In this case an appeal is pending before the specified date i.e.31.01.2020 before an appellate forum and their exists ‘disputed income’, ‘disputed tax’ and ‘tax arrear’. In the circumstances it is possible to file a valid declaration under s. 4 r.w.s 2(1)(a)of the Act and the amount payable by him will be determinded as per s. 3 of the Act.

As per the First Proviso to s.3, the amount payable by the assesse shall be one-half of the amount payable as per the Table given in s. 3 which amount is Rs. 8 lakh and the assesse is required to pay 50% of Rs. 8 lakh, being Rs. 4 lakh  under the scheme for a valid settlement of the dispute. 

For settlement of the tax arrear comprising of the tax, interest and penalty, the  assesse is required to pay only the ‘disputed tax’ as per Table r.w. the First Proviso and not any interest, penalty or part thereof. The penalty order would not survive   and the demand for penalty would stand vacated.

A Declaration can be filed under S. 4 of the DTVSV Act, 2020 only in respect of the ‘tax arrear’ . In the given facts, it is gathered that the assessee is not seeking to settle any dispute relating to the disputed tax, interest or penalty and that any appeal relating thereto is pending before any appellate forum. The desire of the querist is to seek immunity form prosecution on compounding of the offence. The correct thing for him to stay on the course as he has already filed an application for compounding of offence and once it s entertained, the prosecution launched would be dropped.

Assuming that an appeal is filed by the querist and is pending  on the specified date before an appellate forum in respect of the disputed tax, interest or penalty and the querist desires to file a declaration in respect of the tax arrear arising out of such disputed amounts, the querist should look in to the provisions of S..9(1) and in particular clause(ii) which prohibits the filing of the Declaration in a case where a prosecution has been instituted on or before the date of filing the declaration relating to an assessment year in respect of the tax arrear. In our considered opinion, the institution of proceedings u/s 276B or 276BB should not disentitle an assesssee form filing the declaration for settlement of the tax arrear in as much as the said sections 276B and 276BB provide for prosecution in relation to the offences for TDS, DDT or TCS violations that are unrelated to the tax arrear of the kind that is being dealt with under the DTVVSAct.

The assessee under the DTVSVAct, 2020  is entitled to  settle his disputes in relation to the issues under question provide other conditions relating to filing of appeal in time , pendency thereof on the  specified date and the presence of tax arrear   are satisfied and he is not disentitled by S.  9 of the Act from filing a  declaration. 

Section 6 provides prohibits a designated authority from instituting any proceeding in respect fo an offence; or imposing or levying any penalty; or charging interest under the Income tax in respect of the tax arrear. Designated authority is defined by clause(e) of sub-section (1) of s. 2 to mean an officer not below the rank of the Commissioner of Income-tax. No immunity is provided u/s 6 from any proceeding under the other laws including under the PBPTA . S.8  further warns that nothing contained in the Act shall confer any benefit concession or immunity in relation to any proceedings other than those in relation to which the declaration is made. Needless to state that the declaration is made for the settlement of a dispute relating to the tax arrear and therefore the immunity is not available even under the Income tax Act  to any proceedings other than those in relation to which the declaration is made. 

Having noted the position in law, the assesse may examine the possibility to support his case under the PBPTA under sub-section(3) of s. 5 of the Act which prohibits the reopening of the matter under ‘any other law for the time being in force’. Even this immunity is restricted to cases of reopening and may not prevent an authority under the PBPTA to initiate the proceedings in future, as is feared by the assesse.

The assessee has accepted that the order was forwarded by e mail on the mailing address provided by him but he had failed to access the e mail in time . The service of an order electronically by an e-mail is a valid service as per s.282 , particularly clause( c ) of sub-section(1) and (2) and Rule 127 r.w.s 66A of the Information Technology Act. Such a servie is alo permitted under the Code of Civil Procedure, 1908. The assesse should again check whether the notice was served at the e mail address given by him and confirm the date of service. The time for filing an appeal starts running u/s 246A form the date of service of the order on the e mail address given by him. In his case even where an appeal is filed before 31.01.2020, he will not be able to seek the benefit under VSVt in as much as he will not be treated as appellant under clasue(a) of sub-section (1) of s.2 of the Act. No appeal can be said to be pending in his case  as on the specified date. 

The assesse may make an application for condonation of delay in filing the appeal to the CIT(A) and get the same waived by furnishing the reasons for delay in filing. Not accessing the email regularly can be a valid reason for an assesse who is otherwise not techno savvy. On getting the appeal admitted on condonation of delay he should be entitled to ope for the VSVt provided the appeal even if belated was filed by the specified date i.e. 231.01.2020.

