M/s. Kamineni Builders V. Union of India

WP/19619/2021

AI Insights

The case involves Kamineni Builders, the petitioner, challenging the rejection of their application under the Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV Act). The petitioner sought to declare Circular No. 21 of 2020, which influenced the rejection, as null and void, and to contest the legality of the order issued by the Principal Commissioner of Income Tax, Hyderabad. The High Court's decision was influenced by a precedent set in a similar case, Boddu Ramesh v/s Designated Authority, where it was held that the benefits of the DTVSV Act should not be restricted by the dates specified in the circulars but should consider the actual pendency and admission of appeals.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 721635 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 24-09-2021
• Assessment Year: misc
• Other Referred Cases: Boddu Ramesh v/s Designated Authority, M/s. Dongfang Electric Corporation Ltd v. Designated Authority
• Laws Referred To: Direct Tax Vivad Se Vishwas Act, 2020, Income-Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: N RAJESHWAR RAO; K RAJI REDDY
• Assessee Lawyers: R RAMAN
• Keywords: Condonation of delay; Direct Tax Vivad Se Vishwas Act, 2020; Income Tax; Writ of Mandamus; Circular No. 21 of 2020
• Section: 143(3); 246A

Judgement Text

"HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) FRIDAY ,THE TWENTY FOURTH DAY OF SEPTEIVBER TWO THOUSAND AND TWENTY ONE PRESENT Between: l ,4/s. Kamineni Builders, No. 10 - 3 - 316/4, Masab Tank, Hyderabad - 500 028 Represented by its authorized signatory. ...PETITIONER AND 1. Union of lndia, I /inistry of Finance, Department of Revenue, 3rd Floor, Jeevan Deep Building, Sansad Marg, New Delhi- 110001 Rep. by its Secretary 2. Central Board of Direct Taxes, Depadment of Revenue- Ministry of Finance Government of lndia, New Delhi Rep. by its Chairperson 3. The Principal Commissioner of lncome Tax, Hyderabad - l, 2nd Floor, A Block' lncome Tax Towers, A.C. Guards, Hyderabad - 500 004. 4. Assistant Commissioner of lncome Tax, Circle - 7(1),Hyderabad ' 500 004. ...RESPONDENTS Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a writ or a direction in the nature of writ of l ,4andamus a. declaring the Circular No. 21 of 2020 daled 04j2.2020 issued by the 2nd respondent as null, void and u nconstitution a I in so far as it relates to the clarification issued with regard to the Question No. 59 as contrary to the Direct Tax Vivad se Vishwas Act, 2020 b, Declare the impugned order of Respondent No.3 in Receipt Number' 281635711050321 daled 20.04.2021 as itlegal, arbitrary and contrary to the scheme of Direct Tax Vivad Se Vishwas Act, 2020 c. consequently direct the Respondenl No.3 to accept the petitioners application in Form 1 and 2 filed under the Direct Tax Vivad se vishwas Acl, 2020 and issue till Form 5 as per the scheme of the Direct Tax Vivad Se Vishwas Acl' 2020 and pass lA NO: 1 OF 2021 Petition under section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to restrain the Respondents from taking coercive steps of recovery pursuant to the order of the impugned rejection of the Respondent No.3 pending disposal of the present writ petition Counsel for the Petitioner: SRl. R. SIVA RAMAN FOR SRl. N VIJAY Counsel for the Respondent No. 1: SRl. N. RAJESHWAR RAO' ASST. SOLICITOR GENERAL Counsel for the Respondent Nos. 2 to 4: SRl. K. RAJI REDDY' SC FOR CT The Court made the following: THE HONOURABLE SRI JUSTICE T.VINOD KUMAR ,, I) THE HONOURABLE SRI JUSTICE K.LAKSHMAN WRIT PETITION NO: 19619 OF 2021 THE HON'BLE SRI ]USTICE T.VINOD KUMAR AND THE HON'BLE SRI JUSTICE K.LAKSHMAN O R D E R:(per Honble Sri Justice T.Vinod Kumar) The petitioner has filed the present Writ Petition - i) to declare Circular No.21 of 2020, dated 04.12.2020, issued by the 2\"d respondent, as null, void and unconstitutional, insofar as it relates to the clarification