MAHESHBHAI SHANTILAL PATEL V. THE PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL, AHMEDABAD

SCA/7441/2021

AI Insights

The case revolves around Maheshbhai Shantilal Patel's challenge against the rejection of his declarations filed under the Direct Tax Vivad se Vishwas Act, 2020, by the Principal Commissioner of Income Tax, Central, Ahmedabad. The petitioner had initially faced procedural hurdles and health issues, leading to delays in filing appeals and subsequent applications for condonation of delay. The court examined whether the petitioner's appeal was 'pending' as required by the Act on the specified date, and whether the delay in filing could be condoned. The court found that the delay was rightly condoned by the ITAT and thus, the appeal was considered pending, making the petitioner eligible for the benefits under the Vivad se Vishwas Scheme.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 749639 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 23-09-2021
• Assessment Year: misc
• Other Referred Cases: Boddu Ramesh vs. Principal Commissioner of Income-Tax, Hyderabad, Shyam Sunder Sethi vs. Principal Commissioner of Income-Tax and others
• Laws Referred To: Direct Tax Vivad se Vishwas Act, 2020, Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: B HATT; MAUNA BHATT
• Assessee Lawyers: BANDISH SOPARKAR; SWATI SOPARKAR
• Keywords: Condonation of delay; Direct Tax Vivad Se Vishwas Act; Income Tax; Tax dispute resolution
• Section: 148; 271(1)(c); 132; 245C(1); 245D(4)

Judgement Text

"C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 7441 of 2021 FOR APPROVAL AND SIGNATURE: HONOURABLE MS. JUSTICE SONIA GOKANI and HONOURABLE MR. JUSTICE RAJENDRA M. SAREEN ========================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ? ========================================================== MAHESHBHAI SHANTILAL PATEL Versus THE PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL, AHMEDABAD ========================================================== Appearance: MR BANDISH SOPARKAR and MRS SWATI SOPARKAR(870) for the Petitioner(s) No. 1 MR MR BHATT, SR.ADV with MRS MAUNA M BHATT(174) for the Respondent(s) No. 1,2 ========================================================== CORAM: HONOURABLE MS. JUSTICE SONIA GOKANI and HONOURABLE MR. JUSTICE RAJENDRA M. SAREEN Date : 23/09/2021 CAV JUDGMENT (PER : HONOURABLE MS. JUSTICE SONIA GOKANI) 1 In this petition under Article 226 of the Page 1 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 Constitution of India challenge is made to the rejection of the declaration Forms No.1 and 2 filed by respondent No.1 on 30.04.2021, by the petitioner under the Direct Tax Vivad se Vishwas Act, 2020 (“VsV Act” for short) and the Direct Tax Vivad se Vishwas Rules, 2020 (“VsV Rules” for short), which has been contrary to the law and violating the fundamental rights of the petitioner. 2 The facts in a capsulized form are as follows: 2.1 Search action under section 132 of the Income Tax Act was carried out at the residential and office premises of the assessee in the months of September 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 Page 2 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 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 before the Income Tax Appellate Tribunal Page 3 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 (“ITAT” for short). The appeal before the ITAT was required to be filed by 18.12.2019 within 60 days. The petitioner, since was hospitalized, there was a delay in preferring the appeal. 5 Pandemic due to Covid-19 virus had further delayed the filing of the appeal, as according to the petitioner, most of Courts and Tribunals functioned only for urgent matters. The Apex Court in suo motu writ petition (Civil) No.3 of 2020 vide order dated 23.03.2020 and the ITA- Office order dated 30.03.2020 extended the time for filing of the appeal. There was a complete lockdown from 25.03.2020 and all offices remained functional only for urgent board and ordinance dated 31.03.2020 called “ Taxation and other laws (Relaxation of Certain Provision) Ordinance, 2020” was promulgated providing that any action or compliance, due date for which was falling between 20.03.2020 to 29.06.2020 shall be extended to 30.06.2020 or Page 4 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 any other date as may be further extended by the Central Government by way of Notification. 