2021 (6) TMI 1054 - HC - Income Tax

Vivad Se Vishwas scheme 2020 - petitioner would contend that having regard to the scheme of the Act of 2020 and various clarifications issued by the Central Board of Direct Taxes in exercise of powers conferred under Sections 10 and 11 therein from time to time, the appeal filed by the petitioner before the Tribunal, even though with an application for condonation of delay, has to be considered, as dispute pending as on the specified date under the Act of 2020 - HELD THAT - If Board circular is construed in such a restrictive manner, as is contended by respondents, the same would run contrary to the scheme of the Act of 2020 and the powers exercised by Board under Section 10 and 11 to issue directions or orders in public interest or to remove difficulties. We are unable to persuade ourselves to confine the benefit of deemed pendency of appeal only if an application for condonation is filed on or before 04.12.2020, as in our view no significance can be attached to the said date of issue of the circular, since, what is required to be considered is the pendency of the appeal with an application for condonation and the admission of the appeal as on the date of filing of declaration. In our view, even after 04.12.2020, if an appeal is filed with an application for condonation of delay and the appeal is admitted by the appellate authority before the date of filing of the declaration, the benefit is to be extended, as otherwise, it would lead to creation of separate class of persons among the declarants, without any reasonable basis, resulting in discrimination thereby violating Article 14 of the Constitution of India. In the present case, the petitioner having filed an appeal before Tribunal along with an application for condonation and the Tribunal, having heard the matter on 05.02.2021 by condoning the delay, it is to be construed as pending appeal as on the date of filing of declaration on 08.02.2021. As a matter of fact, the Tribunal by order dt.15.02.2021, allowed the appeal of the petitioner remitted the matter back by restoring the appeal on the file of CIT, for fresh adjudication. Once it is considered that the appeal before the Tribunal is deemed as having been filed in time, the same would have to be construed as having been filed before the specified date , and thus, an appeal can be stated to be pending before the appellate forum and the petitioner would have to be considered as an appellant as defined in Section 2(1)(a)(i) of the Act of 2020, and the tax as assessed would have to be considered as disputed tax , as defined under Section 2(1)(j)(B) of the Act of 2020. As noted that since, the last date for filing declaration had been extended up to 31.03.2021 and the Tribunal, having found cogent reasons to condone the delay and allowing the appeal filed by the petitioner and remitting the matter back to the CIT by its order dt.15.02.2021, would automatically revive and restore the appeal, which was dismissed by the CIT by his order dt.18.09.2019. Thus, by order of the Tribunal dt.15.02.2021, the appeal of the petitioner before of the CIT filed on 19.02.2019 would stand revived, and such restoring of appeal relates back the original date of filing, which is within the specified date as per Act of 2020. Thus, considered from any angle, the declaration/application submitted by the petitioner on 08.02.2021 or the revised declaration/application submitted in Form 1 and 2 on 31.03.2021 cannot be considered as invalid and liable for rejection . As noted above, the Act of 2020 is a beneficial piece of legislation and the benefit under such legislation should enure to the benefit of the assessee and cannot be denied by taking hyper-technical view. This Court is of the considered view that the remark/reason given by the 1st respondent in rejecting the declaration in Forms 1 and 2 filed by the petitioner on 31.03.2021 as well as on 20.02.2021 cannot be sustained, as the said reasons are not inconsonance with the scheme of the Act and also do not confirm to the intent and purpose of the Legislation. Writ Petition is allowed and the impugned proceeding of the 1st respondent, dt.22.04.2021, is hereby set aside; the 1st respondent is directed to accept the revised declaration Form 1 and 2 filed by the petitioner on 31.03.2021; process the same in accordance with the Act of 2020; issue Form 3; and accept the payment from the petitioner in terms thereof before the due date as notified.

Summary

Issues Involved:
1. Validity of rejection of the petitioner’s declaration/application under the Direct Tax Vivad Se Vishwas Act, 2020 (the Act of 2020).
2. Interpretation of the "specified date" for pending appeals under the Act of 2020.
3. Applicability of the Central Board of Direct Taxes (CBDT) Circular No.21/2020 to the petitioner’s case.
4. Whether the Act of 2020 is a beneficial legislation and the scope of its interpretation.

Issue-wise Detailed Analysis:

1. Validity of Rejection of the Petitioner’s Declaration/Application under the Act of 2020:
The petitioner challenged the proceeding dated 22.04.2021 issued by the 1st respondent, which rejected the petitioner’s revised declaration/application dated 31.03.2021 in Form 1 and 2 under the Act of 2020. The petitioner contended that the appeal against the CIT’s order was filed before the Tribunal, condoning the delay, and thus should be considered pending as on the specified date, i.e., 31.01.2020. The respondents argued that no appeal was pending on the specified date, thus the application was invalid.

2. Interpretation of the "Specified Date" for Pending Appeals under the Act of 2020:
The Act of 2020 aims to resolve disputed tax matters and requires appeals to be pending as on 31.01.2020. The petitioner argued that the appeal should be deemed pending as on the specified date due to the Tribunal’s condonation of delay and subsequent remand to the CIT. The court noted that the Act of 2020 is a beneficial legislation intended to reduce tax disputes and should be interpreted to achieve its purpose. The court found that the appeal, once admitted by the Tribunal, should be considered pending as on the specified date.

3. Applicability of the CBDT Circular No.21/2020 to the Petitioner’s Case:
The petitioner relied on Circular No.21/2020, which clarifies that appeals where the time limit for filing expired between 01.04.2019 and 31.01.2020, and an application for condonation of delay is filed before the date of the circular (04.12.2020), should be deemed pending as on 31.01.2020. The respondents contended that the petitioner’s application did not meet these criteria. The court held that the circular should not be interpreted restrictively and should apply to appeals admitted before the filing of the declaration, even if the application for condonation was filed after 04.12.2020.

4. Whether the Act of 2020 is a Beneficial Legislation and the Scope of Its Interpretation:
The court emphasized that the Act of 2020 is a beneficial legislation aimed at reducing tax litigation and unlocking disputed tax arrears. The court cited precedents to support the view that beneficial legislation should be interpreted to fulfill its purpose. The court concluded that the rejection of the petitioner’s declaration/application was not in line with the scheme and intent of the Act of 2020.

Conclusion:
The court allowed the writ petition, setting aside the impugned proceeding dated 22.04.2021. The 1st respondent was directed to accept the revised declaration Form 1 and 2 filed by the petitioner on 31.03.2021, process it in accordance with the Act of 2020, issue Form 3, and accept the payment from the petitioner before the due date. The court highlighted that the Act of 2020 should be interpreted to benefit the assessee and not be denied based on a hyper-technical view.