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TMI Blog2021 (9) TMI 1237X X X X Extracts X X X X X X X X Extracts X X X X ..... tember and October, 1993. Pursuant to which the orders under section 132(5) of the Income Tax Act was passed and the notice under section 148 of the Act was issued for making the assessment of earlier years on 03.10.1995. 2.2 Application was made before the Settlement Commissioner under section 245C(1), which allowed the application of the petitioner initially but later under section 245D(4) dismissed the application for non-payment of additional taxes. 2.3 This was challenged before this Court in Special Civil Application No. 4939 of 2015 and the Court allowed the said petition and directed the Settlement Commissioner not to dismiss this application on the said grounds. The proceedings before the Settlement Commissioner were dismissed on 11.07.2017 and the Assessing Officer assumed the jurisdiction. The Assessing Officer passed the assessment orders for Assessment Year 1991-92 to 1994-95 on 09.07.2018. 3 Challenging the said order, the petitioner preferred the appeal before the Commissioner of Income Tax (Appeals) ("CIT (Appeals)" for short), which was allowed partly on 09.10.2019. 4 A copy of the order was received on 18.10.2019 and, therefore, the appeal was to be preferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case on merits or to opt for VsV Scheme. 9 The VsV Act was passed on 17.03.2020 to provide for resolution of disputed tax and for matters connected therewith or incidental thereto. For operational Act, the VsV Rules also came to be framed. 10 The petitioner, since was desirous of taking recourse of the provisions of the said Act, filed Form No.1 and 2 as per section 4 of the VsV Act and Rule 3 of the VsV Rules on 13.02.2021 firstly. However, he revised the same by filing on 23.02.2021. The ITAT had dismissed the appeal of the petitioner as withdrawn to let the petitioner take the benefit of the VsV Scheme vide order dated 25.02.2021. 10.1 The petitioner awaited the issuance of Form No.3 by respondent No.1. However, no response was received. He had, on several occasions, reminded the respondents for issuance of Form No.3 but in vein. He has annexed four communications of 24.02.2021, 26.02.2021, 11.03.2021 and 18.03.2021. He also made representations to the Chairman urging to consider his genuine hardship, who was keen to take recourse to the VsV Scheme. 10.2 The petitioner had also provided the details of the taxes paid for Assessment Year 1991-92, 1992- 93, 1993-94 and 1994- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.04.2021, when he Page 1 of 2 Downloaded on : Thu Sep 23 14:53:15 IST 2021 C/SCA/7441/2021 ORDER DATED: 14/06/2021 verified from the tax portal about the status of his applications, which showed "Rejected" In view of the above submission, issue Notice to the respondents returnable on 21.06.2021. Direct service today is permitted." 13 In response to the said notice, the respondents appeared and filed affidavit-in-reply of the Principal Commissioner of Income-Tax (Central) Ahmedabad having each and every averment made in this petition. According to the respondent, section 4(6)B of the VsV Act provides that declaration filed shall be presumed never to have been made, if the declarant violates any of the conditions referred to in the Act. The petitioner since was found not eligible to avail the benefit, his applications were rejected. There is no flaw in the decision making process and rejection is in accordance with law. 14 The respondent has also provided the relevant dates necessary for adjudication at paragraph No.4, which is as under : Sr. No. Dates Particulars 1. 18.10.2019 Receipt of CIT(A) order dated 09.10.2019. 2. 18.12.2019 Last date for filing appeals b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orms No.1 and 2 through ITBA/EFiling portal on 27.02.2021 in the Office of Principal Commissioner of Income Tax (Central) and it was immediately undertaken and processed. After careful consideration and in light of the Circular dated 04.12.2020, the status of application was intimated on 30.04.2021 through E-Filing portal. There was no requirement of passing a speaking order while rejecting the application. 18 Affidavit-in-Rejoinder is filed urging that the Board circular is construed in a restrictive manner, which would run contrary to the scheme of the Act of 2020 and powers exercised by Board under sections 10 and 11 to issue directions or orders in public interest or to remove difficulties. 19 According to the petitioner, after an appeal is filed with an application for condonation of delay after 04.12.2020 and if the same is admitted by the appellate authority before the date of filing of the declarant, the benefit is to be extended as otherwise it would lead to creation of a separate class of persons among the declarants without any reasonable basis, resulting in discrimination and thereby violating Articles 14 of the Constitution of India. 