VOLTAIRE LEASING AND FINANCE LIMITED,MUMBAI vs. ITO WARD 13(3)(1) MUMBAI, MUMBAI

The assessee filed its return of income for the assessment year 2015-16 declaring total income of Rs. 28,88,130/-. The assessment was subsequently reopened under section 147 of the Income-tax Act, 1961 and an assessment was completed under section 147 read with section 144B of the Act, wherein the loss of Rs. 1,35,58,200/- claimed from Futures and Options transactions was treated as bogus and added to the income of the assessee. Aggrieved, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals), NFAC.

During the pendency of the appellate proceedings, the Commissioner (Appeals) noticed that Form 2 had been issued to the assessee under the Direct Tax Vivad Se Vishwas Scheme, 2024 in respect of the assessment year under consideration. On that basis, the Commissioner (Appeals) treated the appeal as having become infructuous and dismissed the same without adjudicating the grounds raised by the assessee on merits. Aggrieved by the aforesaid order, the assessee is in appeal before the Tribunal.

Through Ground No. 1, the assessee has challenged the action of the Commissioner (Appeals) in dismissing the appeal as infructuous merely on the basis of issuance of Form No. 2 for the relevant assessment year 2015-16, contending that the assessee company was interested in pursuing the appeal on merits.

We have considered the matter. The mere issuance of Form No. 2 under the Direct Tax Vivad Se Vishwas Scheme, 2024 does not, by itself, result in full and final settlement of the tax arrears. Consequent upon issuance of Form No. 2, the assessee is required to intimate payment in Form No. 3 to the Designated Authority along with proof of withdrawal of the pending appeal. Thereafter, upon issuance of Form No. 4 by the Designated Authority recording full and final settlement of the tax arrears, the proceedings attain finality. Thus, after issuance of Form No. 2, the assessee ought to have sought withdrawal of the pending appeal.

Since the entire matter is being restored to the file of the Commissioner (Appeals) for adjudication on merits, the remaining grounds of appeal do not require adjudication at this stage and are, accordingly, left open for consideration by the Commissioner (Appeals).

In the result, the appeal filed by the assessee is treated as allowed for statistical purposes.