The Delhi High Court (‘HC’) has directed Central Board of Direct Taxes (‘CBDT’)/ Indian tax department to consider applying the Direct Tax Vivad Se Vishwas (‘DTVSV’) Scheme to taxpayers whose appeal filing deadline has not yet expired.

Brief background

• The petitioner filed a petition challenging the constitutional validity of DTVSV Scheme, 2024 specifically Section 89(1)(a) of the Finance (No.2) Act, 2024, which limits the definition of an “appellant” to a person who has filed an appeal, writ petition or special leave petition either by themselves or by the Income Tax Authorities.
• The petitioner argues that the current definition excludes individuals who intend to file an appeal but whose filing deadline has not yet expired, creating a distinction between taxpayers who have filed an appeal and those who are still within the filing period.
• The petitioner points out that this is inconsistent with Section 2(1)(a) of the DTVSV Act, 2020, which allows persons in the process of filing an appeal to be included in the scheme.

HC’s observations

• The HC finds it difficult to accept that differentiating between taxpayers on the basis whether they have filed an appeal before the specified date or thereafter could be dispositive of the taxpayer’s right to claim benefit under the DTVSV Scheme, 2024.
• HC also noted that in respect of the Finance Act, 2020 the tax authorities had issued a comprehensive circular to clarify that a case where an appeal is not filed but the time for filing the same has not expired would also be included in the scheme.

Direction from HC to tax department

• The HC has directed the tax authorities to consider issuing a circular to clarify the anomaly pointed out by the petitioner.
• Considering December 31, 2024 has been fixed as a cut-off date for availing the maximum benefit, the HC has requested the tax authorities to issue a circular, preferably within a period of two weeks.