BHASKAR MANUBHAI MEHTA V. DESIGNATED AUTHORITY PR. CHIEF COMMISSIONER OR HIS SUCCESSOR

SCA/11847/2021

AI Insights

The case involves Bhaskar Manubhai Mehta, the petitioner, who challenged the rejection of his declarations under the Vivad Se Vishwas Scheme by the Designated Authority. The scheme, introduced to resolve pending income tax litigations, was not applied to the petitioner due to alleged procedural delays in filing his appeal. The court examined the circumstances under which the petitioner's appeal was filed and the subsequent rejection of his declarations. It was found that the rejection was contrary to the principles of the Vivad Se Vishwas Scheme, which aims to resolve disputes without getting entangled in procedural technicalities.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 726112 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 21-09-2021
• Assessment Year: misc
• Other Referred Cases: Special Civil Application no.6232 of 2021
• Laws Referred To: Direct Tax Vivad Se Vishwas Act, 2020, Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: MAUNA BHATT
• Assessee Lawyers: S N DIVATIA
• Keywords: Condonation of delay; Dispute resolution; Income Tax; Pending appeal; Vivad Se Vishwas Scheme
• Section: 143(3); 54F; 5

Judgement Text

"C/SCA/11847/2021 ORDER DATED: 21/09/2021 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 11847 of 2021 ===================================================== BHASKAR MANUBHAI MEHTA Versus DESIGNATED AUTHORITY PR. CHIEF COMMISSIONER OR HIS SUCCESSOR ===================================================== Appearance: MR SN DIVATIA(1378) for the Petitioner(s) No. 1 MRS MAUNA M BHATT(174) for the Respondent(s) No. 1 ===================================================== CORAM: HONOURABLE MS. JUSTICE SONIA GOKANI and HONOURABLE MR. JUSTICE RAJENDRA M. SAREEN Date : 21/09/2021 ORAL ORDER (PER : HONOURABLE MS. JUSTICE SONIA GOKANI) 1. Rule. Mrs. Mauna Bhatt, learned Senior Standing Counsel waives service of notice of rule on behalf of the respondent. By consent of the parties, rule is fixed forthwith. 2. The petitioner is here by way of petition under Article 226 of the Constitution of India is challenging the legality of the orders passed on 23 rd February, 2021 and 12 th April, 2021 under Section 5 of the Direct Tax Vivad Se Vishwas Act, 2020 (‘VSV Scheme’ for short) by the respondent whereby the declaration filed by the petitioner in the Form-1 and Form-2 of the Vivad Se Vishwas Scheme has been rejected and he has been deprived of availing the benefit of the said scheme. Page 1 of 11 C/SCA/11847/2021 ORDER DATED: 21/09/2021 3. The petitioner is an individual who derived the income by way of share from partnership firm and other sources. He filed his return of income for the A.Y. 2014-15 declaring his income at Rs.1,97,435/-. His regular assessment was over after scrutiny under Section 143(3) of the Income Act, whereby his income is determined as Rs.56,88,350/- and his claim of exemption under Section 54F of the Act has been rejected, which resulted into addition of Rs.54.90 Lacs (rounded of). 4. Aggrieved by this, he preferred the appeal before the CIT(A) on 12 th January, 2017. A letter came to be issued on 28 th December, 2017, that his paper appeal was not in accordance with the notification of CBDT no.11 of 2016 dated 1 st March, 2016, whereby e-appeal was to be filed and therefore, he was directed to e-file the appeal in new Form-35 on or before 10 th January, 2018. 5. It is the case of the petitioner that he has preferred such appeal on 6 th January, 2018 vide acknowledgment no.357601781060118. 6. It is the case of the petitioner that during the Union Budget- 2020, the VSV scheme was announced for evolving the mechanism for dispute resolution in respect of pending income tax litigation. The scheme was amended by the Taxation and other Laws (relaxation and amendment of certain provisions) Act, 2020 for providing the relaxation in view of the Covid-19 pandemic. For availing the benefit, the petitioner filed on 12 th November, 2020 the original declaration in Form-1 and Form-2 in respect of the pending appeal for the A.Y. 2014-15. His declaration has been rejected and that has aggrieved him and is before this Court therefore with the following prayers : Page 2 of 11 C/SCA/11847/2021 ORDER DATED: 21/09/2021 “(a) to issue a writ of certiorari or in the nature of certiorari or any other appropriate writ, orders or directions quashing and setting aside the impugned orders dated 23 rd February, 2021 and 12 th April, 2021 (Annexure-A) passed by the respondent rejecting the declarations filed by the petitioner under VSV Scheme for A.Y. 2014-15 and all such orders passed or actions taken, in consequence to the impugned orders. (b) to issue a writ of certiorari or in the nature of certiorari or any other appropriate writ, orders or directions to the respondent to accept the declarations in Form no.1-2 filed by the petitioner and issue certificate in Form-3 and 5 under the VSV Scheme. (c) to issue a writ of certiorari or in the nature of certiorari or any other appropriate writ, orders or directions to the respondent to allow the petitioner to pay amount so determined under the scheme within reasonable time. (d) to call for the records of the proceedings, look into them and be pleased to issue a writ of certiorari or any other appropriate writ, order or direction quashing the impugned orders dated 23 rd February, 2021 and 12 th April, 2021 (Annexure-A). Page 3 of 11 C/SCA/11847/2021 ORDER DATED: 21/09/2021 (e) Pending the hearing and final disposal of this petition to maintain status quo in the matter and ask the respondent and its subordinates not to take any action or to do anything in furtherance and pursuance of this impugned notice. (f) To