DCIT Circle-22(2) vs. Satellite Finance Pvt. Ltd.: Resolution under Vivad Se Vishwas Scheme for AY 2013-14

Case Overview: DCIT Circle-22(2) vs. Satellite Finance Pvt. Ltd. – Assessment Year 2013-14

The case of DCIT Circle-22(2) vs. Satellite Finance Pvt. Ltd. for the assessment year 2013-14 was presented before the Income Tax Appellate Tribunal (ITAT) Delhi Bench ‘A’. The tribunal, comprising Vice President Shri G. S. Pannu and Judicial Member Ms. Suchitra Kamble, heard the appeal on June 21, 2021, via video conferencing due to the ongoing COVID-19 pandemic.

Background of the Case

The Deputy Commissioner of Income Tax (DCIT) Circle-22(2), New Delhi, assessed the income of Satellite Finance Pvt. Ltd. for the assessment year 2013-14 and raised a tax demand. Disagreeing with the assessment, Satellite Finance Pvt. Ltd., a New Delhi-based company, filed an appeal before the Commissioner of Income Tax (Appeals)-XXV, New Delhi. The CIT(A) ruled in favor of the assessee, leading the Revenue to appeal to the ITAT.

However, during the pendency of the appeal, the Government of India introduced the Direct Tax Vivad Se Vishwas Act, 2020, a scheme designed to resolve direct tax disputes amicably and reduce litigation. The scheme offered taxpayers an opportunity to settle disputes by paying a certain percentage of the disputed tax amount, thereby reducing the burden of ongoing tax litigation.

Filing Under the Vivad Se Vishwas Scheme

Satellite Finance Pvt. Ltd. opted to settle the ongoing tax dispute for the assessment year 2013-14 under the Vivad Se Vishwas scheme. The company filed the necessary Declaration Form Nos. 1 and 2, in accordance with Section 4 of the Direct Tax Vivad Se Vishwas Act, 2020. Following this, the authorities granted the company a Certificate in Form No. 3, confirming the settlement. On June 5, 2021, the company paid Rs. 45,431/- as tax dues, as per the certificate.

Tribunal’s Decision

After considering the facts and submissions made by both parties, the ITAT acknowledged the settlement of the dispute under the Vivad Se Vishwas scheme. The tribunal, therefore, dismissed the Revenue’s appeal, as the issue had been resolved.

Caveat for Potential Reinstatement

The tribunal’s order included a specific caveat. The order stated that if the dispute relating to the tax arrears for the assessment year 2013-14 was not ultimately resolved under the Vivad Se Vishwas scheme, the Revenue would have the liberty to approach the tribunal for the reinstitution of the appeal. This safeguard ensured that the rights of the Revenue were preserved, even as the case was treated as dismissed.

Conclusion

The decision of Satellite Finance Pvt. Ltd. to opt for the Vivad Se Vishwas scheme highlights the utility of the scheme in resolving tax disputes without the need for prolonged litigation. By settling the tax dues for the assessment year 2013-14, the company was able to close the matter efficiently, reducing the administrative and financial burden associated with ongoing litigation.

The ITAT’s order emphasized the importance of government initiatives like the Vivad Se Vishwas scheme in streamlining tax dispute resolution. By offering a structured and incentivized mechanism for resolving disputes, the scheme has successfully reduced the caseload of appellate forums like the ITAT, allowing them to focus on more contentious issues.

The inclusion of a caveat in the tribunal’s order demonstrates a balanced approach, ensuring that both the taxpayer and the Revenue have their rights protected. If the settlement under the scheme does not reach its final conclusion, the Revenue retains the option to reinstate the appeal, ensuring that justice is not compromised.

In summary, the case of DCIT Circle-22(2) vs. Satellite Finance Pvt. Ltd. underscores the effectiveness of the Vivad Se Vishwas scheme in promoting voluntary compliance and reducing litigation. As more taxpayers opt for such schemes, the tax administration system in India is likely to become more efficient, benefiting both taxpayers and the government.

DCIT Circle-22(2) vs. Satellite Finance Pvt. Ltd.: Resolution under Vivad Se Vishwas Scheme for AY 2013-14