6 The Notification dated 24.03.2020 was issued by the Government for extending the time limit for certain compliance under the Income Tax Act. 6.1 A Notification dated 29.06.2020 was also issued subsequently by the Central Government and time for filing the return of income for Assessment Year 2019-2020 also was extended. A bill called “the Taxation and other Laws/ Relaxation of Certain Provision) Bill, 2020” was introduced in the Parliament, which received assent of President of India on 29.09.2020 and the same became the Act. Thereby, the Notification was issued on 30.09.2020 and the time limit for the filing of the return for Assessment Year 2019-2020 was extended as a general rule for all due dates, which were falling under the period of 20.03.2020 to 30.03.2020 have been extended to 31.03.2021. Page 5 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 7 The petitioner is averred to have suffered from Parkinson’s disease since long and has undergone treatment and hospitalization due to kidney and abdominal issues from August, 2019. He also had been re-hospitalized and on a bed rest till March, 2020 and later due to pandemic, he was medically advised not to move out being a senior citizen with various co-morbidities. 8 The petitioner preferred an appeal on 14.12.2020 before the ITAT. The ITAT on condoning the delay by a speaking order on 23.02.2021, allowed the petitioner to argue the 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 Page 6 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 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 1994-95. The total taxes paid by Page 7 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 him also have been expressly pointed out, which is as under: AY Demand as per record VsV Tax Amount Taxes Paid/Adjusted Net VsV Tax Payable 1991-92 46,62,481 6,73,039 23,830 6,49,209 1992-93 42,56,654 6,45,546 3,01,661 3,43,885 1993-94 10,74,861 56,301 7,722 48,579 1994-95 (5,16,902) 2,55,444 22,00,000 (19,44,556) 94,77,094 16,30,330 25,33,213 (9,02,883) 11 Meanwhile, respondent No.2 issued the notice for penalty proceedings under section 274 read with section 271(1)(c) on 01.03.2021 for having not accepted the application of the petitioner. On Income Tax portal status of his VsV application showed as rejected on 30.03.2021. Aggrieved petitioner, therefore, is before this Court seeking following reliefs: “7. The Petitioner, therefore, prays that this Hon’ble Court be pleased to issue a writ of mandamus or a writ in the nature of mandamus or a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, direction or order and be pleased to: (a) quash and set aside the impugned rejection at Annexure-’A’ to this Petition and direct the Respondent No.1 to accept the application of the Petitioner; (b) pending the admission, hearing and final Page 8 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 disposal of this petition, to stay implementation and operation of the penalty proceedings initiated vide notice at Annexure-’H’ and stay further proceedings; (c) any other and further relief deemed just and proper be granted in the interest of justice; (d) to provide for the cost of this petition.” 12 This Court (Coram: Ms. Bela M. Trivedi, as Her Ladyship then was, A.C. Joshi, JJ ), vide order dated 14.06.2021, passed the following order:- “Learned advocate Mr. Bandish Soparkar appearing for the petitioner states that the petitioner was not intimated in writing about the outcome of the forms filed by the petitioner under Section 4 of the Direct Tax Vivad Se Vishwas Act and the Rule 3 of Direct Tax Vivad Se Vishwas Rules on 13.02.2021, and it was only on 26- 27.02.2021, he was intimated orally that the said forms / applications were not accepted as not found valid. Thereafter, the petitioner filed forms / applications on 27.02.2021, the outcome of which also was not intimated to the petitioner, and the petitioner came to know about the rejection of the said forms / applications only on 30.04.2021, 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) Page 9 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 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 before the ITAT 3. 31.01.2020 Specified date u/s 2(1)(n) of the Act. 4. 04.12.2020 CBDT’s clarification/relaxation in the form of FAQ’s. 5. 14.12.2020 Appeals came to be preferred with application for condonation of delay. 6. 23.02.2021 Delay condoned by the ITAT 7. 27.02.2021 Declarations filed in Form 1 and 2. 8. 30.04.2021 Rejection of applications by the Respondent No.1 15 It is further contended that section 21(a) of the Page 10 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 Act defines for the appellant to be present in whose case, the appeal has been filed by before the appellate forum and such appeal is pending as on the specified date. The specified date is defined under section 2(n) of the Act, which is 31.01.2020. The Central Board of Direct Taxes ( “the CBDT” for short) under its circular dated 04.12.2020 relaxed certain conditions owing to Covid-19 pandemic and the relevant FAQ no.59 also is forming part of the reply. It is contended that only those appeals with application for condonation of delay filed before 04.12.2020 and admitted before the date of filing the declaration