20 After completion of pleadings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n has not expired as on that date; (iii) a person who has filed his objections before the Dispute Resolution Panel under section 144C of the Income-tax Act, 1961 (43 of 1961) and the Dispute Resolution Panel has not issued any direction on or before the specified date; (iv) a person in whose case the Dispute Resolution Panel has issued direction under sub-section (5) of section 144C of the Income-tax Act and the Assessing Officer has not passed any order under sub-section (13) of that section on or before the specified date; (v) a person who has filed an application for revision under section 264 of the Income-tax Act and such application is pending as on the specified date;; 1[Explanation.-For the removal of doubts, it is hereby clarified that the expression appellant shall not include and shall be deemed never to have been included a person in whose case a writ petition or special leave petition or any other proceeding has been filed either by him or by the income-tax authority or by both before an appellate forum, arising out of an order of the Settlement Commission under Chapter XIX-A of the Income-tax Act, and such petition or appeal is either pending or is dispose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondoned the delay on 15.02.2021 and allowed the appeal and remanded the matter back by restoring the matter back to the Commissioner of Appeals. 25 Applicant before the Telangana High Court had submitted the application to avail the benefit under the said scheme in a prescribed format, but the application was rejected by the designated authority on the ground that there was no appeal pending as on specified date i.e. on 31.02.2020 and the declaration, according to the department, was invalid. The petitioner re-submitted the declaration/application under the Act in Form Nos.1 and 2 on 31.03.2021 opting to settle the dispute pending re-adjudication before the Commissioner (Appeals). However, that was again rejected by the designated authority and in theses circumstances, the Telangana High Court held in favour of the assessee, interpreting the provisions of the Act. 25.1 Some of the relevant paragraphs are reproduce as under: "19. Before adverting to the respective contentions urged by the learned counsel, it is necessary to note the intent and purpose for which the Act of 2020 was enacted by the Parliament. The statement of objects and reasons appended to the Act of 2020 would t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disputed fee, the amount payable by the declarant shall be 25 per cent of the disputed penalty, disputed interest or disputed fee, as the case may be, if the payment is made on or before 31st day of March, 2020. If the payment is made after 31st day of March, 2020, but on or before the date notified by the Central Government, the amount payable shall be increased to 30% of the disputed penalty, disputed interest, or disputed fee, as the case may be. 4. The proposed Bill shall come into force on the date it receives the assent of the President and declaration may be made thereafter up to the date to be notified by the Government." 20. A reading of the statement of objects and reasons would indicate that the intent and purport behind the introduction of the Vivad Se Vishwas Bill, 2020 (Act of 2020) was i) to reduce tax disputes pertaining to direct taxes, ii) the staggering disputed direct tax arrears, nearly as equal to nations one year direct tax collections of the year 2018-19. This was the cause of concern which was sought to be addressed by the Government with the introduction of the said Bill, which later, on receiving the assent of the President of India had become the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clude that the scheme was intended to give a quietus to huge pending direct tax litigation either at the behest of the assessee or by the Department and collect only the disputed taxes by granting waiver of penalty and interest. If the above object is taken into consideration, the Act of 2020, as enacted, would have to be considered as a beneficial piece of legislation." 26 The Court also interpreted Question No.59 and took note of filing of the appeal with application for condonation of delay and admission of the appeal by the appellate authority to hold thus: "36. If Board circular is construed in such a restrictive manner, as is contended by respondents, the same would run contrary to the scheme of the Act of 2020 and the powers exercised by Board under Section 10 and 11 to issue directions or orders in public interest or to remove difficulties. 37. Therefore, we are unable to persuade ourselves to confine the benefit of "deemed pendency of appeal" only if an application for condonation is filed on or before 04.12.2020, as in our view no significance can be attached to the said date of issue of the circular, since, what is required to be considered is the pendency of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al of the petitioner before of the CIT filed on 19.02.2019 would stand revived, and such restoring of appeal relates back the original date of filing, which is within the "specified date" as per Act of 2020." 