provide the copy of the audit objection and response given by the respondent to the same. (g) To allow this petition with cost. (h) To pass any further or other orders as the Hon’ble Court may deem proper in the interest of justice and in the circumstances of the case.” 7. We have heard extensively Mr. S.N. Divetia, learned advocate for the petitioner and Ms. Mauna M. Bhatt, learned Senior Standing Counsel for the respondent. We could notice from the facts, which have been presented before us that from the portal of VSV Scheme on the website of the department, the declaration of the petitioner has been rejected with the following remarks : “In your case, the AO has reported that “As per Form-35 the demand notice against the assessment order has been served on 17 th December, 2016. However, applicant has filed appeal on 6 th January, 2018, which is beyond the time limit prescribed for filing appeal before CIT appeal. It has been reported by the order passed for delay in filing of appeal by the assessee. However, till date no reply has been received from the CIT appeal. Further, as Page 4 of 11 C/SCA/11847/2021 ORDER DATED: 21/09/2021 per Minutes of Meeting held with CBDT Chairman and Members through Video Conference on 4 th January, 2021, it was conveyed that orders disposing condonation applications of the assessee will be passed in all cases within week by CsIT(AU)s. However, no information has been received from NFAC/respective CsIT(AU)s as to whether the delay has been condoned in this case. Under the circumstances, declaration filed is hereby rejected.” 8. It appears that a petition came to be preferred before the designated officer on 30 th July, 2021, which is pending for disposal. The review of the decision of rejecting the declaration is also moved and it is urged before this Court that this rejection has come contrary to the scheme of the VSV. The very aspect has been challenged before this Court in Special Civil Application no.6232 of 2021, where the Court examined the scheme in detail and held as under : “7. Before adverting to the submissions made by the learned Advocates for the parties, it would be germane to reproduce the definition of the ‘Appellant’ as contained in Section 2(i)(a) of the said Act as well as the definition of the ‘specified date’ as contained in Section 2(i)(n) thereof: “2. (1) In this Act, unless the context otherwise requires,— (a) “appellant\" means (i) a person in whose case an appeal or a writ petition or special leave petition has been filed either by him or by the income-tax authority or by both, before an appellate forum and such appeal or petition is pending as on the specified date; (ii) a person in whose case an order has been Page 5 of 11 C/SCA/11847/2021 ORDER DATED: 21/09/2021 passed by the Assessing Officer, or an order has been passed by the Commissioner (Appeals) or the Income Tax Appellate Tribunal in an appeal, or by the High Court in a writ petition, on or before the specified date, and the time for filing any appeal or special leave petition against such order by that person 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 subsection (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;\" [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 disposed of.] 8. As per Section 2(i)(n), \"specified date\" means the 31st day of January, 2020; Page 6 of 11 C/SCA/11847/2021 ORDER DATED: 21/09/2021 9. In the light of the aforestated provisions, let’s examine as to whether the petitioner could be said to be an “Appellant” within the meaning of Section 2(i) (a) of the said Act or not. In the present Petition, there are certain undisputed facts. It is not disputed that the Appeal filed by the Petitioner electronically on 17.5.2016 against the order of assessment dated 25.2.2016 is pending with the Appellate Authority, though there was delay of 40 days occurred in filing the said Appeal. It is also not disputed that the said delay has not been condoned by the Appellate Authority since the filing of the Appeal. It is stated at the bar by the learned Senior Advocate Mr. Hemani, and not disputed by the learned Senior Standing Counsel Mrs. Mauna Bhatt that there is no practice of registering an application for condonation of delay separately at the office of the CIT (Appeals), and the same is heard along with the Appeal itself. Even in the prescribed Form No.35, there was Column No. 15, where the Petitioner – Appellant was required to mention about the number of days of delay occurred in filing the Appeal. It has also emerged from the record of the Petition that the Appellate Authority itself had issued various notices to the Petitioner with regard to the hearing of the said Appeal. Now, the Declaration made by the Petitioner under the said Act has been rejected as shown in the portal, on the following grounds: “In your case, the AO has reported that “As per form-35 the demand notice against the assessment order has been served on 25.2.2016. However, applicant has filed appeal on 17.05.2016, which is beyond the time limit prescribed for filing appeal before CIT appeal. It has has been reported by the AO that leter to CIT appeal have been issued regarding any condonation order passed for delay in filing of appeal by the assessee. However, till date no reply has been received from the CIT appeal. Further, as per minutes of meeting held with CBDT Chairman and Members through video Page 7 of 11 C/SCA/11847/2021 ORDER DATED: 21/09/2021 Conference on 04.01.2021, it was conveyed that order disposing condonation applications of the assessee will be passed in all cases within week by CsIT (AU)s. However, no information has been received from NFAC / respective CsIT (AU)s as to whether the delay has been condoned in this case. Under the circumstance, declaration filed is hereby rejected.” 