The service of notice by the AO on the wrong postal address and returning of the same by the postal department can be a solid ground in ordinary circumstances and his case then would be considered as the case for which the time for filing the appeal shall be taken to have NOT been  expired in accordance with sub-clause(C) of clause(f) of sub-section(1) of section2 of the Act. In such an event, he would be well within his right to make a valid declaration u/s 4 after first filing the appeal.  

The assesse is advised to file an appeal and thereafter move an application for condonation of delay in filing the appeal and also consider the possibility of covering his case under sub-clause(C) of clause(f) of sub-section(1) of section2 of the Act as an alternative.

Clause (i) of s. 2 defined the term ‘disputed penalty’ to mean a penalty determined in any case under the provisions of the Act where such penalty is not levied in respect of disputed income or tax and an appeal has been filed in respect of such penalty. The penalties in question satisfy the requirement of being classified as the disputed penalty which therefore can be classified as tax arrear and on being so defined become eligible for settlement u/s 3 of the scheme and the assessee is entitled to file a declaration u/s 4 for the disputed penalty independent of assessment. In fact the penalty associated with the assessment gets settled under the settlement of the disputed tax itself; the settlement of the disputed penalty rather mandates that such a penalty is not levied in respect of  the disputed income or the disputed tax . 

An assessee is disentitled under clause (ii) of s.9(a) to file a declaration where a prosecution is initiated on or  before the date of declaration. On an apparent reading of the clause(ii) in isolation nto in the context one would agree with the authorities however, on a closer reading  of s.9 one would gather that it is only where the prosecution is in relation to a tax arrear relating to an assessment year that an assesseee is prohibited from opting for the scheme. In the facts of the case, the prosecution is not launched in relation to an assessment year for which the tax arrear are in dispute under the appeal before the appellate forum. The assessee is well within his rights to file a declaration under the scheme and settle the dispute and seek relief. 

The case of the assessee satisfies all the conditions of the scheme . The tax payable under the scheme by the assessee us should be reduced by one-half as per the Proviso to s.3 of the Scheme. In other words the assessee would be entitled to get a further concession in rates to the concessional  already granted by the Commissioner(Appeals).

It is not in dispute that an order of rectification was passed and such an order had the effect of determining the total income at a figure higher than the assessed income.  It is also a fact that the tax payable increased due to such an order and such tax  is well within the meaning of the tax arrear. It is also true that the assessee has filed an appeal in time to dispute the action of the AO . However, the assessee in the appeal has not contested the quantum of addition or the merit thereof but has instead challenged the power of the AO  to pass such an order.  The case of the assessee is the fit case which should be entertained for relief under scheme without being unduly technical and in case of need, the authorites should seek a   clarification to confer the benefit of the scheme to the assessee. The assessee may also explore the possibility of filing an additional ground in the appeal already filed which ground if admitted would be taken to have been filed as a part of the appeal filed by the specified date.

Clause (j) o f s. 2 defines the term ‘disputed tax’ . The proviso to the clause has the effect of expanding the scope of the disputed tax . It states that the disputed tax shall be increased by the amount of tax pertaining to the  issues for which notice of enhancement has been issued u/s 251 by the Commissioner(Appeals) before the specified date. It is clear that the law requires that a notice should not only be issued but should have been issued on or before the specified date. In the facts of the case, the assessee claims that no such notice was issued. The authorities will have to refute the charge by proving that the notice was not only issued but was issued by the specified date, failing which the assessee would be in his right to pay only such disputed tax that excludes the tax on the issue under the alleged notice of enhancement. Secondly, the courts have been holding that for a valid notice , it is essential to establish that such notice was served within the prescribed time or at least within a reasonable time. It is therefore required to establish a valid service of notice by the specified date or within a reasonable time thereafter, say first week  of the next month. 

The case of the assessee apparently satisfies the requirements of he being an appellate whose has filed a writ  that is pending before the high court on a specified date and in respect of which the tax is determined to be payable under an order passed by the Settlement Commission which is an Income tax Authority within the meaning of the term u/s 119 of the Act. The assessee should not be denied the  relief in respect of the disputed interest and penalties in payment of the disputed tax under the scheme. It is important to note that the declaration being filed is for settlement of dispute arising out of the order of the Settlement Commission. And not of the original order passed by the AO.