Direct Tax Vivad Se Vishwas Act, 2020 – Resolution of disputes – Sum payable by declarant – Difference between appeal by assessee and that by Revenue – Lower rate of deposit of disputed tax where appeal is preferred by Revenue – Appeal to Tribunal by Revenue – Tribunal remanding matter to A.O. – Appeal from order by assessee before High Court – High Court restoring Revenue’s appeal to Tribunal – Appeal was by Revenue – Assessee entitled to lower rate of deposit of disputed tax

Direct Tax Vivad Se Vishwas Act, 2020 – Resolution of disputes – Sum payable by declarant – Difference between appeal by assessee and that by Revenue – Lower rate of deposit of disputed tax where appeal is preferred by Revenue – Appeal to Tribunal by Revenue – Tribunal remanding matter to A.O. – Appeal from order by assessee before High Court – High Court restoring Revenue’s appeal to Tribunal – Appeal was by Revenue – Assessee entitled to lower rate of deposit of disputed tax

The assessee was a bank established in the Netherlands. It filed its return for the A.Y. 2002-03 declaring Nil income. The assessment order was passed assessing the business profits attributable to its permanent establishment at Rs. 31,25,060. The Commissioner (Appeals) deleted the addition. The Revenue filed an appeal before the Tribunal which remanded the issue to the A.O. Against the order, the assessee filed an appeal before the High Court on 23rd September, 2015 u/s 260A. The assessee also filed a Miscellaneous Application before the Tribunal which was rejected by an order dated 21st August, 2018. Thereafter, on 29th August, 2018, the High Court passed an order setting aside both the orders of the Tribunal, viz., the order dated 1st April, 2015 restoring the issue to the file of the A.O., as well as the order dated 21st August, 2018 dismissing the Miscellaneous Application filed by the assessee. The High Court directed the Tribunal to decide the matter afresh.

Meanwhile, the assessee made a declaration in Form 1 along with an undertaking in Form 2 according to the provisions of the Direct Tax Vivad Se Vishwas Act, 2020. The assessee indicated an amount payable under the 2020 Act as Rs. 7,50,014 which was 50% of the disputed tax. On 28th January, 2021, Form 3 was issued by the designated authority indicating the amount payable as Rs. 15,00,029 which was 100% of the disputed tax.

The Bombay High Court allowed the writ petition filed by the assessee and held as under:

‘i) A plain reading of the Table in section 3 of the Direct Tax Vivad Se Vishwas Act, 2020 suggests that in the case of an eligible appellant, if it is a non-search case, the amount that is payable would be 100% of the disputed tax, and if it is a search case it would be 125% of the disputed tax. However, in a case where the appeal is filed by the Income-tax authority, the amount payable shall be one-half of the amount calculated for payment of 50% of disputed tax or 100%.

ii) The Court had sent back the matter to the Tribunal and what was before the Tribunal was a matter by the Revenue. Factually as well as in law, it was the Revenue’s matter which stood revived. It was also not the Revenue’s case that it had not accepted the decision of the Court. The whole process resurrected under the orders of the High Court was not the proceedings in the Tribunal by the assessee but of the Revenue preferred u/s 253 of the 1961 Act where the Revenue was the appellant. Maybe the appeal by the Revenue is revived at the instance of the assessee because of its proceedings in the High Court, but that would by no stretch of imagination make the appeal before the Tribunal an appeal by the assessee u/s 253. Hence, the first proviso to section 3 of the 2020 Act would become applicable and, accordingly, the amount payable by the assessee would be 50% of the amount, viz., 50% of the disputed tax.’