10. At this juncture, it would be relevant to refer to the decision of Supreme Court in case of Commissioner of Income Tax v. Shatrusailya Digvijaysingh Jadeja, relied upon by the learned Senior Advocate Mr. Hemani, in which the S.C. had an occasion to deal with the issue, as to whether, the department could have rejected the Declaration filed under the similar scheme called Kar Vivad Samadhan Scheme, introduced vide the Finance [No.2] Act 1998, on the ground that the Revision / Appeal filed by the concerned Petitioner was time barred or was not valid. In the said case, the Supreme Court considered the object of the said Scheme as also the other earlier decisions, and observed as under: “13. In our view, the Scheme was in substance a recovery scheme though it was nomenclatured as a \"litigation settlement scheme\" and was not similar to the earlier Voluntary Disclosure Scheme. As stated above, the said Scheme was a complete Code by itself. Its object was to put an end to all pending matters in the form of appeals, reference, revisions and writ petitions under the IT Act/WT Act. Keeping in mind the above object, we have to examine section 95(i)(c) of the Scheme, which was different from appeals under section 246, revisions under section 264, appeals under section 260A etc. of the IT Act and similar provisions under the W.T. Act. Under the I.T. Act, there is a difference between appeals, revisions and references. However, those differences were obliterated and appeals, revisions and references were put on par under section 95(i)(c) of the Page 8 of 11 C/SCA/11847/2021 ORDER DATED: 21/09/2021 Scheme. The object behind section 95(i)(c) in putting on par appeals, references and revisions was to put an end to litigation in various forms and at various stages under the IT Act/Wealth Tax Act and, therefore, the rulings on the scope of appeals and revisions under the IT Act or on Voluntary Disclosure Scheme, will not apply to this case. 15. In the case of Dr. Mrs. Renuka Delta (supra), this Court has held on interpretation of section 95(i)(c) that if the appeal or revision is pending on the date of the filing of the declaration under section 88 of the Scheme, it is not for the DA to hold that the appeal/revision was \"sham\", \"ineffective\" or \"infructuous\" as it has. 16. In the case of Raja Kulkarni v. The State of Bombay reported in AIR 1954 SC 73, this Court laid down that when a section contemplates pendency of an appeal, what is required for its application 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. 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. 17. To the same effect is the law laid down by the judgment of this Court in the case of Tirupati Balaji Developers (P) Ltd. v. State of Bihar & Others reported in (2004) 5 SCC 1, in which it has been held that an appeal does not cease to be an Page 9 of 11 C/SCA/11847/2021 ORDER DATED: 21/09/2021 appeal though irregular and incompetent.” 11. In view of the aforestated legal position, there remains no shadow of doubt that appeal could be said to be pending, even if the delay occurred in filing the same was not condoned and even if it was allegedly irregular or incompetent. In the instant case therefore also, the Respondent could not have rejected the Declaration Form of the Petitioner filed under the said Act merely on the ground that the Appeal was not valid or competent, as the delay occurred in filing the Appeal was not condoned by the Appellate Authority. In the opinion of the Court, the Respondent had to only take into consideration, as to whether, the Petitioner had filed an Appeal, and the same was pending on the ‘specified date’ i.e. 31.1.2020. It was not for the Respondent to decide, as to whether, such Appeal was irregular or incompetent or invalid in the eye of law. 12. In that view of the matter, the impugned communication dated 22.2.2021, displayed on the Portal of the Department, rejecting the Declaration filed by the Petitioner under the said Act, deserves to be quashed and set aside, and is accordingly quashed and set aside. The Respondent is directed to accept the said Declaration under the said Act for the assessment year under consideration, if otherwise is valid. The Petition stands allowed accordingly. Rule is made absolute.” 9. In wake of this, in the case of the present petitioner also, the communication displayed at the portal of the department rejecting the declaration of the petitioner by orders dated 23 rd February, 2021 and 12 th April, 2021 are quashed and set aside. The respondent is directed to accept the declaration under the said Act for the A.Y. 2014-15. Additionally we need to also specify that on account of the non-reply on the part of the CIT(A) and non passing of the Page 10 of 11 C/SCA/11847/2021 ORDER DATED: 21/09/2021 order disposing of the condonation application of the assessee, the declaration file has been rejected, as otherwise on the point of law, we have already quashed and set aside such orders of declaration of the respondent. However, we need to particularly make a note as a parting note that the non-availability of the order on the part of any of the authorities can never be the reason for not availing the benefit of any provision or scheme to the citizens. 10. Let the declaration be accepted by the respondent on or before the 27 th September, 2021. The payment allowed to be made on or before 30 th September, 2021 considering the outer time limit set under the scheme. Any other consequential declarations if needed to be allowed, no delay shall be caused by the authority concerned. 11. With the above observations and directions, the petition is disposed of. Rule is made absolute. (SONIA GOKANI, J.) (RAJENDRA M. SAREEN, J.) AMAR RATHOD... Page 11 of 11 "