issued with regard to Question No.59 as contrary to the Direct Tax Vivad Se Vishwas Act, 2020 (for shoft,'the DTVSV Act 2020), and ii) to declare the impugned proceeding, issued by the 3'd respondent, in Receipt No.281635711050321, dated 20.04.2021, with the 'Remark' noted therein, whereby the petitioner's declaration/application in Forms l and 2 filed on 05.03.2021 under the DTVSV Act 2020 was rejected, as illegal, arbitrary and contrary to the scheme of the DTVSV Act 2020, and consequently, to direct the 3'd respondent to accept the petitioner's application in Forms 1 and 2 under the DTVSV Act 2020. Back oround facts : 2, It is the contention of the petitioner that the 4rh respondent had completed the assessment of the petitioner for the Assessment Year 2013- 14 under Section 143(3) of the Income-Tax Act, 1961 (for short, 'the Act of 1961') on 23.03.2016; that aggrieved thereby, the petitioner filed an appeal under Section 246A of the Act of 1961 before the Commissioner of Income Tax (Appeals) (for short,'the CIT'), on 08.05.2016; thatthe said appeal was dismissed by the CIT on 06.02.2019; that assailing the said order, the petitioner preferred further appeal before the income Tax Appellate Tribunal WRIT PETITION No.19619 of 2021 W.P.No.19619 of 2021 TVK,J & KL,J (for short, 'the Tribunal') on 23.02.202L, along with an application to condone the delay in filing such appeal; and that the Tribunal condoned the delay in filing the appeal by order dated 22.03.2021, and allowed the petitioner to withdraw the appeal to avail the beneflt under the DWSV Act 2020. 3. It is further contended by the petitioner that, in similar circumstances, when a challenge to Circular No.21 of 2020, daled 04.1,2.2020, was laid before a Division Bench of this Court, in the case of Boddu Ramesh v/s, Designated Authori{ (W.p.No.12038 ot 2O2I), this Court (to which one of us, TVK,J, is a Membeo was pleased to allow the said writ petition, vide order dated 28.06.2021, wherein it was held that the restriction sought to be imposed by the above said circular conferring the benefit only to appeals flled on or before 04.12.2020 has no significance and what is required to be seen is the \"pendency of the appeal\" with an application for condonation of delay and the appeal being admitted by the appellate authority before the date of filing of declaration. 4, It is the contention of the petitioner that since the last date for fillng declaration in Forms 1 and 2 was extended from time to time till 31.03.2021 and the petitioner having filed an appeal before the Tribunal on 23.02.2021 along with an application for condonation of delay and the Tribunal having condoned the delay on 22.03.2021, the declaration filed by the petitioner on 05.03.2021 would have to be considered as having been flled before the specifled date; and that the rejection of the declaration filed by the petitioner under the DTVSV Act 2020 with the'Remark', dated 20.04.2021, issued by the 3'd respondent, is contrary to the said decision rendered by this Court in the above writ petition in W.P.No.12038 of 2021. I (2021) 128 Taxmann.com l3 (Telangana) 2 3 W.P.No.19619 of 2O2 t TVK,J & KL,J 5. Per contra, learned Senior Standing Counsel appearing for the respondents seeks to sustain the impugned proceeding and the .Remark, noted in the impugned proceeding. Though the learned Senior Standing counsel does not dispute that the issue in the present writ petition is covered by the decision rendered by this Court in the case of Boddu Ramesh (supra), on instructions submits that the department has not accepted the above said judgment and authorization has been issued to prefer SLP thereagainst. However, he would fairly submit that, as of today, the said order is in force and the operation of the same has not been suspended. Consideration bv the Court : 6. Heard Sri R. Siva Raman, learned counsel appearing for Sri N.Vijay, learned counsel for the petitioner; sri K.Raji Reddy, learned senior standing Counsel appearing for respondents 2 to 4; and Sri Namavarapu Rajeshwar Rao, learned Assistant Solicitor General appearing for the 1,.r respondent. We have noted the contentions urged by the learned counsel appearing for the respective parties. 