The amount deposited under the Income Declaration Scheme could not be forfeited and should be adjusted under the Direct Tax Vivad se Vishwas Act.

JUDGMENT :

DHIRAJ SINGH THAKUR, J.

1. The petitioner prays for issuance of a writ of mandamus to respondent No. 2 to revise the impugned Form-3 dated 27th September 2021 issued under the provisions of Direct Tax Vivad Se Vishwas Act, 2020 (‘DTVSV Act’) by giving credit and taking into consideration the amounts already paid under the Income Declaration Scheme, 2016.

2. Briefly stated the material facts are as under:

An Income Declaration Scheme, 2016 (‘IDS’) was introduced by Chapter IX of the Finance Act, 2016 which envisaged granting an opportunity to persons to come forward and declare their undisclosed income and pay the applicable tax, surcharge and penalty on the income so disclosed. The Scheme also provided to such a declarant, among others, immunity from prosecution. The petitioner, with a view to seek benefit under the IDS filled up Form- 1, dated 30th September 2016 for the relevant year and disclosed an undisclosed income of Rs.15,50,000/-.

The revenue then issued an acknowledgment in Form-2 dated 4th October 2016 requiring the petitioner to pay an amount of Rs.6,97,500/-. The petitioner, however, deposited an amount of Rs.3,48,752/- by way of two challans but could not deposit the rest on account of an alleged personal difficulty.

The case of the petitioner was then opened for reassessment under section 147 of the Income Tax Act, 1961 (‘the Act’). A notice dated 30th March 2018 under section 148 of the Act for the assessment year 2016-17 was issued pursuant to which the petitioner fled his return declaring an income of Rs.22,72,910/-.

3. An order of assessment came to be passed on 30th November 2018, whereby the total income of the petitioner was assessed at Rs.38,22,910/-. Penalty proceedings against the petitioner also resulted in levying a penalty of Rs.6,97,500/- upon the petitioner. Both these orders came to be challenged before the Appellate Forum.

4. On 17th March 2020, Direct Tax Vivad se Vishwas Act, 2020 was enacted by the Parliament with a view to provide for resolution of disputed tax and for matters connected therewith or incidental thereto as is clear from the preamble of the said Act. The purpose and spirit of such an enactment can be noticed from the Bill that was introduced in the parliament, the statements and objects and reasons whereof read as under:

“24. Let us now read the statement of objects and reasons of the Vivad se Vishwas Bill when introduced in the Parliament which later on became the Vivad se Vishwas Act. The statement of objects and reasons reads as under:

“Over the years, the pendency of appeals fled by taxpayers as well as Government has increased due to the fact that the number of appeals that are fled is much higher than the number of appeals that are disposed. As a result, a huge amount of disputed tax arrears is locked-up in these appeals. As on the 30th November, 2019, the amount of disputed direct tax arrears is Rs. 9.32 lakh crores. Considering that the actual direct tax collection in the financial year 2018-19 was Rs.11.37 lakh crores, the disputed tax arrears constitute nearly one year direct tax collection.

2. Tax disputes consume copious amount of time, energy and resources both on the part of the Government as well as taxpayers. Moreover, they also deprive the Government of the timely collection of revenue. Therefore, there is an urgent need to provide for resolution of pending tax disputes. This will not only benefit the Government by generating timely revenue but also the taxpayers who will be able to deploy the time, energy and resources saved by opting for such dispute resolution towards their business activities.

3. It is, therefore, proposed to introduce the Direct Tax Vivad se Vishwas Bill, 2020 for dispute resolution related to direct taxes, which, inter alia, provides for the following, namely:

(a) the provisions of the Bill shall be applicable to appeals fled by taxpayers or the Government, which are pending with the Commissioner (Appeals), Income-tax Appellate Tribunal, Hi