions crovided under clause (a) is in respect of tax arrear whereas in clauses (b) to (e), the thrust is on the person who is either in detention or facing prosecution under the specia.l enactments mentioned therein. Therefore. if u'e read clauses (bt to (e) of section 9, it rvould be apparent rhat such categories of persons wotrid not be eligible to file declaration under the V'iuaa se Tishruas Ac-- in view of their exclusion in terms oi section 9(b) to (e). 53 Thus, Bombay High Court has held that the thrust ol the aforesaid provision is in respect of tax arrear. The prosecution must be in respect of tax arrear as defined under the Vrvad se Vishwas Act u'hich naturally is relatable to an assessment year. Under Section 9 certain categories of assessees are excluded from availing the benefit of the Vivad se Vishawas Act. Exclusion under Clause (a) of Section 9 is in respect of tax arrear which is further circumscribed by Sub-Clause (ii) to the extent that if prosecution has been instituted in respect of ta-x arrear of the declarant relating to an assessment vear on or before the date of fi1ing of declaration, he would not be entitled to apply unr:ler the Vivad se Vishq'as Act. 54 As alreaiy discussed above, tax arrear in the context ol the Vivad se Vishvras Act has a definite connotation under Section 2 (1) (o) which has to be read in conjuncrion with Section 2 (l) (lJ to 2 (1) (i). 7) 55 Respondents have placed reliance upon FAe No,22 and the answer given thereto in Circular No.7 of 2O2O of CBDT dated 44.03.2020. We have already extracted FAe No.22 and the answer given thereto. The question posed is, if in the case of an assessee prosecution has been instituted and is pending in Court, would the assessee be eligible under the Vivad se Vishwas scheme. As a corollarJz to the above, the further question posed is, in the event prosecution has not been instituted, but notice has been issued, whether the assessee would be eligible under the said scheme. CBDT has clarified by way of answer to the above question opining that u,here only notice for initiation of prosecution has been issued r.t,ithout prosecution being instituted, assessee would be eligible to file declaration under the scheme. But where prosecution has been instituted with respect [o an assessment year, the assessee would not be eligible to file declaration for that assessment year under the Vivad se Vishwas scheme unless the prosecution is compounded before filing the declaration. Thus, what answer to FAQ No.22 says.is that where only notice for initiation of prosecution has been issued, assessee would be eligible to hie declaration. Howeverr once prosecution is instituted with respect to an assessment year, the assessee would not be eligible to fi1e declaration for that assessment year r_rnless the prosecution is compounded belore filing the cleclaration. 57 Thus, on a conjoint reading of FAe Nos.22 and 73 and the answers given thereto, it is seen that the answer given to F.Ae No.73 is an imorovement over the answer given to FAe No.22. In 56 The above stald taken bv the CBDT has been further clarified in the answer given to FAQ No.73 in CBDT Circular No.21 /2020 dated 04.12.2020. We have akeady extracted the question and the answer given thereto. The question posed is, if prosecution has been instituted in the case of a taxpayer, for an assessment year in respect to an issue which is not in appeal, would he be eligible to file declaration for issues which are in appeal for the said assessment yea_r and in respect of which prosecution heis not been launched. Clarification given by CBDT in the form of answer thereto is that, ineligibillty to file declaration relates to an assessment year in respect of which prosecution has been instttuted on or before the date ol declaration. Since prosecution has already been institutecl for the assessment year in question, the taxpayer u,ould not be eligible to fi1e deciaration for the said assessment vear even on issues not relating to prosecution. 29 32. We are alraid such an interpretation given by respondent No. 2 in the answer to question No. 73 is noI i,., uli\"gr,-\"nt with the legislative inrent which has got manifested in thJ form of section 9(a)(ii) The ineligibility to fire decraration is in respect of tax arrear relating to ait assessment _ 'ezlr in respect of r,vhich prosecution has been instirutcd. Therefore, ro say rhar rhe ;neligitility under section 9(a)(ii) relates ro ar1 assessment yea-r al:td if for that assessment year a prosccution has been illstituted, then the ta_x payer u,ou)d not be cligrble to fi1e declaration for the said assessment year cven or.r issues not relating to prosecution would r.rot. only be il)ogical an cl irrational but ivouli be in complete de r iatior.r ll-om secrion 9(a)(ii). Such an interpretation would do violence to the plain language of the statute aId, therefore, cannot be accepLed. We have already discussed in deiail section 9(a)(ii) and we have no hesitatron to hold that either on a litera-l interpretation or. by. adopting a purposive interpretation, the only exclusion visualized under the sard provision'is pendency of a prosecution in respect o[ ta,x arrear relatable to an assessment year as on the date of fiiing of declaration and not pendency of a prosecution in respect of a:r assessment year on any issue. The debarment must be in respect of the tax ,r.