Tex & Nets Pvt Ltd vs ITO Ward 17(4), New Delhi: Appeal Dismissed Under Vivad Se Vishwas Scheme – ITA 6090/DEL/2019

Case Analysis: Tex & Nets Pvt Ltd vs ITO Ward 17(4), New Delhi

Case Number: ITA 6090/DEL/2019

Appellant: Tex & Nets Pvt Ltd (Formerly Known as Nath Lamination Pvt Ltd), New Delhi

Respondent: ITO Ward 17(4), New Delhi

Assessment Year: 2010-11

Case Filed On: 2019-07-17

Order Type: Final Tribunal Order

Date of Order: 2020-11-24

Pronounced On: 2020-11-24

Introduction

The case of Tex & Nets Pvt Ltd vs. ITO Ward 17(4), New Delhi (ITA 6090/DEL/2019) concerns the assessment year 2010-11. The appellant, Tex & Nets Pvt Ltd, formerly known as Nath Lamination Pvt Ltd, challenged the tax assessment by the Income Tax Officer (ITO), Ward 17(4), New Delhi, arguing that the tax demand raised by the Income Tax Department was excessive and unjustified. The case was filed on July 17, 2019, following the appellant’s dissatisfaction with the decision of the Commissioner of Income Tax (Appeals) [CIT(A)], New Delhi.

Background: Why the Case Was Filed

Tex & Nets Pvt Ltd, engaged in the manufacturing sector, underwent a tax assessment for the financial year 2009-10 (Assessment Year 2010-11). The Income Tax Department, upon assessing the company’s financial records, raised a tax demand that the company deemed to be inaccurate. The appellant argued that certain additions made by the Assessing Officer were unwarranted and resulted in an inflated tax liability. As a result, the company decided to appeal against the order of the CIT(A) to the Income Tax Appellate Tribunal (ITAT).

The appeal was grounded on several contentions, primarily revolving around the erroneous additions to income and the disallowance of certain expenses that the appellant believed were legitimately incurred and should have been allowed. The company sought relief from the tribunal, hoping to reduce the tax burden that had been imposed as a result of the assessment.

The Legal Proceedings

The appeal was taken up by the ITAT Delhi ‘A’ Bench, which included Vice President Shri G.S. Pannu and Judicial Member Smt. Madhumita Roy. The hearing was conducted on November 24, 2020, through video conferencing, a practice necessitated by the ongoing global pandemic. During the hearing, the appellant’s counsel, Shri Nishchay Khandelwal, presented the case on behalf of Tex & Nets Pvt Ltd.

However, prior to the hearing, the appellant submitted a letter dated November 10, 2020, requesting the withdrawal of the appeal. The letter, received via email, stated that the company had opted to settle the tax dispute under the Vivad Se Vishwas Scheme, 2020. This scheme, introduced by the Government of India, was designed to reduce litigation and enable taxpayers to resolve pending disputes by paying a specified percentage of the disputed tax amount, thereby avoiding further legal action and associated costs.

In accordance with the requirements of the Vivad Se Vishwas Scheme, Tex & Nets Pvt Ltd provided a certificate under Section 5(1) of the Direct Tax Vivad Se Vishwas Act, 2020, confirming its participation in the scheme and the settlement of the tax arrears related to the assessment year in question.

Tribunal’s Ruling and Order

During the virtual hearing, the tribunal considered the appellant’s request for withdrawal. The Senior Departmental Representative (DR), Shri M. Barnwal, representing the Revenue, raised no objections to the withdrawal request. Consequently, the tribunal accepted the appellant’s plea and allowed the withdrawal of the appeal.

In its order, the tribunal noted that the appeal was dismissed as withdrawn following the appellant’s decision to resolve the tax dispute under the Vivad Se Vishwas Scheme. The tribunal’s decision was delivered during the virtual hearing on November 24, 2020, in the presence of both parties.

The tribunal’s acceptance of the withdrawal request marked the conclusion of the legal proceedings, with the case being dismissed from the records for statistical purposes. The dismissal was in line with the provisions of the Vivad Se Vishwas Scheme, which encourages taxpayers to settle disputes amicably and reduce the burden on the judiciary.

Case Conclusion and Final Judgment

The tribunal’s order effectively closed the case of Tex & Nets Pvt Ltd vs ITO Ward 17(4), New Delhi, for the assessment year 2010-11. By opting for the Vivad Se Vishwas Scheme, the appellant sought to put an end to the prolonged litigation and the uncertainties associated with the disputed tax demand. The tribunal’s order dismissing the appeal as withdrawn was a formal acknowledgment of the settlement reached under the scheme.

For Tex & Nets Pvt Ltd, the decision to participate in the Vivad Se Vishwas Scheme likely stemmed from a strategic desire to resolve the tax dispute quickly, minimizing legal costs and avoiding the risk of an adverse ruling that could have further escalated the tax liability.

Implications of the Tribunal’s Decision

The dismissal of the appeal under the Vivad Se Vishwas Scheme underscores the scheme’s role in providing a practical solution to taxpayers facing prolonged tax disputes. The scheme not only facilitates the resolution of pending cases but also helps in clearing the backlog of cases at various appellate forums, including the ITAT.

For the Income Tax Department, the scheme represents an opportunity to recover disputed tax amounts without resorting to extended legal battles. This approach benefits both the Revenue and the taxpayers by fostering a more cooperative and less adversarial relationship.

The tribunal’s handling of the case highlights its role in promoting the objectives of the Vivad Se Vishwas Scheme. By allowing the withdrawal of appeals and dismissing cases resolved under the scheme, the ITAT supports the government’s efforts to streamline tax dispute resolution and improve the overall efficiency of the tax administration system.

Conclusion

The case of Tex & Nets Pvt Ltd vs ITO Ward 17(4), New Delhi, exemplifies the growing trend of resolving tax disputes through alternative mechanisms like the Vivad Se Vishwas Scheme. The tribunal’s decision to dismiss the appeal as withdrawn, following the settlement of the tax dispute under the scheme, reflects the effectiveness of such initiatives in reducing litigation and facilitating quicker resolutions.

For other taxpayers, this case serves as a reminder of the benefits of participating in schemes like Vivad Se Vishwas, which offer a viable alternative to lengthy and costly legal proceedings. The tribunal’s approach in this case also demonstrates its commitment to supporting government policies aimed at reducing the backlog of tax disputes and promoting a more harmonious tax environment.

As tax laws continue to evolve, the success of schemes like Vivad Se Vishwas will likely influence the development of future policies aimed at enhancing the efficiency and fairness of the tax dispute resolution process in India.

Tex & Nets Pvt Ltd vs ITO Ward 17(4), New Delhi: Appeal Dismissed Under Vivad Se Vishwas Scheme – ITA 6090/DEL/2019