2022 (1) TMI 943 - HC - Income Tax

Benefit of Vivad Se Vishwas Scheme ('VVS Scheme') - last extended date for filing declaration - Condonation of delay - HELD THAT - As petitioner filed her declaration on 03.03.2021 which was before the last extended date for filing declaration i.e., 31.03.2021. But, before 03.03.2021, the appeal was filed by the petitioner before the Income Tax Appellate Tribunal on 24.02.2021 along with an application for condonation of delay. The delay was condoned on 23.03.2021 on which date the appeal was also disposed of considering the submission of the petitioner that she would file declaration under the Vivad Se Vishwas Act which was not objected to by the Revenue. On due consideration, we are in agreement with the view taken by the coordinate Bench in Boddu Ramesh 2021 (2) TMI 1174 - ITAT HYDERABAD more particularly to those expressed in paragraph nos.40 and 43 thereof. We find that rejection of the declaration was not preceded by any notice or hearing. Though such notice or hearing is not provided under Section 5 of the Vivad Se Vishwas Act, it is axiomatic that principles of natural justice, which is the very essence of fairness, demands that before an adverse decision is taken affecting the rights and liabilities of an aggrieved person, he ought to be put on notice and given an opportunity of hearing. The same having not been done in the present case, the impugned decision suffers from violation of the principles of natural justice which is one more reason why we are constrained to interfere with the same. We set aside the impugned order dated 20.04.2021 passed by respondent no.2 rejecting the declaration / application of the petitioner dated 03.03.2021 for settlement of tax dues under the Direct Tax Vivad Se Vishwas Act, 2020 and remand the matter back to the authority for taking a fresh decision in accordance with law.

Summary

Issues Involved:
1. Validity of the rejection of the petitioner's declaration under the Direct Tax Vivad Se Vishwas Act, 2020.
2. Eligibility criteria under the Vivad Se Vishwas Act for filing a declaration.
3. Interpretation of the specified date for pending appeals under the Vivad Se Vishwas Act.
4. Adherence to principles of natural justice in the decision-making process.

Detailed Analysis:

1. Validity of the rejection of the petitioner's declaration under the Direct Tax Vivad Se Vishwas Act, 2020:
The petitioner sought quashing of the order dated 20.04.2021, which rejected her application for settlement of tax dues under the Vivad Se Vishwas Act. The rejection was based on the grounds that no appeal was pending as on the specified date (31.01.2020) and that the dispute was on the quantum of addition, not on interest. The court found that respondent no.2's decision to reject the declaration on merits was unnecessary once it was deemed non-maintainable due to ineligibility.

2. Eligibility criteria under the Vivad Se Vishwas Act for filing a declaration:
The Vivad Se Vishwas Act aims to resolve disputed tax matters. According to Section 2(1)(a), an "appellant" is a person whose appeal or petition is pending as on the specified date (31.01.2020). The court referred to Circular No.21 of 2020 issued by the C.B.D.T., which clarified that if an application for condonation of delay was filed before 04.12.2020 and the appeal was admitted before the declaration filing date, such appeal would be deemed pending as on 31.01.2020.

3. Interpretation of the specified date for pending appeals under the Vivad Se Vishwas Act:
The court noted that the specified date of 31.01.2020 was not extended, but the last date for filing declarations was extended to 31.03.2021. The court emphasized a liberal approach, consistent with the Act's objective to reduce litigation. It cited a similar case (Boddu Ramesh vs. Designated Authority), where it was held that if the delay in filing an appeal is condoned, the appeal should be deemed pending as on the specified date.

4. Adherence to principles of natural justice in the decision-making process:
The court found that the rejection of the declaration was not preceded by any notice or hearing, violating principles of natural justice. The court emphasized that fairness demands an opportunity for the aggrieved person to be heard before an adverse decision is taken.

Conclusion:
The court set aside the impugned order dated 20.04.2021 and remanded the matter back to the authority for a fresh decision in accordance with the law. The jurisdictional Principal Chief Commissioner of Income Tax was directed to assign another designated authority to handle the petitioner's declaration. A fresh decision was to be taken within eight weeks from the date of receipt of the court's order. The writ petition was disposed of with no order as to costs, and any pending miscellaneous applications were closed.