27 The Delhi High Court in the case of Shyam Sunder Sethi (supra) was addressing the very issue of eligibility of the petitioner as the Appellant on the specified date under the VsV Act where also the petitioner had preferred the appeal along with condonation of delay application on 11.07.2019. 28 On 14.12.2020, the petitioner received a letter from respondent No.2 when he filed a declaration form with a request that his form be processed under the 2020 Act, where he was required to file condonation letter from CIT (Appeals) for granting the condonation of delay, as appeal was filed after 30 days from the date of service of the order. The respondent raised the issue that letter for condonation of delay had not been filed with respondent No.3, which was sought to be explained and a request was made for processing the forms. However, the portal only adverted to the decision taken on the petitioner's request and the same had been rejected. No reason had been furnished for reje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssary to extract FAQ 59 and the response provided thereto. "Q 59. Whether the taxpayer in whose case the time limit for filing of appeal has expired before 31st January, 2020 but an application for condonation of delay has been filed is eligible? Answer: If the time limit for filing appeal expired during the period from 1st April, 2019 to 31st January, 2020 (both dates included in the period), and the application for condonation is filed before the date of issue of this circular, and appeal is admitted by the appellate authority before the date of filing of the declaration, such appeal will be deemed to be pending as on 31st January, 2020." 21. As would be evident, the response was not only beyond the provisions of the 2020 Act but also qua the query raised. Simply put, the query raised in the form of FAQ 59 was: if an appeal had been filed before the specified date, i.e., 31.01.2020 along with an application for condonation of delay, would such assessee (i.e., the taxpayer) be eligible for availing benefits available under the 2020 Act? 22. However, in response to this query, several facets have been alluded to, which are not found in the 2020 Act. For instance, the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Clagett, (1882) 20 Ch. D. 637 at p. 653. " W.P.(C) 2291/2021 Pg. 10 of 10 rejected by respondent no.3/CIT(A) before the petitioner had filed Forms 1 and 2. If that situation obtained, the respondents could have, possibly, taken the stand that nothing was pending before the appellate forum." 30 The question that begs answer is as to whether in case of the present petitioner, any such appeal was pending or can he be said to be an appellant within the meaning of the VsV Act. 31 Reference would be also necessary at this stage of the Circular dated 04.12.2020 of the CBDT on Frequently Asked Questions (FAQ No.59), meant for the guidance of assessees which is to be construed as a tool of interpretation. "Q.No.59.Whether the taxpayer in whose case the time limit for filing of appeal has expired before 31st Jan 2020 but an application for condonation of delay has been filed is eligible? Answer: If the time limit for filing appeal expired during the period from 1st April 2019 to 31st Jan, 2020 (both dates included in the period), and the application for condonation is filed before the date of issue of this circular, and appeal is admitted by the appellate authority before the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich are binding on the authorities in the administration of the act. Under Section 119(2)9a), however, the circulars as contemplated therein cannot be adverse to the assesses." 35 Therefore, when the Circular has been issued by the CBDT on 04.12.2020 answering to one of the Frequently Asked Questions, it is not expected of the Revenue to contend contrary to the said guidelines in the answer given in the Circular. Obviously, the Circular cannot override the express provisions of the Act and they are to be considered clarificatory in nature. They are basically meant to guide the officers and those, who execute the law in the field. They may not also bind the Court while it interprets statutory provisions. 36 However, the Court when regards and takes into consideration the fundamental principles along with the provision of Limitation Act, particularly Section 5 of the Limitation Act seeking condonation of delay in preferring any petition, appeal or litigation or proceedings, it is meant for exercise of discretion by the adjudicatory authority, which, if is satisfied with the sufficiency of cause, is expected to condone the delay. And, once the application for condonation of delay ..... X X X X Extracts X X X X X X X X Extracts X X X X
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