Delhi HC Insights on Vivad Se Vishwas Scheme 2024

On December 23, 2024, the Delhi High Court passed a significant order in Anant Vir Jain vs. Principal Chief Commissioner of Income Tax, highlighting conflicts between FAQ No. 30 of Circular No. 12/2024 (issued by the CBDT) and the Direct Tax Vivad Se Vishwas (DTVSV) Scheme, 2024. This blog explores the key aspects of the case, the court’s observations, and its implications.

What is the Vivad Se Vishwas Scheme (DTVSV), 2024?

The DTVSV Scheme, 2024 was introduced under the Finance Act, 2024, to facilitate the settlement of pending income tax disputes. Key objectives include:

• Simplifying Tax Litigation: Resolving long-standing disputes between taxpayers and authorities.
• Encouraging Voluntary Compliance: Offering taxpayers an opportunity to settle tax arrears at concessional rates.
• Enhancing Revenue: Promoting early recovery of disputed taxes without prolonged litigation.

Under the scheme:

• Eligible Disputes: Includes appeals, writs, or objections pending before appellate forums (High Courts, Supreme Court, ITAT, etc.) as of the specified date (July 22, 2024).
• Tax Arrear Resolution: Covers disputed tax, interest, penalty, and fee components.

Case Background

The petitioner, Anant Vir Jain, sought settlement of disputes under the DTVSV Scheme for Assessment Year 2013-14. His declaration in Form-1 was rejected based on FAQ No. 30 of Circular No. 12/2024, which states that disputes involving stayed assessment orders are ineligible under the scheme.

Key Facts:

• Reassessment Proceedings: Initiated under Section 148 of the Income Tax Act, 1961, for AY 2013-14.
• Pending Litigation: The petitioner challenged reassessment notices and the subsequent assessment order in multiple writ petitions.
• Stay of Enforcement: The Delhi High Court stayed the enforceability of the assessment order, pending resolution of the writ.

High Court’s Observations

Conflict with Statutory Provisions:

• Section 89(1)(a) of the Finance Act, 2024: Defines "appellant" to include taxpayers with appeals or writs pending on July 22, 2024.
• The court observed that the petitioner qualified as an "appellant" and the disputed amount fell under the definition of "tax arrear."
• FAQ No. 30: Restricting eligibility for stayed assessment orders was deemed inconsistent with the express provisions of the Finance Act.

Prima Facie Inconsistency:

The court noted that FAQ No. 30 of Circular No. 12/2024 "militates against" the scheme’s express provisions, as the Finance Act does not explicitly exclude stayed assessment orders from the scheme.

Processing of Declaration:

• The court directed the Revenue to process the petitioner’s declaration as eligible under the DTVSV Scheme.
• Any certificate issued under the scheme would be subject to the final outcome of the case.

Implications of the Judgment

For Taxpayers:

Expanded Eligibility:

• Taxpayers with stayed assessment orders may now contest rejections of their declarations under the DTVSV Scheme.

Precedent for Challenges:

• The ruling opens the door for challenging FAQs or circulars that contradict statutory provisions.

For the CBDT and Revenue Authorities:

Revisiting FAQs:

• The judgment highlights the need for the CBDT to ensure alignment of FAQs and circulars with the enabling legislation.

Clearer Guidelines:

• Authorities must provide transparent and consistent interpretations of the scheme to avoid legal disputes.

For the Legal Framework:

Reinforcing Judicial Oversight:

• The case emphasizes the judiciary’s role in ensuring administrative interpretations do not override legislative intent.

Strengthening Scheme Integrity:

• This judgment affirms the scheme’s intent to include all taxpayers with pending disputes, fostering trust in tax dispute resolution mechanisms.

How to Navigate the Scheme Post-Judgment?

Taxpayers with Stayed Orders:

• Review the eligibility criteria and challenge rejections based on inconsistent FAQs or circulars.
• File necessary declarations within prescribed deadlines.

For Legal Practitioners:

• Leverage this judgment to advocate for clients whose declarations have been rejected under similar circumstances.
• Highlight inconsistencies in administrative interpretations to ensure fair application of the law.

For Revenue Officials:

• Reassess cases involving stayed orders and process eligible declarations in accordance with statutory provisions.

Conclusion

The Delhi High Court’s ruling in Anant Vir Jain vs. Principal Chief Commissioner of Income Tax underscores the primacy of statutory provisions over administrative interpretations. By directing the Revenue to process declarations under the Vivad Se Vishwas Scheme, 2024, the court ensures that taxpayers are not unfairly excluded due to inconsistent FAQs. This judgment sets a significant precedent for balancing administrative discretion with legislative intent, promoting fairness in tax dispute resolution.