2022 (3) TMI 1427 - HC - Income Tax

Benefit of settlement scheme as per Direct Tax Vivad Se Vishwas Act, 2020 - condonation of delay - whether a right to avail the benefit of settlement scheme is a valuable or vested right? - HELD THAT - Undoubtedly, the scheme has been brought about bearing in mind various factors. There is no compulsion on the assessee to avail the benefit of the scheme as it is purely optional. Therefore, an assessee may choose or may not choose to avail the benefit of the scheme. The assessee has filed an affidavit stating that she was advised to avail the benefit of scheme in the event the revenue prefers an appeal before this Court against the decision of the Tribunal which was in favour of the assessee. We cannot examine the case on abstract propositions or what would have been the intention of the assessee. On careful reading of all the provisions of Act 3 of 2020, it is clear that the benefit provided is optional, an assessee exercising such option is not automatically entitled to the benefit under the scheme and the authority is empowered to consider and refuse to entertain the application for reasons to be assigned. Section 9 has also enumerated the cases where the Act will not apply. Thus, on a complete reading of Act 3 of 2020 it is clear that the scheme propounded therein not only is optional but can never construed to be a vested or a valuable right. Therefore, on the assessee contemplating of going under the scheme cannot be said to have suffered prejudice only because the revenue preferred the appeal belatedly as we find the scheme does not confer any vested right on the assessee. Assessee placed reliance on the order passed by this Court in the case of Nitu Agarwal 2021 (12) TMI 1385 - CALCUTTA HIGH COURT the revenue had not placed any submission as to the effect of the provisions of Act 3 of 2020 nor there was any dispute raised on the submission of the assessee that they wanted to avail the benefit of the scheme. In any event it is an order passed in a miscellaneous application refusing to exercise discretion and the same cannot be treated as precedent as each case has to be considered on the facts and circumstances contained therein. Upon going through the affidavits filed in support of the applications and bearing in mind the facts and circumstances set out above, we are satisfied that the revenue has shown sufficient cause for not being able to prefer the appeal within the period of limitation. We are of the considered view that cause of justice would be served if the delay in filing the appeal is condoned and the appeals are heard on merits so that the Court can consider as to whether any substantial question of law arises for consideration.

Issues Involved:
1. Condonation of delay in filing appeals under Section 260A of the Income Tax Act, 1961.
2. Impact of the Direct Tax Vivad Se Vishwas Act, 2020 on the assessee's rights.
3. Legal principles regarding 'sufficient cause' for delay.
4. Investigation into large-scale financial scams involving 'Penny Stock Cases'.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing Appeals:
The revenue sought condonation of delay in filing appeals before the High Court under Section 260A of the Income Tax Act, 1961, challenging the orders passed by the Income Tax Appellate Tribunal, Kolkata. The Court noted that the length of delay, whether 90 days or more than 300 days, was not the primary factor. The main consideration was whether the Court should exercise discretion in condoning the delay. The Court emphasized that even a short delay caused by mala fide reasons could lead to dismissal, while substantial delays could be condoned if sufficient cause was shown.

2. Impact of the Direct Tax Vivad Se Vishwas Act, 2020:
The respondents argued that the delay deprived them of the opportunity to benefit from the Direct Tax Vivad Se Vishwas Act, 2020, which allowed for the resolution of disputed taxes. The Court examined whether the right to avail the scheme was a valuable or vested right. It concluded that the scheme was optional and did not confer any vested right on the assessee. Therefore, the delay in filing the appeals did not prejudice the assessee's rights under the scheme.

3. Legal Principles Regarding 'Sufficient Cause' for Delay:
The Court referred to the Supreme Court's decision in Collector Land Acquisition, Anantnag vs. Mst. Katiji, which explained that 'sufficient cause' is an elastic expression allowing courts to apply the law meaningfully to serve justice. The principles highlighted included avoiding a pedantic approach, preferring substantial justice over technical considerations, and recognizing that delay is not presumed to be deliberate. The Court reiterated that each case must be considered on its facts to decide on condonation of delay.

4. Investigation into Large-Scale Financial Scams:
The revenue's case involved 'Penny Stock Cases', where the Tribunal had granted relief to the assessee based on earlier decisions. The revenue argued that these cases exposed a large financial scam, with significant revenue loss estimated at over Rs. 38,000 crores. The Court acknowledged the ongoing investigation and the broader implications of the scam. It noted that the Central Board of Direct Taxes (CBDT) had instructed the Department to pursue appeals in penny stock matters irrespective of the tax effect, underscoring the seriousness of the issue.

Conclusion:
The Court concluded that the revenue had shown sufficient cause for the delay in filing the appeals. It emphasized that cause of justice would be served by condoning the delay and hearing the appeals on merits to determine if any substantial question of law arose. Consequently, the applications for condonation of delay were allowed, and the appeals were scheduled for hearing on April 18, 2022.

← Previous Next →