2024 (2) TMI 1116 - HC - Income Tax

Benefit of Vivad se Vishwas Scheme - Which appeals are covered under the Vivad se Vishwas? - whether the filing of the revision after the specified date but within the period of limitation as available rendered the petitioners ineligible from availing the beneficial coverage of the VSV Act. HELD THAT - CBDT had clearly provided that the provisions of the VSV Act would also extend to those disputes which emanated from orders passed under the Act and which could be appealed against and the limitation for preferment of those appeals having not come to an end prior to the specified date. Undisputedly, the period of limitation for the preferment of a revision could not be said to have come to an end on 31 January 2020 bearing in mind the provisions of the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 and the orders passed on Suo Moto 3/2020. The limitation for filing a revision in terms of the aforesaid thus travelled beyond the specified date of 31 January 2020. In our considered opinion, once the respondents had taken the principled position that the VSV Act would apply even in those matters where the limitation period for filing of appeals had not expired on the specified date, there can be no valid justification to either countenance or draw a distinction between an appeal and a revision . The acceptance of such a distinction would be wholly illogical quite apart from being manifestly arbitrary and violative of Article 14 of the Constitution. The respondents, having accepted the directive of the CBDT insofar as appeals are concerned, cannot be permitted to justifiably take the position that the same would not extend to revisions. Once the CBDT had clarified that cases where the limitation for filing of appeals had not expired on 31 January 2020 would also be covered, it would be wholly unfair to hold that the same principle would not apply to a revision. More importantly, the clarificatory directive of the Board must be interpreted and understood in light of the underlying legislative policy of the VSV Act of providing an avenue for settlement of disputes coupled with the insurmountable challenges which were faced by people during the pandemic. If the clarification were to be viewed in that light it becomes apparent that the core theme of the Board directive was to extend the beneficial reach of the VSV Act even to those cases where assessees still retained the right to question an adverse order or decision on the specified date and where the law itself conferred upon them a right to raise such a challenge. There thus exists no justification to restrict the ambit of the clarification merely to appeals and exclude other avenues of redress which were otherwise available to be pursued on the specified date. In our considered opinion, the Scheme as well as the provisions of the VSV Act constitute beneficial legislation and are liable to be construed and interpreted accordingly. We allow the instant petition and quash the notifications of rejection impugned in the present petition. Since the petitioner has already deposited the entire disputed tax liability as computed in terms of the VSV Act, the Form 5 issued during the pendency of these proceedings is accorded finality.

Summary

Issues Involved:
1. Eligibility under the Direct Tax Vivad Se Vishwas Act, 2020 (VSV Act) for revisions filed after the specified date.
2. Interpretation of the CBDT circulars and legislative intent behind the VSV Act.
3. Applicability of the extension of limitation due to COVID-19 pandemic.

Summary:

Issue 1: Eligibility under the VSV Act for Revisions Filed After the Specified Date
The petitioner challenged the rejection of their declarations under the VSV Act by the respondents, who argued that revisions filed after the specified date of 31 January 2020 were ineligible. The petitioner had filed a revision under Section 264 of the Income Tax Act, 1961 on 01 March 2021, benefiting from the extended limitation period due to the COVID-19 pandemic. The court examined whether the filing of the revision within the extended limitation period rendered the petitioner ineligible under the VSV Act.

Issue 2: Interpretation of the CBDT Circulars and Legislative Intent
The court referred to the CBDT circular dated 04 March 2020, which clarified that the VSV Act covered appeals pending as of 31 January 2020 and cases where the time limit for filing an appeal had not expired by that date. The court noted that the CBDT circular also extended to revisions pending on the specified date. The respondents' interpretation that only revisions pending on 31 January 2020 were covered was deemed illogical and arbitrary. The court emphasized that the legislative intent of the VSV Act was to provide a broad avenue for dispute resolution, including cases where the limitation for filing appeals or revisions had not expired by the specified date.

Issue 3: Applicability of the Extension of Limitation Due to COVID-19
The court acknowledged that the limitation period for filing revisions was extended due to the COVID-19 pandemic, as per the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 and the Supreme Court's orders in Suo Motu Writ Petition (Civil) No. 3/2020. This extension allowed the petitioner to file the revision within the extended period, thus retaining their right to challenge the adverse order.

Conclusion:
The court concluded that the VSV Act's provisions should be interpreted broadly to include revisions filed within the extended limitation period due to the pandemic. The court quashed the notifications of rejection and accorded finality to the Form 5 issued during the proceedings, as the petitioner had already deposited the entire disputed tax liability. The judgment emphasized the remedial and beneficial nature of the VSV Act, aiming to reduce litigation and provide timely revenue to the government.