Vertel Infotel Pvt Ltd vs ITO – Appeal Withdrawal under Vivad Se Vishwas Scheme – ITA No. 6272/DEL/2019 (Assessment Year 2013-14)

Case Analysis: Vertel Infotel Pvt Ltd vs ITO – ITA No. 6272/DEL/2019

Case Number: ITA 6272/DEL/2019

Appellant: Vertel Infotel Pvt Ltd, New Delhi

Respondent: ITO Ward-78(3), New Delhi

Assessment Year: 2013-14

Order Type: Final Tribunal Order

Date of Order: 21st May 2021

Case Filed On: 24th July 2019

Bench: Shri G. S. Pannu, Vice President, and Shri Sudhanshu Srivastava, Judicial Member

Introduction

The case of Vertel Infotel Pvt Ltd vs ITO (ITA No. 6272/DEL/2019) revolves around a tax dispute related to the assessment year 2013-14. Vertel Infotel Pvt Ltd, a company based in New Delhi, had filed an appeal against the order passed by the Income Tax Officer (ITO), Ward-78(3), New Delhi. The appeal was filed before the Income Tax Appellate Tribunal (ITAT) to contest the tax liabilities imposed by the ITO. However, before the case could proceed to a detailed hearing, the appellant chose to resolve the dispute under the Vivad Se Vishwas Scheme 2020, leading to the withdrawal of the appeal.

Background of the Case

Vertel Infotel Pvt Ltd, a company engaged in the telecom sector, was assessed for the financial year 2013-14. During the assessment, the ITO raised certain demands that Vertel Infotel Pvt Ltd found to be excessive and unjustified. The company believed that the assessment order was not in accordance with the provisions of the Income Tax Act, 1961, and therefore, decided to file an appeal against the order.

The appeal, registered under ITA No. 6272/DEL/2019, sought to challenge the additions made by the ITO and to seek relief from the tax liabilities imposed. The appeal was directed to the ITAT Delhi Bench for adjudication. However, during the pendency of the appeal, the Indian government introduced the Vivad Se Vishwas Scheme 2020, providing an alternative avenue for dispute resolution.

Reason for Filing the Case

The appeal was filed by Vertel Infotel Pvt Ltd to contest the tax demands raised by the ITO for the assessment year 2013-14. The company was of the view that the ITO had incorrectly assessed its income, leading to an inflated tax liability. The primary reasons for the appeal included the following:

• Discrepancies in Assessment: Vertel Infotel Pvt Ltd contended that the ITO had made errors in calculating the taxable income, resulting in an unjustified tax demand.
• Disallowance of Deductions: The company argued that certain legitimate deductions claimed during the assessment year were disallowed by the ITO without proper justification.
• Penalty and Interest: The ITO had imposed penalties and interest on the additional tax demand, which the company believed were not warranted under the circumstances.

The appeal was intended to address these issues and to seek relief from the ITAT by overturning the ITO’s assessment order.

The Vivad Se Vishwas Scheme, 2020

The Vivad Se Vishwas Scheme 2020 was introduced by the Indian government as a measure to reduce litigation in direct taxes. The scheme allowed taxpayers to settle their disputes by paying the principal tax amount while waiving off penalties, interest, and prosecution. The objective was to provide a quick and amicable resolution to long-standing tax disputes, thus reducing the burden on both taxpayers and the judiciary.

Given the benefits of the scheme, Vertel Infotel Pvt Ltd opted to settle its dispute with the tax authorities under the Vivad Se Vishwas Scheme. This decision was driven by the desire to avoid prolonged litigation and to resolve the matter expediently, taking advantage of the concessions offered by the government.

Proceedings at the ITAT

The appeal was scheduled for hearing on 21st May 2021 before the ITAT Delhi Bench ‘Friday’. The bench was composed of Shri G. S. Pannu, Vice President, and Shri Sudhanshu Srivastava, Judicial Member. On the date of the hearing, the authorized representative of Vertel Infotel Pvt Ltd informed the tribunal that the company had opted to resolve the dispute under the Vivad Se Vishwas Scheme 2020.

The authorized representative submitted a written communication requesting the withdrawal of the appeal, citing the company’s decision to settle the dispute under the scheme. A declaration in accordance with Section 4 of The Direct Tax Vivad Se Vishwas Act, 2020, had been filed by the company, confirming its intention to settle the dispute.

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

Tribunal’s Findings and Conclusion

The ITAT noted that Vertel Infotel Pvt Ltd had chosen to settle the dispute under the Vivad Se Vishwas Scheme 2020. Given that the necessary declaration under Section 4 of the Act had been filed, and there were no objections from the revenue authorities, the tribunal found it appropriate to dismiss the appeal as withdrawn.

However, the tribunal added a caveat to its decision. It noted that in case the dispute relating to the tax arrears for the assessment year 2013-14 was not ultimately resolved under the Vivad Se Vishwas Scheme, the appellant would have the liberty to approach the tribunal for reinstitution of the appeal. The tribunal assured that such an application would be considered appropriately as per law. This caveat ensured that Vertel Infotel Pvt Ltd retained the right to seek legal recourse if the settlement under the scheme did not materialize as expected.

In the final order, the tribunal dismissed the appeal as withdrawn, subject to the aforementioned caveat. The decision was announced on the same day, 21st May 2021, during the virtual hearing.

Significance of the Decision

The decision to withdraw the appeal under the Vivad Se Vishwas Scheme 2020 underscores the scheme’s effectiveness in resolving tax disputes swiftly and amicably. For Vertel Infotel Pvt Ltd, opting for the scheme allowed them to settle their tax dispute without engaging in further litigation, thereby saving time and resources.

The tribunal’s decision to include a caveat allowing the appellant to reinstate the appeal if the settlement under the scheme did not proceed as expected also highlights the ITAT’s commitment to ensuring justice and fairness. This case serves as a significant example of how the Vivad Se Vishwas Scheme can be an effective tool for taxpayers looking to resolve disputes without protracted legal battles.

Final Judgment

The final judgment in the case of Vertel Infotel Pvt Ltd vs ITO (ITA No. 6272/DEL/2019) resulted in the dismissal of the appeal as withdrawn. The tribunal acknowledged the appellant’s decision to utilize the Vivad Se Vishwas Scheme to settle the matter, thereby bringing the dispute to a close without further litigation.

Bench: Shri G. S. Pannu, Vice President, and Shri Sudhanshu Srivastava, Judicial Member

Order Pronounced On: 21st May 2021

Result: The appeal was dismissed as withdrawn under the Vivad Se Vishwas Scheme, 2020, with a caveat allowing for potential reinstitution.

Vertel Infotel Pvt Ltd vs ITO – Appeal Withdrawal under Vivad Se Vishwas Scheme – ITA No. 6272/DEL/2019 (Assessment Year 2013-14)