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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
UJJAL BHUYAN, MILIND N. JADHAV, JJ.
Macrotech Developers Limited - Appellant
Versus
Principal Commissioner of Income Tax and others - Respondents
Writ Petition No.79 of 2021 With Interim Application (L) No.1060 of 2021
Decided on : 25-03-2021
Income Tax Act, 1961 - Sections 276-C(2), 278B, 279(2) and 143(3) -Direct Tax Vivad se Vishwas Act, 2020 - Section 9(a)(ii) - Direct Tax Vivad se Vishwas Rules 2020 - Companies Act, 1956 - Amalgamation scheme - Assessment - Business of land development and construction of real estate properties - Alleged wilful attempt to evade tax on account of delayed payment of balance amount of self-assessment tax. Petitioner replied to the same-denying the allegations made - Petitioner stated there was only a delay in payment of self-assessment tax that too on account of cash flow pressures on the business which was promptly discharged within six months and that there was no attempt made in any manner whatsoever to evade payment of tax. Therefore, request was made to respondent No.1 to withdraw show cause notice - What is discernible is that where only notice for initiation of prosecution has been issued, assessee would be eligible to file declaration.
Finding of the court: A careful and conjoint reading of the various sub-clauses comprised in section 9(a), court find that the thrust of the said provision is in respect of tax arrear which appears to be common thread running through all the sub-clauses. Extricating clause (ii) from the above, we find that the exclusion referred to in section 9(a)(ii) is in respect of tax arrear relating to an assessment year in respect of which prosecution has been instituted on or before the date of filing of declaration - Once prosecution is instituted with respect to an assessment year, the assessee would not be eligible to file declaration for that assessment year unless the prosecution is compounded before filing the declaration - Such delayed payment cannot be construed to be a tax arrear within the meaning of section 2(1)(o) of Act - Therefore such a prosecution cannot be said to be in respect of tax arrear - Because such a prosecution is pending which is relatable to assessment year 2015-16, it would be in complete defiance of logic to debar petitioner from filing a declaration for settlement of tax arrear for the said assessment year which is pending in appeal before Tribunal - Hence set aside and quashed the order .
Result: Writ petition is allowed
JUDGMENT :
(Per Ujjal Bhuyan, J.)
Heard Mr. V. Sridharan, learned senior counsel along with Mr. Prakash Shah, learned counsel for the petitioner and Mr. Suresh Kumar, learned standing counsel Revenue for the respondents.
2. By filing this petition under Article 226 of the Constitution of India, petitioner seeks a declaration that the clarification given by respondent No.2 to question No.73 vide circular No.21/2020 dated 04.12.2020 is violative of Article 14 of the Constitution of India and thus is arbitrary and ultra vires to the provisions of the Direct Tax Vivad se Vishwas Act, 2020 and the Direct Tax Vivad se Vishwas Rules, 2020. Therefore, petitioner seeks quashing of the said clarification and further seeks a direction to respondent No.1 to accept the declaration filed by the petitioner on 23.09.2020 under the Direct Tax Vivad se Vishwas Act, 2020.
3. Case of the petitioner as pleaded in the writ petition is that it is a public limited company incorporated under the Companies Act, 1956 having its registered office at Mahalaxmi, Mumbai. It is engaged in the business of land development and construction of real estate properties.
4. Initially, Shreeniwas Cotton Mills Private Limited ('Cotton Mills' for short) was a subsidiary of the petitioner. Subsequently it was merged with the petitioner on the strength of the amalgamation scheme sanctioned vide order dated 07.06.2019 passed by the National Company Law Tribunal, Mumbai Bench. The merger had taken place with effect from 01.04.2018. However, the pending tax demand against the cotton mills under the Income Tax Act, 1961 (briefly 'the Act' hereinafter) continued in the name of the cotton mills since migration of the permanent account number of the cotton mills to the permanent account number of the petitioner has not taken place. Therefore, it is pleaded that the tax demand of the cotton mills should be construed to be that of the petitioner and reference to the petitioner would mean and include the petitioner as well as the cotton mills.
5. For the assessment year 2015-16, petitioner had filed return of income under section 139(1) of the Act disclosing total income of Rs.2,05,71,01,650.00. The self-assessment income tax payable on the returned income as per section 115JB of the Act was Rs.69,92,08,851.00. At the time of filing of the return, an amount of Rs.27,34,77,755.00 was shown to have been paid by way of tax deducted at source. Balance of self-assessment tax of Rs.42,57,31,096.00 (Rs.69,92,08,851.00 less Rs.27,34,77,755.00) with interest thereon under sections 234A, 234B and 234C of the Act aggregating to Rs.12,36,74,855.00, totalling Rs.54,94,05,951.00 were paid by the petitioner after the due date for filing of the return in the following manner:-
Sr. No. Date Amount Paid (Rs.)
1. 05 July 2016 2,00,00,000
2. 31 August 2016 52,94,05,951
TOTAL 54,94,05,951
6. Respondent No.1 issued notice to the petitioner on 19.09.2017 to show cause as to why prosecution should not be initiated against the petitioner under section 276-C(2) of the Act for alleged wilful attempt to evade tax on account of delayed payment of the balance amount of the self-assessment tax. Petitioner replied to the same on 05.10.2017 denying the allegations made. Petitioner stated there was only a delay in payment of self-assessment tax that too on account of cash flow pressures on the business which was promptly discharged within six months and that there was no attempt made in any manner whatsoever to evade payment of tax. Therefore, request was made to respondent No.1 to withdraw the show cause notice.
7. Petitioner was informed by respondent No.1 by letter dated 07.12.2018 that income tax department was actively considering the case of the petitioner for alleged wilful attempt to evade payment of tax and interest. However, an offer was given to the petitioner for compounding of the offence under section 279(2) of the Act to which petitioner replied that since there was no mala fide intent to evade paym
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