MARUTHI BABURAO JADHAV vs. DESIGNATED AUTHORITY UNDER THE DIRECT TAXES VIVAD SE VISHWAS ACT, 2020

WP(C)/29818/2021HC KeralaKLHC01073775202101 March 2023Author: HONOURABLE MR. JUSTICE T.R.RAVI7 pages
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What were the facts?

The petitioner, an assessee under the Income Tax Act, 1961, had cash amounting to Rs.6,30,94,750/- seized from him during the financial years 2015-2016, 2016-2017, and 2017-2018. Subsequently, tax was assessed on this seized cash. The petitioner sought to avail the benefit of the Direct Taxes Vivad se Vishwas Act, 2020. The respondents deemed him eligible, issuing certificates (Exts.P11, P12, P13) indicating a total payable amount of Rs.1,15,79,181/- under the scheme. The petitioner requested that this liability be adjusted against the seized cash, but the respondents refused. This led the petitioner to approach the High Court.

What did the High Court hold?

The High Court held that the respondents were not entitled to refuse the adjustment of the amounts payable under the Direct Taxes Vivad se Vishwas Act, 2020, against the cash seized from the petitioner. The Court reasoned that the department's own case was that even cash seized from other individuals actually belonged to the petitioner. Therefore, a different yardstick could not be applied for adjustment. The Court also noted the affidavits from the individuals confirming the cash belonged to the petitioner. The Court found no justification for the department's stand. The writ petition was allowed with a direction to the 3rd respondent to adjust the amounts payable under the Vivad se Vishwas Act from the seized cash and pass orders on the rectification application (Ext.P14), issuing rectified certificates under Section 5 of the Act for the assessment years 2001-2002, 2016-2017, and 2017-2018. The adjustment was to be in accordance with the rectified certificates, with necessary action to be completed within three months.

What were the issues?

1. Whether the respondents are justified in refusing to adjust the amounts payable by the petitioner under the Direct Taxes Vivad se Vishwas Act, 2020, against the cash seized from the petitioner, when the department itself claims the cash seized from others belongs to the petitioner? Assessee's Contention: The petitioner argued that the respondents should permit the adjustment of the Vivad se Vishwas liabilities from the seized cash. The petitioner also submitted affidavits from individuals from whom cash was seized, stating it belonged to the petitioner, reinforcing the department's own stance that the cash, even if seized from others, was attributable to the petitioner. Revenue's Contention: The respondents stated in their counter-affidavit that adjustment could only be made against cash seized directly from the petitioner. They noted that the cash in question was seized not only from the petitioner but also from certain other individuals, details of which were provided.

Which sections of the Income-tax Act were involved?

Section 5

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IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE T.R.RAVI WEDNE AY, THE 1ST DAY OF MARCH 2023 / 10TH PHALGUNA, 1944 WP(C) NO. 29818 OF 2021 PETITIONER: MARUTHI BABURAO JADHAV DHANALAKSHMI NIVAS, NEAR AARADHANA QUARTERS, PERINTHALMANNA, MALAPPURAM DISTRICT, PIN - 679 322. BY ADVS. LATHA ANAND BHARATH MURALI M.N.RADHAKRISHNA MENON K.R.PRAMOTH KUMAR S.VISHNU (ARIKKATTIL) RADHAKRISHNA PILLAI B SIDHARTH P.S. ARJUN VARMA RESPONDENTS: 1 DESIGNATED AUTHORITY UNDER THE DIRECT TAXES VIVAD SE VISHWAS ACT, 2020 (PRINCIPAL COMMISSIONER OF INCOME TAX - CENTRAL, KOCHI), OFFICE OF THE PRINCIPAL COMMISSIONER OF INCOME TAX - CENTRAL, 5TH FLOOR, KANDAMKULATHY TOWERS, M.G.ROAD, KOCHI, PIN - 682 011. 2 THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, AAYAKAR BHAVAN (NORTH BLOCK), MANANCHIRA, KOZHIKODE - 673 001. 3 PRINCIPAL COMMISSIONER OF INCOME TAX KOZHIKODE, AAYAKAR BHAVAN, MANANCHIRA, KOZHIKODE, PIN- 673 001. 4 PRINCIPAL COMMISSIONER OF INCOME TAX THRISSUR, AAYAKAR BHAVAN, SAKTHAN THAMPURAN NAGAR, MUNICIPAL OFFICE ROAD, THRISSUR, PIN - 680 001. BY ADVS. P.K.RAVINDRANATHA MENON (SR.) JOSE JOSEPH, SC, FOR INCOME TAX

WP(C) NO. 29818 OF 2021 2 THI

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