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Section 10 and 11 of the DTVSV Act is not to be independent of directions: Bombay High Court

When the circulars are issued exercising powers under sections 10 and 11 of DTVSV Act, directions are supposed to aid and smoothen bringing into operation provisions and execution of the actions based thereon. A division bench of SUNIL P. DESHMUKH & ABHAY AHUJA, JJ., while adjudicating the matter in Chandrakant Narayan Patkar v. Union of India; [WRIT PETITION (L) NO.5956 OF 2021], dealt with the issue of Income Tax.

The petitioner’s case is that it is a registered charitable trust. It had filed return of income for financial year 2009-10 – assessment year 2010-11, belatedly disclosing income to be ‘Nil’. Subsequently, an intimation/computation sheet purporting to be under section 143(1) of the Income Tax Act, 1961 ( IT Act ) had been received at its end on 22nd December, 2012, determining income of Rs.69,36,357/- and total tax liability to the tune of Rs.19,84,908/- with interest thereon totalling to Rs.31,83,240/-. It has been referred to by the petitioner that while preparing the return of income, audit report in Form No.10B was also prepared but the same remained to be filed along with the return of income. According to petitioner, there have been no reasons coming forth as to why the exemption under section 11 of the Act was disallowed or the adjustments could not have been made in the intimation under section 143(1)(a) of the IT Act. Against aforesaid intimation, the petitioner preferred an appeal with the Commissioner of Income Tax (Appeals)-1, Mumbai ( CIT-A ) in November, 2018. The appeal was dismissed on 31st January, 2020 on the ground of filing of the return belatedly.

The learned counsel for the petitioner stated that the scheme of the DTVSV Act covers the Petitioner’s case and the Petitioner had accordingly applied pursuant to the provisions of the DTVSV Act and the rules and submitted Form No.1, giving requisite details referring to that time limit to file appeal before ITAT had not expired and also referring to amount payable under the scheme was Rs. 17,55,984/- and out of which, an amount of Rs. 16,79,770/- had already been paid and as such, net amount payable under the scheme of the DTVSV Act is Rs. 76,240/-. He emphasises that the scheme of the DTVSV Act does not make any distinction in adjustments under the clauses or sub clauses of section 143 of the IT Act. There is no such reference in the enactment.

The Court upon considering the aforesaid facts allowed the petition and stated that; “The situation thus emerges that answer to question No. 71 in the circular No. 21 of 2020 tends overreach the purpose and intendment underlying the provisions of the Act and the Rules and purports to exclude an otherwise eligible assessee on a ground and reason neither contained in nor reflected from the scheme. The circular is manifestly divorced from the object and purpose of DTVSV scheme. The answer to question no.71 purporting to exclude appeals against the orders under section 143(1)(a)(i) or (ii) is unsustainable and unacceptable.”

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