would be deemed as pending as on 31.01.2020. According to the respondents, in the present case, the appeal with application for condonation of delay came to be filed on 14.12.2020 and, therefore, the appeal cannot be deemed to be pending as on 31.01.2020 or extended date of 04.12.2020, which is a condition precedent for Page 11 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 availing the benefit under the Act. 16 In parawise replies, justification is given for rejection of applications/declaration of Form Nos.1 and 2. According to the respondent, in case of Amina Abdulaziz Mastan, the CIT(Appeals) had accepted the application and issued Form No.3. In that case, the order of CIT (Appeals) was received on 14.12.2020 and, thereafter, the appeal came to be filed on 31.12.2020. Therefore, in this peculiar set of facts, her application was accepted and Form No.3 was issued, whereas in the instant case, order dated 09.10.2019 of CIT (Appeals) was received by the petitioner on 18.10.2019 and appeal with an application for condonation of delay came to be filed only on 14.12.2020, which was required to be filed on or before 04.12.2020 as per the relaxation granted by CBDT and, therefore, the appeal cannot be deemed to be pending on 31.01.2020. 17 It is further the say of the respondent that the Page 12 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 petitioner’s application under the VsV Act was uploaded in Forms No.1 and 2 through ITBA/E- Filing 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 Page 13 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 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, learned counsel on both the sides have been extensively heard, who have, in support of their respective pleadings argued at length. Mr. Bandish Soparkar, learned advocate for the petitioner, also relied upon the decision of the High Court of Telengana Boddu Ramesh vs. Principal Commissioner of Income-Tax, Hyderabad, [2021] 128 taxmann.com 13 (TELANGANA) and the decision of the Delhi High Court in the case of Shyam Sunder Sethi vs. Principal Commissioner of Income-Tax and others, W.P. Page 14 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 (C) 2291/2021 and CM APPL.6677/2021. 21 At the outset, law on the subject, shall need to be regarded. The short question that needs to be addressed by this Court is as to whether the petitioner would fall within the definition of an “appellant” as given under the VsV Act and whether his appeal can be said to have been pending on the specified date as provided under the said Act. 22 The VsV Act is enacted to provide for resolution of disputed tax and for matters connected therewith and incidental thereto. As is apparent, the Act has been brought to bring a about amicable and final solution to the direct tax litigation pending over the years with an intent to collect the tax and by waiving the penalty and the interest. This could be initiated at the level of the assessee or the department and this shortly could be said to be a legislation for the larger interest of all stakeholders. The intent of the bill Page 15 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 is to reduce the tax disputes considering the notable pendency of the direct tax cases. 23 The provision of VsV Act shall need to be regarded for comprehending the issue, which is presented before this Court. 23.1 In this context, section 2 of the VsV Act requires reproduction, at this stage: “(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 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 sub-section (13) of that section on or before the specified date; Page 16 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 (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 disposed of.] (b) \"appellate forum\" means the Supreme Court or the High Court or the Income Tax Appellate Tribunal or the Commissioner (Appeals); (c) \"declarant\" means a person who files declaration under section 4; (d) \"declaration\" means the declaration filed under section 4; (e) \"designated authority\" means an officer not below the rank of a Commissioner of Income-tax notified by the Principal Chief Commissioner for the purposes of this Act; xxx xxx xxx (k) \"Income-tax Act\" means the Income-tax Act, 1961 (43 of 1961); (l) \"last date\" means such date as may be notified by the Central Government in the Official Gazette; (m) \"prescribed\" means prescribed by rules made under this Act; (n) \"specified date\" means the 31st day of January, 2020;” 23.2 Section 2(a)(i) defines the appellant. Section 2(1)(3) defines designated authority and section2(1)(n) speaks of a specified date, which means 31st day of Page 17 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 January, 2020. 