2021 (9) TMI 1008 - HC - Income Tax

Condonation of delay - time limit for filing the appeal u/s 246A exceeded - Application /declaration/ undertaking filed under the provisions of Direct Tax Vivad Se Vishwas Act, 2020 ('VSV' Act) rejected - HELD THAT - As communication has come from Commissioner of Income Tax (Appeals) and the Commissioner of Income Tax (Appeals) is asking the petitioner to furnish ground-wise written submission on grounds of appeal, it would mean that condonation of delay application has been allowed by Commissioner of Income Tax (Appeals). Therefore for respondent no.2 to say that there is no order condoning the delay and hence, the application/ declaration of petitioner under the VSV Act is rejected, is incorrect. Section 2(1)(a)(i) of the VSV Act provides for a person in whose case an appeal or a writ petition or special leave petition has been filed either by himself or by income tax authority or by both, before an appellate forum and such appeal or petition is pending as on the specified date is entitled to make a declaration under the Act. The specified date under Section 2(1)(a)(n) of the VSV Act is January 31, 2020. The time to file declaration/undertaking under VSV Act was January 31, 2021. Petitioner has admittedly made its declaration in Form 1 on January 21, 2021, i.e., within the prescribed period. In the case at hand, the time limit to file appeal expired on January 18, 2020, and the condonation of delay application was filed on February 6, 2020, before December 4, 2020, the date of the Circular, the appeal would be pending as required under the VSV Act. In any event, the Commissioner of Income Tax (Appeals) himself has addressed a letter dated January 20, 2021 asking the petitioner to furnish ground-wise submissions on the grounds of appeal if petitioner was not opting for VSV Scheme, 2020. This itself would mean the delay also has been condoned. Order of rejection dated February 26, 2021 is bad in law and is accordingly set aside. Respondent no.2 is directed to process the forms filed by petitioner under the provisions of VSV Act.

Summary

Issues:
Impugning the rejection order under Direct Tax Vivad Se Vishwas Act, 2020 (VSV Act) - Delay in filing appeal under Section 246A of the Income Tax Act, 1961 - Communication from Commissioner of Income Tax (Appeals) regarding VSV Scheme 2020 - Interpretation of VSV Act provisions - Circular by Central Board of Direct Taxes - Admissibility of appeal under VSV Act.

Analysis:
The petitioner challenged the rejection order dated February 26, 2021, passed by respondent no.2 under the VSV Act. The petitioner filed its original income tax return for Assessment Year 2017-18, which was selected for scrutiny, leading to an assessment order under Section 144 of the Income Tax Act, 1961. The petitioner filed an appeal under Section 246A of the Act on February 6, 2020, after the expiry of the time limit, with an application for condonation of delay. The delay was of 19 days, and the filing fees for the appeal were paid on January 24, 2020. The Commissioner of Income Tax (Appeals) inquired about the petitioner's choice regarding the VSV Scheme 2020 on January 20, 2021, indicating that the delay in filing the appeal had been condoned.

The VSV Act allows a person with a pending appeal as of January 31, 2020, to make a declaration under the Act by January 31, 2021. The petitioner made its declaration on January 21, 2021, within the prescribed period. A Circular by the Central Board of Direct Taxes clarified that appeals with applications for condonation filed before December 4, 2020, would be deemed pending as of January 31, 2020. The Delhi High Court held that an appeal is considered pending from the time it is filed until adjudicated upon, rejecting the notion that admission of the appeal equates to pendency. In this case, the appeal was filed before December 4, 2020, meeting the VSV Act's requirements.

The rejection order dated February 26, 2021, was deemed legally flawed and set aside. Respondent no.2 was directed to process the forms filed by the petitioner under the VSV Act. The Writ Petition was disposed of accordingly, with no order as to costs.