\"* \"\" deirned under section 2(1)(o) of the Viuad se ffishu.ras Act. To hold that an assessee wouid not be eligible to file a declaration because there is a pending prosecution for the assessment year in question on a;r issue unrelated to tax arrear would defeai the very purport and object of the Viuad se Vi.shwasAct. Such an interpretation which FAQ No.73 it has been opined that ineligibility to file declaration relates to an assessment l/ear in respect of which prosecution has been instituted; the ta-xpayer u,ould not be eligible to hle declaration for the said assessment year even on issues not relating to the prosecution. This appears to be the stand of CBDT which is reflected in the counter afiidavit of the respondents. 58 In Macrotech Developers Limited ( 1 supra), petitioners had sought for quashing of the answer given to FAe No.73. After a threadbare analysis, Bombay High Court held as follows: 3C abridges thr: scope of settiement as colttemplated under the Vitacl se Vishuas Act cannot therefore be accepted. 59 We agree with the views expressed by the Bombay High Court and hc,ld that an assessee i.r,ould be ineligible to file declaration in the event of pendency of prosecution in respect of the tax arrear re.latable to the assessment yea_r in question as on the date of filing of the declaration; and not on account of pendency of prosecution in respect of the assessment year on any issue unrelated to the tax arrear. Bombay High Court has rightlv held that the debarment must be in respect of the tax arrear as defined under Section 2 (1) (o) ol the Vivad se Vishu,as A.ct. We reiterate the vierv of the Bombal. High Court thar to hold thar an assessee would not be eligible to file a declaration because there is pending prosecution for the assessment year in question orr an issue unrelated to tax arrear would defeat the very purport ancl object of the Vjvad se Vishwas Act. 60 We have already analysed the scheme of the Vivad se Vishwas Act and the Vivad se Vishwas Rules. We find therefrom that the basic thrust is settlement of direct tax disputes in respect of tax arrears which as already noticed above has a definite connohation under the Vivad se Vishwas Act. Therefore, the interpretation which has been put forn,ard by the 31 respondents runs counter to the scope of settlement as contemplated under the Vivad se Vishwas Act' To that extent answers given to FAQ Nos.22 and 73 are contra-ry to the very scheme of the Vivad se Vish\"\"'as Act' 5 i Coming back to the facts of the present case' prosecution against petitioner No. 1 is under Sectio n 276 CC which pertains to iailure to furnish return under Sections 139 (1) or under Section i53 A etc., of the Act. Such delayed filing of income tax returns cannot be construed to be a 'tax arrear' within the meaning of Section 2 (1) (o) of the Vivad se Vishwas Act' Therefore' such pending prosecution cannot be said to be in respect of tax arrear though it may be relatable to the assessment years in question and cannot render petitioner No' 1 ineligible' 62 Thus, having regard to the discussions made above' rejection of the declarations of petitioner No 1 by the respondents on 31.01 .2021 arld 31'03'202 1 cannot be sustained and those are accordingly set aside and quashed Consequently' the matter is remanded back to the responclents who shall consider the . declarations ol petitioner No 1 dated 29 '12 '2020 (or subsequent declarations dated 31'01 '2021 and 31'03'202 1) in conformity I ! I (_. 32 To with the provisions of the Vivad se Vishwas Act deho\"s the answers given 1.o FAQ Nos.22 and 73. 63 In view ot'the decision rendered on the second grievance ol the petitioners it may not be necessary for us to adjudicate on the other grievance of the petitioners relating to computar-ion of compounding fee b1' the respondcnts and the related compounding of offences turder Section 27 6 CC oi tl're Act. 64 Writ peti.,ion is accordir-rglr- allorr ecl to thc exterlt rl-rclicarrcci above. Ho',l,et er, there shal1 be no order .IS to costs. Miscellaneous petitions, il ar-r1-. pending in this u'rit petitior-r shali SD/.T,TIRUMALA DEVI ASSISTANT RECiISTR,AR ,TRUE COPY// , SECTION OFFICER 1. The Revenue Serretary, Union of lndia, Ministry of Finance, Department of Revenue, Office,rf Ministry of Finance, Room No. 46, North Block, New Delhi 110 001. 2- The Chairman, Central Board of Direct Taxes, Central Board of Direcl Taxes. North Block, Neu' Delhi-1 1 0002. 3. The Principal Director General of lncome Tax (lnvestigation), Andhra Pradesh and Telangana Aayakar Bhavan, Basheer Bagh. Hyderabad- 500004. 4. The Principal Conmissioner of lncome Tax (Central), Hyderabad 7 Floor, Aayakar Bhavan Basheer Bagh, Hyderabad- 500004. 5. The Deputy Commissioner of income Tax, Central Circle 1(2), Hyderabad (Formerly Joint Crommissioner of income Tax) 7111 Floor, Aayakar Bravan. Basheer Bagh, l-yderabad- 500004. 6. The Assistant Cc mmissloner of income Tax, Central Circle 1(2), Hyderabad 7' Floor, Aayakar Bhavan, Basheer Bagh, Hyderabad- 500004. 7. One CC to SRl./,V|NASH DESAI, Advocate IOPUCI B. One CC to SRI.I.IANIAVARAPU RAJESHWAR RAO (ASSGI) IOPUC] 9. Two CD Copies 10. One spare copy stand closed. I -_ - ,Y ,! HIGH COURT DATED i2910412022 ORDER WP.No.E078 of 2021 ALLOWING THIE W.P WITHOIJT COSTS, o ? 1 lu| 2021 eog THE 5 1.4 lr; \"a ic p r--o {. o o i. ( 2 .a, ..i 1,Y C I "