23.3 It is clear that the person in whose case an appeal or writ petition or special leave petition has been filed either by himself or by Income-Tax Authority or by both before the appellate forum and such appeal or petition when is pending as on the specified date, he is to be construed as an appellant for the purpose of the said provision. 23.4 It further defines that a person in whose case an order has been passed by the Assessing Officer or by the Commissioner (Appeals) or the ITAT or by the High Court in a writ petition, on or before a specified date and the time as for filing of appeal or Special Leave Petition against such order by that person has not expired as on the specified date, he also is an appellant within the definition given in the said Act. 23.5 It is, thus, amply clear from this provision that as on the specified date i.e. on 31.01.2020, there shall need to be pendency of appeal of an appellant, Page 18 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 which could be the appeal preferred by himself or by the revenue or by both before the appellate forum. 24 In the case of Boddu Ramesh (supra), the High Court of Telangana was dealing with an assessee petitioner, who had filed appeal on 19.02.2019 under section 246A before the Commissioner (Appeals) against the order of Assessing Officer and the same was dismissed. Assailing the order, the appeal was filed before the Tribunal along with an application to condone the delay in preferring the appeal. The Tribunal condoned 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 Page 19 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 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 throw light on this aspect, which reads as under: “Over the years pendency of appeals filed by taxpayers as well as Government has increased due to the fact that the number of appeals that are filed is much higher than the number of appeals that are disposed. As a result, a huge amount of disputed tax arrears is locked-up in these appeals. As on 30th November, 2019, the amount of disputed direct tax arrears is Rs.9.32 lakh crores. Considering that the actual direct tax Page 20 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 collection in the financial year 2018-19 was Rs.11.3 lakh crores, the disputed tax arrears constitute nearly one year direct tax collection. 2. Tax disputes consume copious amount of time, energy and resources both on the part of the Government as well as taxpayers. More over, they also deprive the Government of the timely collection of revenue. Therefore, there is an urgent need to provide for resolution of pending tax disputes. This will not only benefit the Government by generating timely revenue but also the taxpayers who will be able to deploy the time, energy and resources saved by opting for such dispute resolution towards their business activities. 3. It is, therefore, proposed to introduce direct tax Vivad Se Vishwas Bill, 2020 for dispute resolution related to direct taxes, which, inter alia, provides for the following, namely :-- (a) the provisions of the Bill shall be applicable to appeals filed by taxpayers or the Government, which are pending with the Commissioner (Appeals), Income Tax Appellate Tribunal, High Court or Supreme Court as on 31st January, 2020 irrespective of whether demand in such cases is pending or has been paid; 10 W.P.No.12038 of 2021 (b) the pending appeal may be against disputed tax, interest or penalty in relation to an assessment or re-assessment order or against disputed interest, disputed fees where there is no disputed tax. Further, the appeal may also be against the tax determined on defaults in respect of tax deducted at source or tax collected at source; (c) in appeals related to disputed tax, the declarant shall only pay the whole of the disputed tax, if the payment is made before 31st day of March, 2020 and for the payments made after 31st day of March, 2020, but on or before a date notified by the Central Government, the amount payable shall be increased by 10% of the disputed tax; (d) in appeals related to disputed penalty, disputed interest, or 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 Page 21 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 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 of 2020 w.e.f. 17.03.2020. 11 W.P.No.12038 of 2021. 