AQ Frozen Foods vs. DCIT, Circle-3(1), Delhi: Vivad Se Vishwas Resolution for AY 2014-15

Case Overview: AQ Frozen Foods Pvt. Ltd. vs. DCIT, Circle-3(1), Delhi – Assessment Year 2014-15

The case of AQ Frozen Foods Pvt. Ltd. vs. DCIT, Circle-3(1), Delhi pertains to the assessment year 2014-15 and was heard before the Income Tax Appellate Tribunal (ITAT) Delhi Bench ‘A’. The bench, comprising Accountant Member Shri Pradip Kumar Kedia and Judicial Member Shri Anubhav Sharma, conducted the hearing on January 5, 2023, through video conferencing.

Background of the Case

AQ Frozen Foods Pvt. Ltd., a company based in New Delhi, filed its income tax return for the assessment year 2014-15. Following the assessment conducted by the Deputy Commissioner of Income Tax (DCIT) of Circle-3(1), New Delhi, the company disagreed with the tax demand raised. Consequently, AQ Frozen Foods Pvt. Ltd. appealed to the Commissioner of Income Tax (Appeals)-I, New Delhi. However, the CIT(A) upheld the assessment order on May 22, 2019, leading AQ Frozen Foods Pvt. Ltd. to file an appeal before the ITAT.

Opting for the Vivad Se Vishwas Scheme

In 2020, the Indian government introduced the Direct Tax Vivad Se Vishwas Scheme to reduce litigation and provide a platform for taxpayers to settle pending disputes. Under this scheme, taxpayers could resolve their disputes by paying a specified percentage of the disputed tax amount, thus closing the case and avoiding prolonged litigation.

AQ Frozen Foods Pvt. Ltd. decided to take advantage of the Vivad Se Vishwas Scheme to settle the tax dispute for the assessment year 2014-15. On January 5, 2023, the company submitted a letter to the ITAT, indicating its intention to withdraw the appeal as it had opted for the Vivad Se Vishwas Scheme. The company also requested that the appeal be dismissed as they no longer wished to pursue the case.

Tribunal’s Decision

During the virtual hearing on January 5, 2023, the Senior Departmental Representative (DR) representing the Revenue did not raise any objections to the withdrawal of the appeal. After reviewing the letter and considering the request from AQ Frozen Foods Pvt. Ltd., the ITAT Delhi Bench ‘A’ accepted the withdrawal request and dismissed the appeal.

However, the tribunal provided a caveat stating that if AQ Frozen Foods Pvt. Ltd. fails to avail the benefits of the Vivad Se Vishwas Scheme due to any bonafide reasons, the company would have the liberty to seek the restoration of the original appeal for hearing before the ITAT in accordance with the law.

Implications of the Dismissal

The dismissal of the appeal underscores the success of the Vivad Se Vishwas Scheme in facilitating the resolution of tax disputes. By opting for the scheme, AQ Frozen Foods Pvt. Ltd. was able to settle its tax arrears for the assessment year 2014-15, thereby avoiding further legal proceedings and potential penalties.

The tribunal’s acceptance of the withdrawal request demonstrates the scheme’s effectiveness for both taxpayers and the tax authorities. For taxpayers, the scheme offers a clear and structured method to resolve disputes, while for the tax authorities, it helps in reducing the backlog of cases, allowing them to focus on more complex issues.

Conclusion

The case of AQ Frozen Foods Pvt. Ltd. vs. DCIT, Circle-3(1), Delhi highlights the practical application of the Vivad Se Vishwas Scheme and its role in reducing litigation. The withdrawal of the appeal and its subsequent dismissal by the ITAT Delhi Bench ‘A’ reflect the benefits of this scheme, particularly in terms of simplifying the tax dispute resolution process.

As more taxpayers choose to resolve their disputes under similar schemes, the overall burden on the judicial system is expected to decrease, leading to faster resolutions for pending cases and a more efficient tax administration process in India.

AQ Frozen Foods vs. DCIT, Circle-3(1), Delhi: Vivad Se Vishwas Resolution for AY 2014-15