Facts of the Case

The assessee filed an appeal against the order of the CIT(A) for Assessment Year 1993-94. During the hearing, the assessee informed the Tribunal that he had opted for settlement under the Vivad Se Vishwas Scheme, 2020 (VSVS). Forms 1 and 2 were filed, Form 3 was issued by the Department determining the payable amount, and payment was made accordingly. However, Form 5 (final settlement certificate) had not been issued due to alleged short payment.

The assessee explained that the shortfall arose because prepaid taxes (advance tax and TDS) relating to the relevant year were not reflected in the Department’s computerized records due to the earlier GIR system. The assessee requested withdrawal of the appeal and sought directions for issuance of Form 5.

Issues Involved

  1. Whether the appeal should be dismissed as withdrawn upon opting for the VSVS scheme.
  2. Whether the Department should consider issuance of Form 5 after verifying prepaid tax credits.
  3. Whether failure to grant credit for old prepaid taxes justified withholding settlement certificate.

Petitioner’s (Assessee’s) Arguments

  • The assessee had validly opted for the VSVS scheme and complied with payment requirements.
  • The apparent shortfall resulted from non-credit of prepaid taxes paid under the old GIR system.
  • Relevant records, including computation forms, evidenced such payments.
  • Non-issuance of Form 5 caused hardship despite compliance.

Respondent’s (Revenue’s) Position

The Department acknowledged that the assessee had availed the VSVS scheme and that Form 5 had not yet been issued. The matter required verification regarding tax payments and credit.

 Court Order / Findings (ITAT)

  • Since the assessee opted for the VSVS scheme, the appeal was permitted to be withdrawn.
  • Consequently, the appeal was dismissed as withdrawn.
  • Regarding issuance of Form 5, the Tribunal emphasized that tax authorities must assist taxpayers in genuine cases.
  • The Department was advised to examine the assessee’s claim regarding prepaid taxes and grant appropriate credit if found valid.

Important Clarification

  • Opting for the VSVS scheme generally requires withdrawal of pending appeals.
  • Administrative authorities must verify genuine claims of tax payments even if records are old or non-computerized.
  • CBDT Circular 14(XL-35) underscores a taxpayer-friendly approach and duty of assistance by tax officials.
  • Issuance of Form 5 depends on satisfaction of scheme conditions and verification of payments.

Link to download the order -https://itat.gov.in/public/files/upload/1643027711-378PDF.pdf

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