Swatch Group (India) Pvt Ltd. vs Commissioner Of Income Tax, Appeal

5.

FINDINGS: I have considered the rectification order, assessee’s submissions, Form 35 filed by the assessee and statement of facts. In response to the notice, the assessee furnished the following submissions vide letter dated 29.09.2025.

In this regard, we wish to submit that the subject appeal was filed by the Assessee against order under section 154 of the Income-tax Act, 1961 passed by DCIT, CIRCLE 22(2), Delhi on 27 March 2019 for the Assessment Year 2012-13.

Post filing of the appeal, the Government of India enacted the Direct Tax Vivad se Vishwas Act, 2020 (“VSV Act”) to provide an opportunity to the taxpayers to end their tax disputes by paying the disputed tax and get a waiver from interest and penalties and reduce income tax litigation.

Without prejudice to the merits of the appeal filed and the fact that the Assessee firmly believes that it is entitled to relief on all the grounds of appeal filed before your goodself, the Assessee with the sole objective of ending the ongoing tax dispute has filed a declaration in prescribed Form 1 along with an undertaking in Form 2 electronically on 22 December 2020 (Copy of the Form 1 and 2 filed is enclosed as Annexure 2).

In view of the same, the company would like to withdraw the contested appeal in view of settlement of litigation under the VSV Act. Therefore, the Assessee requests your goodself to accept the request for withdrawal of the appeal. Notwithstanding the above, we submit that the withdrawal of appeal should not be construed as an acceptance of the order passed by the AO.

The assessee again submitted written submissions dated 01.10.2025 and the relevant extract of the submissions are reproduced below:

Filing of declaration: The Appellant filed a declaration in Form-1 and an undertaking in Form-2 on 22 December 2020 under the provisions of the VSV Act, covering all the aforementioned disputed issues pending before the Hon’ble ITAT and your goodself. Further, the Appellant wish to humbly bring to your Honour’s notice that while filing the said Form-1, the Appellant inadvertently reported the entire disputed income of INR 21,81,49,519 (comprising both the TP addition pending before the Hon’ble ITAT and the depreciation disallowance pending before your goodself) under the single appeal reference of the ITAT (ITA No. 871/DEL/2020). The acknowledgments for filing Form-1 and Form-2 are enclosed as Annexure 7.

5.1.

The assessee’s submissions were perused and it was seen from the documents filed, that the Form 1 filed by the assessee was in respect of only one appeal i.e. the appeal which was filed before ITAT with ITA no. 871/Del/2020. In the Form 1, there was no mention of any other appeal being settled by the assessee under VSVS. Vide order sheet entries on 01.10.2025, the assessee was again provided an opportunity to clarify the position and furnish any submissions which they would like to make in their case and the case was fixed on 08.10.2025. However, on 08.10.2025, the assessee again attended the hearing and stated that they stand by their earlier replies and no fresh clarifications with regard to the VSVS application of the present appeal was submitted.

5.2.

From the perusal of the above, it is seen that the assessee has realised its mistake that details of the appeal pending before the CIT(A) was not mentioned in the Form 1 of the VSVS and as the same was not part of the VSVS Form, the same could not be settled under VSVS. Further, even in the Form 5 issued by the Department the details of the appeal settled is clearly mentioned. For ready reference, the relevant extract of the Form 5 is reproduced below:

Thus, from the perusal of the above, it is crystal clear that the assessee applied for settlement of only one appeal which is pending before ITAT i.e. ITA no. 817/Del/2020 and that appeal was duly settled through Form 5, issued by the Pr. CIT-07, New Delhi dated 06.09.2021. Thus, the assessee's contention of having settled the present appeal in VSVS is not in accordance with the Form 1 and Form 5 of VSVS and as the contention, being baseless and incorrect, is rejected.

5.3.

It is further submitted that inspite of opportunities given; the assessee has not made any submissions on merits. From the AO's order, it is seen that the assessee has claimed excess depreciation of Rs. 55,34,929/- and which has resulted in under statement of income. When the same was brought to the notice to the assessee, vide notice u/s. 154, the assessee has furnished the following submissions before AO:

"However, the tax auditor inadvertently missed to include the same amount in the block of assets and corresponding depreciation in the Tax Audit Report (TAR) for the subject year."

From above, it is clear that the assessee had surrendered the mistake and the necessary rectification is being made as per the provisions of Income Tax Act, 1961.

From the perusal of the rectification order of the AO and the submissions filed by the assessee, it is crystal clear that the assessee has wrongly claimed the excess depreciation of Rs. 55,34,929/- and the same was allowed inadvertently by the AO. In the 3CD report, it has been clearly mentioned that depreciation amounting to Rs. 1,02,87,076/- was allowable to the assessee as per the IT Act but it claimed depreciation of Rs. 1,58,22,007/-. The assessee in its reply has accepted its mistake and accordingly, the excess depreciation allowed of Rs. 55,34,929/- and duly rectified by the order u/s. 154 of the IT Act, is hereby confirmed and the assessee's appeal is dismissed.

6.

In the result, the appeal of the assessee is dismissed.