Assessee Can Confine Settlement of Dispute to One Issue; Revenue Can’t Compel Settlement of Other Issues | HC

Case Details: Rose Wood Buildwell (P.) Ltd. vs. Pr. Commissioner of Income-tax-7 - [2024] 169 taxmann.com 414 (Delhi)

Judiciary and Counsel Details

• Vibhu Bakhru & Ms Swarana Kanta Sharma, JJ.
• Sumit Lalchandani & Tarun Chanana, Advs. for the Petitioner.
• Indruj Singh Rai, Sanjeev Menon, Rahul Singh & Anmol Jagga, Advs. for the Respondent.

Facts of the Case

Assessee-company, engaged in real estate business, had filed its return of income, which was selected for scrutiny and an assessment order was passed making certain additions. The assessee filed an appeal before the Commissioner (Appeals), who partly allowed the assessee’s appeal.

Both assessee and revenue preferred their respective appeals before the Tribunal. The tribunal allowed the assessee’s appeal but did not accede to the revenue’s appeal. In the meantime, the assessee filed a declaration under section 3 of the Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV Act) in respect of its appeal, which was confined to only one issue regarding the disallowance of loss claimed by it in respect of trading in derivatives.

However, the Commissioner issued the certificate under the DTVSV Act, with modification and included the settlement of certain disputes that were not the subject matter of the declaration made by the assessee. The matter reached before the Delhi High Court.

High Court Held

The Delhi High Court held that the assessee had filed a declaration in respect of its appeal. The disputed tax paid is confined to the tax, interest and penalty payable in respect of the loss in derivatives which was the subject matter of appeal. The fact that the revenue had preferred a consolidated appeal against the order passed, and its appeal would not detract from the fact that revenue’s appeal to this Court was in respect of an order relatable to two separate appeals.

The issues involved in the two appeals are not interlinked. The dispute, the subject matter of appeal and revenue’s appeal, was confined to deleting addition under section 68. The assessee’s declaration does not concern the dispute as it was confined to the order passed by the Tribunal regarding its appeal.

Accordingly, the petition is allowed, and the certificate issued by the designated authority in Form No. 3 is directed to be confined to the declaration made by the assessee. The respondents are accordingly directed to take steps to issue a modified certificate under section 5(1) of the DTVSV Act.

List of Cases Reviewed

• MUFG Bank Ltd. v. Commissioner of Income Tax 2 & Anr. Neutral Citation No. 2022/DHC/005159 (Para 27) followed.