7. This Court, in the decision rendered in Boddu Ramesh,s case (supra) had observed in paras 30 to 35 as under: '30. It is to be noted that the date for filing of declaration under the Act of 2020 opting to avait the benefti of Scheme was originally notified as 30.03.2020, which was extended from time to time, including up to 31.12.2020. 31. Subsequently the time for fiting declarations under the Act_9f 2q20 was finaly extended by Nouncation No.g/2021 dt.26.02.2021 up to 31.03.2021. So petitioners apptication fi/ed on 08.02.2021, was with in time. 32. However, whlle providing answer to e.No.Sg, in Clrcular No.21/2020 issued on 04.12.2020, the tast da? for fjling Contentions of the respondents : W.P.No.19619 oJ 2021 TVK,J & KL,J declaration under the Act of 2020 was considered as 31.12.2020, as notified by the Government at the relevant point in time. 33. It is only on 31.12.2020, the time for filing declarations under the Act of 2020 was extended for fufther period. 34. In the answer provided to Q.No. 59 in circular No 21/2020, it is stated that even \"if the limitation for filing appeal has expired before 31.01.2020, i,e., the 'specified date', if an application for condonation of delay is filed on or before the date af issue of Clrcular, and the delay is condoned, the appeal should be deemed to be pending as on 31.01.2020\". 35. This would have to be considered, in our opinion, as applicab/e even in relatlan to fufther extension of time granted for nling declarations til 31.03.2021,, and cannot be restricted either up to the date of issue of clrcular (ie. 04.12.2020) or even the date for filing declaration mentioned therein ((le.) 31.12.2020, as there cannot be any differentiation in delay as it stands on the same footing be it of a day or more.' 8, This Court, having come to the conclusion, while allowing the said writ petition, as above, further held in paras 37and 38 as under: '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 appeal with an application for condonation and the admission of the appea/ as on the date of filing of declaration.' 38. Thus, in our view, even after 04.12.2020, if an appeal is filed with an application for condonation of delay and the appeal is admitted by the appellate authority before the date of filing of the declaration, the benefit is to be extended, as otherwise, lt would lead to creation of separate class of persons among the declarants, without any reasonable basis, resulting ln discrlmination thereby vlolatlng Article 14 of the Constitution of India.' 9, In the light of the above decision, in the facts of the present case, it is to be seen that the petitioner has filed an appeal along with an application for condonation of delay on 23.02.2021; the Tribunal having admitted the appeal, has taken up the same for hearing on 22.03.202I; and by condoning the delay in filing such appeal, the Tribunal permitted the petitioner to withdraw the appeal to avail the benefit of the DTVSV Act 4 5 ll'P.;tt, I9a; i 9 oj :0) i ]'VK..t & Kt_,J 2020. The Tribunat, while dismissing the appeal of the petitioner as withdrawn, however, granted liberty to the petitioner to revive the appeal, if the petitioner's case is not accepted in the DTVSV scheme by the Revenue for whatsoever may be the reason on a subsequent date. 10. During the pendency ot appeal before the Tribunal, the petitioner has flled declaration in Form 1 and 2 under DTVSV Act, 2020 on 05.03.2021, i.e., before 31.03.2021, the last date specified for filing declaration. 