TUSHAR AGRO CHEMICALS V. THE PRINCIPAL COMMISSIONER OF INCOME TAX-1

SCA/6232/2021

AI Insights

The case involves Tushar Agro Chemicals, which filed a petition against the Principal Commissioner of Income Tax-1, challenging the rejection of their Declaration under 'The Direct Tax Vivad se Vishwas Act, 2020'. The petitioner had filed an appeal against an assessment order, which was delayed but still pending. The Income Tax Department rejected the Declaration on the grounds of the delay in filing the appeal, which had not been condoned. The court examined the definitions and provisions under the said Act and relevant precedents, concluding that the appeal's mere pendency on the specified date was sufficient for the petitioner to qualify as an 'Appellant' under the Act, regardless of the delay's status.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 769624 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 31-07-2021
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax v. Shatrusailya Digvijaysingh Jadeja, Shyam Sunder Sethi v. Pr. Commissioner of Income Tax -10 & Ors.
• Laws Referred To: The Direct Tax Vivad se Vishwas Act, 2020, Income Tax Act 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: MAUNA BHATT
• Assessee Lawyers: TUSHAR HEMANI; VAIBHAVI PARIKH
• Keywords: Appeal; Assessment Year; Condonation of delay; Direct Tax Vivad Se Vishwas Act; Income Tax
• Section: 143(3); 2(i)(a); 2(i)(n)

