Diamond Builders Pvt. Ltd. vs ITO – Settlement Under Vivad Se Vishwas Scheme for AY 2001-02

Case Summary: Diamond Builders Pvt. Ltd. vs ITO – AY 2001-02

This article provides a detailed overview of the case between Diamond Builders Pvt. Ltd. and the Income Tax Officer, Ward-10(3), New Delhi, heard by the Income Tax Appellate Tribunal (ITAT) Delhi. The case, under case number ITA 6699/DEL/2019, pertains to the assessment year 2001-02 and was decided on December 22, 2020.

Background and Reason for Filing the Case

Diamond Builders Pvt. Ltd., a construction company based in Delhi, had filed its return of income for the assessment year 2001-02. The case was selected for scrutiny, and the assessment was completed under Section 143(3) read with Section 147 of the Income Tax Act, 1961. During the assessment, certain additions were made by the Assessing Officer (AO), which were subsequently challenged by the assessee before the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) upheld the additions, leading to the filing of an appeal before the ITAT.

The appellant also faced a penalty under Section 271(1)(c) of the Income Tax Act, corresponding to the assessment made under Section 143(3) read with Section 147. This penalty was also contested by the appellant, leading to a separate appeal before the ITAT under case number ITA 2719/DEL/2019.

Why the Case Was Filed

The appeals were primarily filed to contest the quantum additions made by the AO during the reassessment and the subsequent penalty imposed. The appellant argued that the additions were unwarranted and that the penalty under Section 271(1)(c) was incorrectly levied.

Proceedings Before the ITAT

The appeals were heard by a bench comprising Shri G.S. Pannu, Vice President, and Shri Sudhanshu Srivastava, Judicial Member, through video conferencing due to the COVID-19 pandemic.

Appellant’s Position and the Vivad Se Vishwas Scheme

During the proceedings, the learned counsel for the appellant, Shri J.P. Sharma, informed the Tribunal that the assessee had opted to settle the tax disputes for the assessment year 2001-02 under the Vivad Se Vishwas Scheme, 2020. This scheme, introduced by the Government of India, allows taxpayers to resolve their pending tax disputes by paying a percentage of the disputed tax amount, thereby avoiding prolonged litigation.

The counsel requested the Tribunal to withdraw the appeals in light of the settlement under the Vivad Se Vishwas Scheme. The Tribunal noted the request and proceeded to consider the matter.

Revenue’s Response

The Departmental Representative (DR), Shri M. Baranwal, raised no objection to the withdrawal of the appeals, acknowledging the appellant’s decision to opt for the settlement scheme.

ITAT’s Decision and Conclusion

The ITAT, after considering the appellant’s request and the absence of any objections from the Revenue, decided to dismiss the appeals as withdrawn. The Tribunal noted that the appeals were being consigned to records and treated as dismissed for statistical purposes.

Caveat by the Tribunal

While dismissing the appeals, the ITAT included a crucial caveat: If the dispute related to the tax arrears for the assessment year 2001-02 is not ultimately resolved under the Vivad Se Vishwas Scheme, the appellant would have the liberty to approach the Tribunal for reinstitution of the appeals. The Tribunal assured that any such application would be considered appropriately as per law.

The appeals, therefore, were dismissed with the understanding that they could be reopened if the settlement under the Vivad Se Vishwas Scheme did not conclude successfully.

Implications of the Decision

This case highlights the significance of the Vivad Se Vishwas Scheme as an effective tool for resolving pending tax disputes. By opting for the scheme, Diamond Builders Pvt. Ltd. chose a path of certainty, potentially avoiding the uncertainties and delays associated with prolonged litigation.

For taxpayers, this decision underscores the benefits of utilizing government schemes designed to expedite dispute resolution and bring finality to tax matters. The ITAT’s willingness to dismiss the appeals with a provision for reinstitution provides a safety net for taxpayers, ensuring that they are not left without recourse if the settlement process under the scheme does not reach its intended conclusion.

Conclusion

In summary, the ITAT Delhi’s decision in the case of Diamond Builders Pvt. Ltd. vs ITO, Ward-10(3), New Delhi represents a strategic move by the appellant to resolve its tax dispute under the Vivad Se Vishwas Scheme. The dismissal of the appeals allows the company to settle its tax arrears for AY 2001-02 and move forward with greater financial certainty.

The Tribunal’s inclusion of a caveat ensures that the appellant’s rights are preserved should the settlement not materialize, providing a balanced and fair outcome for all parties involved.

Diamond Builders Pvt. Ltd. vs ITO – Settlement Under Vivad Se Vishwas Scheme for AY 2001-02