2021 (3) TMI 603 - HC - Income Tax

Rejection of application under Direct Tax Vivad Se Vishwas Act, 2020 (DTVSVA) - Appellant / Assessee has filed an appeal with the application for condonation of delay where the period for filing an appeal was already expired - Scope of the clarification issued by the CBDT as FAQ 59 as 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 - HELD THAT - In response to this query, several facets have been alluded to, which are not found in 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. 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. 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. 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 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. The order of rejection dated 28.01.2021 is bad in law. It is, accordingly, set aside.

Issues Involved:
1. Rejection of the application under the Direct Tax Vivad Se Vishwas Act, 2020.
2. Pendency of the appeal and the requirement of condonation of delay.
3. Interpretation of FAQ 59 and its applicability.
4. Legal interpretation of "pendency" under the 2020 Act.

Issue-wise Detailed Analysis:

1. Rejection of the application under the Direct Tax Vivad Se Vishwas Act, 2020:
The petitioner was aggrieved by the rejection of his application filed under the Direct Tax Vivad Se Vishwas Act, 2020. The petitioner had filed his income-tax return for the assessment year 2011-2012 and claimed an exemption under Section 54 of the Income Tax Act, 1961. However, the revenue issued a reassessment notice and disallowed the exemption, assessing the petitioner’s income at ?3,08,94,767/-. The petitioner appealed against this reassessment, including a condonation of delay application, which was filed on 11.07.2019. Despite taking steps under the 2020 Act to resolve the pending disputes, the petitioner’s application was rejected on 28.01.2021 without providing reasons, which led to the filing of the writ petition.

2. Pendency of the appeal and the requirement of condonation of delay:
The core issue was whether the appeal filed by the petitioner, which included a plea for condonation of delay, was considered "pending" as of the specified date (31.01.2020) under the 2020 Act. The petitioner argued that since the appeal was filed on 11.07.2019, it should be deemed pending. The respondents contended that the appeal could not be considered pending unless the application for condonation of delay was admitted before the issuance of the circular dated 04.12.2020 and before the filing of forms 1 and 2.

3. Interpretation of FAQ 59 and its applicability:
The respondents relied on FAQ 59 from a clarificatory circular dated 04.12.2020, which stated that for an appeal to be deemed pending, it must have been filed within the period from 01.04.2019 to 31.01.2020 and admitted by the appellate authority before the filing of the declaration. The court found that this response added conditions not present in the 2020 Act itself. The Act only required that the appeal be pending as of 31.01.2020, without stipulating that it must be admitted by that date.

4. Legal interpretation of "pendency" under the 2020 Act:
The court examined the definition of "pendency" and concluded that an appeal is considered pending from the time it is filed until it is adjudicated upon. The court noted that the 2020 Act did not require the appeal to be admitted by the specified date, only that it be pending. The court emphasized that the appeal, including the condonation of delay plea, was filed well before the specified date and was still pending as the delay had not been adjudicated upon by the appellate authority.

Conclusion:
The court held that the rejection of the petitioner’s application was erroneous and set aside the order dated 28.01.2021. The court directed the respondents to process the forms filed by the petitioner under the 2020 Act, considering the appeal as pending. The writ petition was disposed of with these directions.

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