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2022 (11) TMI 26 - HC - Income TaxEligibility of settlement under the VSV Act - appeal filed against the assessment order under Section 143(3) is pending - petitioner challenging the action in partially settling dispute relating to penalty for Assessment Year 2014-15 pending before ITAT under the Vivad Se Vishwas Scheme without settling the dispute relating to quantum appeal for Assessment Year 2014-15 pending before CIT(A) - HELD THAT:- In the opinion of this Court, when a section contemplates pendency of an appeal, what is required is that an appeal should be pending and in such a case there is no need to introduce the qualification that it should be valid or competent. In Raja Kulkarni v. The State of Bombay [1953 (11) TMI 17 - SUPREME COURT] the Supreme Court has held that “whether an appeal is valid or competent is a question entirely for the appellate court before whom the appeal is filed to decide and this determination is possible only after the appeal is heard but there is nothing to prevent a party from filing an appeal which may ultimately be found to be incompetent, e.g. when it is held to be barred by limitation. From the mere fact that such an appeal is held to be unmaintainable on any ground whatsoever, it does not follow that there was no appeal pending before the Court”. To the same effect is the law laid down by the judgments of the Supreme Court in the cases of Tirupati Balaji Developers (P) Ltd. v. State of Bihar & Ors.[2004 (4) TMI 575 - SUPREME COURT] and Commr. of Income Tax, Rajkot Versus Shatrusailya Digvijaysingh Jadeja, [2005 (9) TMI 362 - SUPREME COURT] - In the said cases, it has been held that an appeal does not cease to be an appeal though irregular and incompetent. Though Section 10 of the VSV Act gives power to the CBDT to issue directions, yet this Court is of the view that the said Section is similar to Section 119 of the Act, 1961. Consequently, the CBDT under Section 10 of VSV Act cannot issue circulars adverse to the assessee. It is also settled law that when the Supreme Court or High Court declare the law on a question arising for consideration, then the view expressed by the Supreme Court or the High Court has to be given effect to and not the circular issued by the CBDT - Consequently, the FAQ No.59 of Circular No.21/2020 dated 4th December, 2020 issued by CBDT to the extent it contemplates admission of appeal before filing of declaration as a condition precedent in order for the appeal to be treated as pending and to be eligible for settlement under the VSV Act is contrary to law. RELIEF - Keeping in view the aforesaid, the Forms 3 dated 23rd January, 2021 and 12th February, 2021 attached as Annexures P-16 and P-21 as well as the FAQ No.59 of Circular No.21/2020 dated 4th December, 2020 issued by CBDT to the extent mentioned hereinabove are quashed and respondent No.1 is directed to treat the appeal filed against the assessment order under Section 143(3) for assessment year 2014-15 before CIT(A) on 24th May, 2019 as pending as on 31st January, 2020. The respondents are also directed to issue revised Forms 3 by settling both the appeals against the assessment order for assessment year 2014-15 (i.e. quantum appeal pending before CIT(A) and the appeal against levy of penalty pending before ITAT) in accordance with the provisions of VSV Act within eight weeks.
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