21. Further, the intent of the Presenter of the Bill, i.e., the Hon’ble Finance Minister, was to reduce tax litigations, as there is a huge pendency of direct tax cases before various appellate forums. The tax payer in whose cases the appeals are pending before various forums can make use of the scheme and benefit, as he is required to pay only the amount of disputed taxes and would get complete waiver of interest and penalty. The relevant portion of the Budget Speech of the Hon’ble Finance Minister made on 1st February 2020, while placing the Bill before the Parliament, reads as under: “Sir, in the past our Government has taken several measures to reduce tax litigations. In the last budget, Sub Ka Vishwas scheme was brought in to reduce litigation in indirect taxes. It resulted in settling over 1,89,000 cases. Currently, there are 4,83,000 direct tax cases pending in various appellate forums, i.e., Commissioner Page 22 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 (Appeals), ITAT, High Court and Supreme Court. This year, I propose to bring a scheme similar to the indirect tax, Sub Ka Vishwas for reducing litigations even in the direct taxes. Under the proposed Vivad Se Vishwas scheme, a taxpayer would be required to pay only the amount of disputed taxes and will get complete waiver of interest and penalty provided he pays, by 31st March, 2020. Those who avail the scheme after 31st March 2020, will have to pay some additional amount. The scheme will remain open till 30th June 2020. Taxpayers in whose cases appeals are pending at any level can benefit from this scheme. I hope the taxpayers will make use of this opportunity to get relief from vexatious litigation process.” 22. From a reading of the objects and reasons as appended to the Bill and the speech of the Mover of the Bill, it would be clear that the pendency of litigation in relation to direct taxes before various forums was considered as a vexatious litigation process. Further, it would also be clear that the Government intended to free up the revenues which were 12 W.P.No.12038 of 2021 blocked on account of the tax disputes pending consideration in appeals before various forums. 23. It is trite law that the speech of Mover of Bill is very relevant for interpreting a new law, as held by the Supreme Court in K.P.VARGHESE V/s. INCOME TAX OFFICER, ERNAKULAM1 . 24. Thus, it would be safe to conclude 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.” Page 23 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 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 appeal with an 15 W.P.No.12038 of 2021 application for condonation and the admission of the appeal 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, it would lead to creation of separate class of persons among the declarants, without any reasonable basis, resulting in discrimination thereby violating Article 14 of the Constitution of India. 39. In the present case, the petitioner having filed an appeal before Tribunal along with an application for condonation and the Tribunal, having heard the matter on 05.02.2021 by condoning the delay, it is to be construed as Page 24 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 ‘pending’ appeal as on the date of filing of declaration on 08.02.2021. As a matter of fact, the Tribunal by order dt.15.02.2021, allowed the appeal of the petitioner remitted the matter back by restoring the appeal on the file of CIT, for fresh adjudication. 40. The natural corollary of the Tribunal accepting the application for condonation is to the effect that the appeal before the Tribunal as having been filed in time, since, such condonation would relate back to the date by which time, the appeal against the order of CIT ought to have been filed by the petitioner. Once it is considered that the appeal before the Tribunal is deemed as having been filed in time, the same would have to be construed as having been filed before the “specified date”, and thus, an appeal can be stated to be pending before the appellate forum and the petitioner would have to be considered as an ‘appellant’ as defined in Section 2(1)(a)(i) of the Act of 2020, and the tax as assessed would have to be considered as ‘disputed tax’, as defined under Section 2(1)(j)(B) of the Act of 2020. 16 W.P.No.12038 of 2021 41. Alternatively, it is to be noted that since, the last date for filing declaration had been extended up to 31.03.2021 and the Tribunal, having found cogent reasons to condone the delay and allowing the appeal filed by the petitioner and remitting the matter back to the CIT by its order dt.15.02.2021, would automatically revive and restore the appeal, which was dismissed by the CIT by his order dt.18.09.2019. Thus, by order of the Tribunal dt.15.02.2021, the appeal 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 Page 25 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 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 Page 26 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 rejection. 