Judgement Text

"C/SCA/6232/2021 JUDGMENT DATED: 31/07/2021 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 6232 of 2021 FOR APPROVAL AND SIGNATURE: HONOURABLE MS. JUSTICE BELA M. TRIVEDI and HONOURABLE DR. JUSTICE ASHOKKUMAR C. JOSHI ========================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? No 2 T o be referred to the Reporter or not ? Yes 3 Whether their Lordships wish to see the fair copy of the judgment ? No 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ? No ========================================================== TUSHAR AGRO CHEMICALS Versus THE PRINCIPAL COMMISSIONER OF INCOME TAX-1 ========================================================== Appearance: MR. TUSHAR HEMANI, SENIOR ADVOCATE with MS VAIBHAVI K PARIKH(3238) for the Petitioner(s) No. 1 MRS MAUNA M BHATT(174) for the Respondent(s) No. 1 ========================================================== CORAM: HONOURABLE MS. JUSTICE BELA M. TRIVEDI and HONOURABLE DR. JUSTICE ASHOKKUMAR C. JOSHI Date : 31/07/2021 ORAL JUDGMENT (PER : HONOURABLE MS. JUSTICE BELA M. TRIVEDI) 1. Rule. Mrs. Mauna Bhatt, Senior Standing Counsel for the Respondent Page 1 of 9 C/SCA/6232/2021 JUDGMENT DATED: 31/07/2021 waives service of Rule. 2. With the consent of learned learned Advocate for the parties, the Petition is taken up for final hearing. 3. The present Petition filed by the Petitioner – Tushare Agro Chemicals, under Article 226 of the Constitution of India, is directed against the impugned communication dated 22.2.2021 (Annexure-F), rejecting the Declaration filed by the Petitioner under “The Direct Tax Vivad se Vishwas Act, 2020 (hereinafter referred to as “the said Act”). 4. The facts in nutshell, giving rise to the present Petition are that during the Financial Year 2012-13, relevant to the Assessment Year 2013-14 (i.e. the year under consideration), the Petitioner was engaged in the business of trading of Pesticides on wholesale basis. The Petitioner had filed its return of income for the year under consideration on 27.9.2013 declaring its total income at Rs. NIL. The case of the Petitioner, having been selected for the scrutiny assessment, the Assessing Officer had framed the assessment under Section 143(3) of the Income Tax Act 1961 (hereinafter referred to as “the IT Act”), vide order dated 25.2.2016. Being aggrieved, by the said assessment order, the Petitioner, on 17.5.2016, had electronically, filed an Appeal before the First Appellate Authority in the prescribed Form, being Form No.35. Since there was a delay of around 40 days in filing the said Appeal, the Petitioner had mentioned about such delay in Column No.15 in the said Form 35. As per the case of the Petitioner, during the pendency of the said Appeal, the Petitioner had moved an application seeking permission to lead an additional evidence. The Appellate Authority had also issued various notices fixing the date of hearing in relation to the Appeal in question. The Petitioner had also appeared before the Appellate Authority from time to time. The Appellate Authority had lastly issued the notice dated 9.8.2018 to the Petitioner in the said Appeal proceedings, and thus the said Appeal was pending before the Appellate Page 2 of 9 C/SCA/6232/2021 JUDGMENT DATED: 31/07/2021 Authority. It is further case of the Petitioner that the said Act having come into force, for settling the disputes, the Petitioner being an Appellant, and desirous of settling the dispute involved in the Appeal pending on the specified date i.e. 31.1.2020, had decided to opt for availing the benefit under the said Act, and accordingly, had filed the Declaration in the prescribed Form Nos. 1 and 2 on 23.12.2020 under the said Act. However, it was displayed on the E-filing portal of the Respondent that the said Declaration was rejected on 22.2.2021, mainly on the ground that the First Appeal was filed belatedly and there was no information received from the Assessing Officer, as to whether, the delay occurred in filing the Appeal before the Appellate Authority was condoned or not. 5. The learned Senior Advocate Mr. Tushar Hemani appearing with learned Advocate Ms. Vaibhavi K. Parikh for the Petitioner, taking the Court to the Scheme of the said Act, more particularly, the definition of an “Appellant” contained in Section 2(i)(a), submitted that since the Appeal of the Petitioner was pending before the Appellate Authority on the ‘specified date’, i.e. 31.1.2020, the Petitioner was an ‘Appellant’ as defined under the said Act, and was eligible to file the Declaration. According to him, the same has been wrongly rejected on the extraneous ground that there was no reply received from CIT (Appeals), as to whether, any order of condonation of delay was passed in the said Appeal or not. Learned Senior Advocate Mr. Hemani has placed reliance on the decision of the Supreme Court in case of Commissioner of Income Tax v. Shatrusailya Digvijaysingh Jadeja – [2005] 147 Taxman 566 (SC) as also on the unreported decision of the Delhi High Court in case of Shyam Sunder Sethi v. Pr. Commissioenr of Income Tax -10 & Ors. passed in W.P. (C) 2291/2021 and CM Appl. 6677/2021, to submit that the Declaration of the Appellant could not have been rejected by the Respondent Authority when the Appeal was pending, even if the delay was not condoned by the Appellate Forum. He also submitted that there is no practice of registering the application seeking condonation of delay separately before the Page 3 of 9 C/SCA/6232/2021 JUDGMENT DATED: 31/07/2021 Appellate Forum. 6. However, the learned Senior Standing Counsel Mrs. Mauna M. Bhatt for the Respondent submitted that since the delay occurred in filing the Appeal was not condoned by the Appellate Authority, it could not be said that the valid Appeal was pending before the Appellate Authority, nor the Petitioner could be treated as an ‘Appellant’ within the meaning of Section 2(i)(a) of the said Act. 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 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; Page 4 of 9 C/SCA/6232/2021 JUDGMENT DATED: 31/07/2021 (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;\" [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; 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 Page 5 of 9 C/SCA/6232/2021 JUDGMENT DATED: 31/07/2021 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 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 Page 6 of 9 C/SCA/6232/2021 JUDGMENT DATED: 31/07/2021 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 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. Page 7 of 9 C/SCA/6232/2021 JUDGMENT DATED: 31/07/2021 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 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. Page 8 of 9 C/SCA/6232/2021 JUDGMENT DATED: 31/07/2021 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. (BELA M. TRIVEDI, J) (A. C. JOSHI,J) J.N.W Page 9 of 9 "