11. Thus, on the date of filing of declaration in Forms 1 & 2 by the petitioner under the DTVSV Act, 2020, the appeal was pending before the Trjbunal along with an application for condonation of delay in filing such appeal. Further, the fact of Tribunat accepting the appeat filed by the petitioner an 23.02.2027, by condoning the detay on 22.03.2021, would amount to the appeal against the order of the CIT dated 06,02.2019 as having been fired in time. The resurt of both the above facts wourd read to inevitable conclusion that the declaration filed by the petitroner on 05.03.2021 would have to be considered as validly filed. 72, Further, this court arso cannot lose sight of the fact of the concession made by the respondents before the Tribunar, which has been recorded by the Tribunal as under: '5. Ld. DR subnitted that if the assessee desires to avail the Vivad Se Vishwas scheme, the revenue n, noiiiiiin , 13. As the respondents did not oppose the condonation of delay and also the prayer of the petitioner to withdraw the appear to avair the benefit of the DTVSV Act 2020, it is not open for the respondents now to turn around and reject the declaration filed in Forms 1 & 2 with the,Remark,as _ '11 1t,o^ggqeat is pending as on the date spectfied (1ate i.e. 31.0i.2020, as per Section 2 of the owSVii-ZOZ0. and the 6 W.P.No.1961 9 o[ 2a2 t .I'VK.,J &, KL,,.J assessee is not an eliglble declarant. Also the condonation js not filed before the date of issue of Circular No.Zt of 2020 dated 04.12.2020. So, the appticant is not an eligible declarant. Hence. the application nbd by the appellant is hereby rejected., L4, Since, this Court had already taken the view that no significance can be attached to the date of O4.L2.2OZO specified in Circular No.21 of 2020 while providing answer to Question No.59; that the same would have to be considered as applicable even in relation to further extension of time granted for filing declaration up to 31.03.2021 and cannot be restricted, the declaration filed by the petitioner under DWSV Act, 2020 on 05.03.2021 would have to be considered as validly filed, and that the petitioner is eligible to avail the benefit under the DTVSV Act, 2020. 15. At this juncture, it may be useful to refer to the contents of Economic Survey for the year 2017-lB and in particular reference to Chapter g titled 'Ease of Doing Business, Next Frontier: Timely Justice,. Under the said Chapter, in sub-heading titled 'Central Government Taxes: A case study,, it has been stated as under: '9.20 Pendency, arrears and delays just are not feature of Coufts and Tribunals, but also the Tax Depaftments and their multilayered process. 9.21 As of March, 2017, there were approximately 1,37,176 direct tax cases under consideration at the tevet of ITAT) High Coufts and Supreme Court. lust 0.2% of these cases constituted nearly 56% of the total demand value: and 66% of pending cases, each less than Rs.10 lakhs in claim amount, added up to a mere 1.8o/o of the total locked up value of pending cases. 9.22 The plcture ls not dissimllar ln the case of indirect taxes. As of the quarter ending March, 20J7, a total of 1.45 lakh appeals were pending with the Commlssloner (Appeals), CESTAT, HCs and the SC together, that were valued by the Depaftment at 2.62 lakh crores. Together, the claims for indirect and direct tax struck ln litigation (Appelate Tribunal and upwards) by the quafter endlng March, 2017, amounted to nearly 7,58 takh crores, over 4.7 per cent of GDP. For the Depaftment, these numbers, especially the value of amounts involved, have been rising sharply oveftime. - ,-, -.- - _ -. .