29 There also the issue was raised of non-pendency of the appeal on a specified date and the Court held thus: “17. We have heard learned counsel for the parties and perused the record. The dates and events which have been set out hereinabove, are not in dispute. What has emerged, though, from the record is the following: (i) That the petitioner filed an appeal with respondent no.3/CIT(A) concerning the assessment year 2011-2012 on 11.07.2019. (ii) This appeal included a plea for condonation of delay which was filed by the petitioner in the prescribed format. (iii) Because the petitioner was seeking condonation of delay in filing the appeal, quite obviously, the limitation provided for instituting the appeal had expired. The limitation, even according to the petitioner, had expired on 03.02.2019. (iv) The plea for condonation of delay, as noticed above, was incorporated in the appeal and was preferred before issuance of the circular dated 04.12.2020. (v) Respondent no.3/CIT(A) as on the date of rejection, i.e., 12.06.2020 had not dealt with the plea for condonation. 18. Therefore, what we are required to delve into is: whether the response given to FAQ 59 circumscribed the power of the designated authority to process forms 1 and 2 filed by the petitioner. It would be relevant in this context to advert to Section 2 (1) a (i) and Section 2 (1) a (n) of the Act. For the sake of convenience, the same is extracted hereafter: “2. (1) (a) (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;” “2. (1) (a) (n) Page 27 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 “specified date” means the 31st day of January, 2020” 19. A perusal of the aforesaid provisions and the attendant provisions of the Act would show that the request should have been made in the prescribed format, i.e., form 1 and 2 before the specified date, i.e., 31.01.2020 and that the appeal (we are not concerned with other forms of action) should be pending before the appellate forum, [i.e., respondent no.3/ W.P.(C) 2291/2021 Pg. 8 of 10 CIT(A) in this case] on the specified date. 20. These provisions do not advert to what has been contended before us by Mr. Singh. 20.1 To shed light on what has been submitted before us by Mr. Singh, it would be necessary 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 Page 28 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 the 2020 Act. For instance, the respondent states that if the limitation or the time limit for filing the appeal expires during the period 01.04.2019 and 31.01.2020 (both dates included) and the application for condonation is filed before the date of issuance of the said clarification, i.e., 04.12.2020, the appeal can be construed as pending on the specified date i.e. 31.01.2020, only if it is “admitted” by the appellate authority before the filing of the declaration in the form prescribed under the 2020 Act. 23. Insofar as the petitioner is concerned, as noted, the appeal which included the condonation of delay application, was filed on 11.07.2019, that is, well before the specified date; the specified date under the 2020 Act being 31.01.2020. 23.1 We were not referred to any provision under the 2020 Act, which provided that limitation qua the subject appeal should be expired within the period spread out between 01.04.2019 and 31.01.2020 (both dates included) and it ought to have been admitted for it to be considered as “pending” under the 2020 Act. 24. The fact that the appeal included a plea of condonation of delay is not in dispute. Therefore, the appeal could not have been admitted unless the delay was condoned. But that by itself does not efface the fact that the appeal was pending. An appeal would be “pending” in the context of Section 2 (1) (a) of the 2020 Act when it is first filed till its disposal1 . Section 2(1)(a) of the 2020 Act does not stipulate that the appeal should be admitted before the specified date, it only adverts to its pendency. Respondent no.1 seems to have, in our view, wrongly equated admission of the appeal with pendency. In our view, as noted above, the appeal would be pending as soon as it is filed and up until such time it is adjudicated upon and a decision is taken qua the same. We could have appreciated the stand of the respondents if a plea made for condonation of delay would have been 1 . See Prem’s Judicial Dictionary, Vol. III 196: “The Page 29 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 word pending is thus defined in Stroud s Judicial ‟s Judicial Dictionary Ed. 3, vol. 3, p.2141: (1) A legal proceeding is „pending as soon as commenced ‟s Judicial and until it is concluded i.e., so long as the Court having original cognizance of it can make an order on the matters in issue, or to be dealt with, therein. Similar are the observations of Jessel, M.R. In Re Clagett s Estate Fordham v. Clagett, (1882) 20 Ch. ‟s Judicial 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 Page 30 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 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 Jan 2020.” 