REC Ltd vs DCIT – Appeal Withdrawal under Vivad Se Vishwas Scheme – ITA No. 6270/DEL/2019 (Assessment Year 2014-15)

Case Analysis: REC Ltd (Formerly Rural Electrification Corporation Ltd) vs DCIT – ITA No. 6270/DEL/2019

Case Number: ITA 6270/DEL/2019

Appellant: REC Ltd (Formerly Known As Rural Electrification Corporation Ltd.), New Delhi

Respondent: DCIT Circle-1, LTU, New Delhi

Assessment Year: 2014-15

Order Type: Final Tribunal Order

Date of Order: 19th February 2021

Case Filed On: 24th July 2019

Bench: Shri R.K. Panda, Accountant Member, and Shri K.N. Chary, Judicial Member

Introduction

The case of REC Ltd (Formerly Known As Rural Electrification Corporation Ltd) vs DCIT (ITA No. 6270/DEL/2019) pertains to the assessment year 2014-15. The appeal was filed by REC Ltd challenging the assessment order passed by the Deputy Commissioner of Income Tax (DCIT), Circle-1, Large Taxpayer Unit (LTU), New Delhi. However, the appellant subsequently opted to settle the dispute under the Vivad Se Vishwas Scheme 2020, leading to the withdrawal of the appeal. This analysis covers the background of the case, the reasons for filing the appeal, and the circumstances that led to its withdrawal.

Background of the Case

REC Ltd, a prominent public sector undertaking in India, was assessed for the financial year 2014-15. During the assessment, the DCIT, Circle-1, LTU, New Delhi, raised certain tax demands that REC Ltd disputed. Consequently, REC Ltd filed an appeal against the assessment order before the Income Tax Appellate Tribunal (ITAT) Delhi, seeking relief from the demands imposed.

The appeal was registered under ITA No. 6270/DEL/2019 and was set for hearing before the tribunal. However, before the hearing could take place, the Government of India introduced the Vivad Se Vishwas Scheme 2020, which provided a new avenue for taxpayers to settle their disputes amicably.

Why the Case Was Filed

The primary reason for filing the appeal was to contest the tax liabilities assessed by the DCIT, Circle-1, LTU, New Delhi, for the assessment year 2014-15. REC Ltd disputed the additions and adjustments made by the assessing officer, which led to a higher tax demand than what the company deemed appropriate. The appeal aimed to challenge the perceived discrepancies in the assessment and to seek a reduction in the tax burden imposed.

The company believed that the assessment was not in accordance with the applicable provisions of the Income Tax Act, 1961, and thus approached the ITAT for redressal. The appeal was a strategic step to mitigate the financial impact of the disputed tax demand.

The Vivad Se Vishwas Scheme, 2020

The Vivad Se Vishwas Scheme, introduced in 2020, was a landmark initiative by the Government of India aimed at resolving long-standing tax disputes. The scheme allowed taxpayers to settle their disputes by paying the principal tax amount while waiving off interest, penalties, and prosecution. This initiative was part of the government’s broader strategy to reduce litigation and enhance tax compliance.

Given the potential benefits of the Vivad Se Vishwas Scheme, REC Ltd decided to opt for this scheme to resolve their tax dispute for the assessment year 2014-15. The decision was influenced by the desire to avoid prolonged litigation and to take advantage of the concessions offered under the scheme.

Proceedings at the ITAT

The appeal was scheduled for hearing on 19th February 2021 before the ITAT Delhi Bench ‘F’. The bench consisted of Shri R.K. Panda, Accountant Member, and Shri K.N. Chary, Judicial Member. On the scheduled date, the learned counsel for the appellant informed the tribunal that REC Ltd had opted to settle the tax dispute under the Vivad Se Vishwas Scheme 2020.

A letter dated 15th February 2021 was submitted by the appellant’s counsel, requesting the withdrawal of the appeal. The letter also mentioned that a certificate under Section 5(1) of The Direct Tax Vivad Se Vishwas Act, 2020, had been filed, confirming the settlement of the dispute under the scheme.

The learned Senior Departmental Representative (DR), Shri M. Baranwal, raised no objections to the withdrawal request. The tribunal, after considering the request and the absence of any objections from the revenue’s side, accepted the appellant’s request for withdrawal.

Tribunal’s Findings and Conclusion

The ITAT noted that REC Ltd had chosen to settle the dispute under the Vivad Se Vishwas Scheme 2020, and a certificate to that effect had been submitted. Given the circumstances, the tribunal found no reason to continue with the appeal and decided to dismiss it as withdrawn.

In the final order, the tribunal dismissed the appeal as withdrawn. The decision was announced on the same day, 19th February 2021, during the virtual hearing. The tribunal’s decision was straightforward, recognizing the appellant’s decision to utilize the Vivad Se Vishwas Scheme as an effective means to resolve the dispute.

Significance of the Decision

The decision to withdraw the appeal under the Vivad Se Vishwas Scheme highlights the scheme’s effectiveness in providing a quick and amicable resolution to tax disputes. For REC Ltd, opting for the scheme allowed them to settle the tax arrears without engaging in prolonged litigation, thereby saving time and resources.

The dismissal of the appeal as withdrawn underscores the ITAT’s role in facilitating the resolution of disputes under the scheme. This case serves as a significant example of how taxpayers can benefit from government initiatives aimed at reducing litigation and promoting voluntary compliance.

Final Judgment

The final judgment in the case of REC Ltd (Formerly Rural Electrification Corporation Ltd) vs DCIT (ITA No. 6270/DEL/2019) resulted in the dismissal of the appeal as withdrawn. The tribunal acknowledged the appellant’s decision to settle the matter under the Vivad Se Vishwas Scheme, bringing the dispute to a close without further litigation.

Bench: Shri R.K. Panda, Accountant Member, and Shri K.N. Chary, Judicial Member

Order Pronounced On: 19th February 2021

Result: The appeal was dismissed as withdrawn under the Vivad Se Vishwas Scheme, 2020.

REC Ltd vs DCIT – Appeal Withdrawal under Vivad Se Vishwas Scheme – ITA No. 6270/DEL/2019 (Assessment Year 2014-15)