- w.r-1 o. 1vt) t > uJ zv. L TVK,J & KL,J g.23 What is interesting is that the success rate of the iiii,trurit-it att three teiets of Appeat - App?il{e r.ribunats' i'rn coutr, and Supreme Court ' and for both direct and iiiirea tar iitigation is under 30vo' In some cases' it is as bw as lin. fie Dipartment unambiguously loos91.650!o of .its cases' b;;; ; i;;; ,f time, the suicess rare of the Department has liti b[i ieairing, white that of the assessees has been increasing. g.24 Nonetheless, the Depaftment is the targest litigant' The 'orpurtirri;t appiats consiitute nearty 85% of the total number i iiidt ntei'in tne case of direct taxes, though that number i\"r*-ii nrr\" improved in the case of indirect taxes' Of the total number of direct tax cases pending by the quafter ending March' zOli,-n\" Depaftment initiated BBb/o of the litigation at ITATS and iW,iri, Court and 83% of the titigation pending at High Courts' g.25 The picture that emerges over a perio-d of .time is the fAi*irg' even though the Department's strike rate.has been falting ionsiderabty over a period of time, i.t is,undeterrt:d' and pirthti- ii puuiing ltigation at every tevet of the iudicial 'hienrchy. 'Since tix titigation constitutes a large share of the io* nia of High Courts and the Sttpreme Court' Courts and the oipainert miy gain from a reduction in appeals pursued at higher levet of the ludlciary. Less might be more\" 16. A step in addressing the above concern was undertaken by the lvlinistry of Finance, firstly, by way of increasing/enhancing monetary limit for filing of appeals by the Department at all the three levels' Thereafter' 'Sabka Vishwas (Legacy Dispute Resolution) Scheme -2019' was announced in relation to indirect tax disputes and thereafter the DTVSV Act' 2020 is enacted to free up the locked revenues in Direct Taxes' L7, This Court, in Boddu Rameslii's case (supra), taking note of the speech of the presenter oF the Bill before the Parliament and the Statement of Objects and reasons appended to the DTVSV Act, 2020' held that the DTVSVAct,2020,isabeneficialpieceoflegislation,andinterpretationof the same should be in such a manner which would go to achieve the object for which the same was enacted. v TVK,J & RL,J 18. Further, this Court, tn M/s. Dongfang Electric Corporation Ltd, v. Designated Authoriff, held that - \"the DTVSV Act, 2020 being a beneficial piece of legislation, resort should be made to liberal interpretation rather than literal interpretation, which would render the entire scheme inoperable\". 19, Applying the ratio of the above tlvo decisions to the facts of the present case, and for the reasons detailed herein above, it is to be held that the rejection of the declaration filed by the petitioner under DTVSV Act, 2020 in Forms l and 2 on 05.03.2021. with the 'Remark' noted on 20.04.2021, by the 3'd respondent, on the basis of answer to Q.No.59, vide Circular No.21 dated 04,12.2020, cannot be sustalned. 20. Accordingly, the Writ Petition is allowed and the impugned order of the 3\"1 respondent, in Receipt No.281635711050321 dated 20.04.2021, with the 'Remark' as noted therein, is hereby set aside; the 3'd respondent is hereby directed to accept the declaration Forms 1 and 2 filed by the petitioner on 05.03.2021; process the same in accordance with the DTVSV Act, 2020; issue Form 3; and accept the payment from the petitioner as declared in Form 1 filed, before the due date as notified. 2L, Pending miscellaneous petitions, if any, shall stand closed in the light ofthis final order. No order as to costs SD/.I,NAGALAKSHMI ASSISTANT REGISTRAR ,TRUE COPY' SECTION OFFICER 1. The Secretary, I ,4inistry of Finance, Department of Revenue, Union of lndia,3rd Floor, Jeevan Deep Building, Sansad lvlarg, New Delhi- 1 10001 2. The Chairperson, Central Board of Direct Taxes, Department of Revenue- Ministry of Finance Government of lndia, New Delhi. 3. The Principal Commissroner of lncome Tax, Hyderabad - l, 2nd Floor, A Block, lncome Tax Towers, A.C. Guards, Hyderabad - 500 004. 4. Assistant Commissioner of lncome Tax, Circle - 7(1),Hyderabad - 500 004. 5. One CC to Sri. N Vilay, Advocate [OPUC] 6. One CC to Sri. N. Raleshwar Rao. Asst. Solicitor General [OPUC] 7. One CC to Sri K. Raji Reddy, SC for CT (OPUC) 8. Two CD Copies. 9. One spare copy To, Pt ,4 NS ('' U HIGH COURT DATED:2410912021 ORDER WP.No.19619 of 2021 Allowing the WP Without costs. 25 stPz0?l * * t a) ,) t) l, ,.a s ------. "