32 It is quite clear from the question that the time period for filing the appeal, if has already expired before 31st January, 2020, but an application for condonation of delay has already been filed, a deeming fiction is provided. According to the Revenue if the time for filing of the appeal expired during the period from 1st April, 2919 to 31st January, 2020( both the dates included in the period) and if the application for condonation of delay is filed before the date of issuance of this circular and if the appeal is admitted by the appellate authority before the date of filing of the declaration, such appeal is deemed to be pending as on 31.01.2020. 33 It is, therefore, rightly contended on the strength of the decision rendered in the case of Boddu Ramesh (supra) by the learned advocate for the Page 31 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 petitioner that condonation of delay whenever is accepted by the appellate authority, the same would relate back to the original date of filing of the appeal, as if the appeal is filed within the time period given under the statute. The Telengana High Court also has taken into consideration the Finance Bill memorandum containing explanation of every clause, intent and purpose for the proposal while laying the said Bill along with the circular of the CBDT which explained each clause while issuing the Circular. The Finance Minister’s speech, its intent and purpose as also the insertion, amendment and modifications have been regarded. The Apex Court has held that the CBDT under section 119 is conferred the powers with the general objective for use of powers and proper administration of this Act. 34 In the words of the Apex Court, “ the power is given for the purpose of just, proper and efficient Page 32 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 management of the work of assessment and in public interest. It is a beneficial power given to the Board for proper administration of fiscal law so that undue hardship may not be caused to the assessee and the fiscal laws may be correctly applied.’ ‘Such instructions may be by way of relaxation of any of the provisions of the sections specified there or otherwise. The Board thus has power, inter alia, to tone down the rigour of the law and ensure a fair enforcement of its provisions, by issuing circulars in exercise of its statutory powers under Section 119 of the Income0tax Act which 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 Page 33 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 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 in any such matter is preferred and the same is allowed, it would be construed as if there is no delay and the appeal is preferred well within time. 37 In such eventuality to say that order of condonation of delay though is already made by the competent forum, that cannot be construed as pendency of appeal, would also amount to arguing against the well established principle of Page 34 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 law. Even without delving much into the provisions of VsV Act, if other laws holding the field for decades and the principles carved out during this journey, are considered, the simple answer to the delay condoned by the appellate authority is that there was no delay at all in preferring the appeal and the appeal, which has been preferred by the petitioner would relate back to the original date of filing of appeal, which would in other words mean that under the VsV Act, the petitioner would fall into the bracket of the definition of appellant in whose case, the appeal preferred before the ITAT was pending as on the specified date i.e. 31.01.2020. It is also necessary to know that the last date for declaration was finalised as 31.03.2021 and in the case of the present petitioner, his declaration has been filed once delay was condoned before the said date of declaration in the form No.1 and 2 was over. Had it been the case of the date of declaration having expired, prior to the delay having been condoned, answer possibly could be otherwise and not so simple, but, here the assessee’s timely allowance of condonation of delay by ITAT on dated 23.02.2020 would not in any manner hamper his path of his case being considered under the VsV Act as an Appellant. Page 35 of 36 C/SCA/7441/2021 CAV JUDGMENT DATED: 23/09/2021 38 Resultantly, the petition is allowed, quashing and setting aside the order of rejection by the respondent authority on dated 30.03.2021. Consequently, the petitioner is entitled to the participation in the process under the VsV Scheme. 39 Let the declaration of the petitioner be accepted by the respondent within three (3) days from the receipt of the copy of this order and the petitioner shall follow the requirement of payment of tax as the last date is 30.09.2021. All consequential procedural actions shall be permitted by the respondent in accordance with law, to enable the petitioner to be considered under the VsV Act. (MS. SONIA GOKANI, J) (RAJENDRA M. SAREEN,J) SUDHIR Page 36 of 36 "