Case Note & Summary
The petitioner, a private limited company, filed its original return of income for assessment year 2017-18 on October 30, 2017, declaring a total loss of Rs.23,92,61,385. The case was selected for scrutiny, and the Assistant Commissioner of Income Tax passed an assessment order on December 19, 2019 under Section 144 of the Income Tax Act, 1961. Aggrieved, the petitioner filed an appeal before the Commissioner of Income Tax (Appeals) on February 6, 2020 under Section 246A of the Act. The statutory time limit for filing the appeal expired on January 18, 2020, so the appeal was filed with an application for condonation of delay of 19 days. The petitioner had paid the filing fees for the appeal on January 24, 2020. The dispute arose under the Direct Tax Vivad Se Vishwas Act, 2020. On January 20, 2021, the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, sent a communication asking the petitioner whether it wished to opt for the Vivad Se Vishwas Scheme 2020 or contest the appeal. The communication also directed that if the petitioner was not opting for the scheme, it should furnish ground-wise written submissions in support of grounds of appeal. The petitioner filed a declaration in Form 1 on January 21, 2021 under the VSV Act. Respondent no.2, the Principal Commissioner of Income-tax-5 Mumbai, rejected the declaration on February 26, 2021, on the ground that the time limit for filing the appeal had expired and there was no order condoning the delay. The main legal issue was whether the appeal could be considered pending as on the specified date of January 31, 2020 under Section 2(1)(a)(i) of the VSV Act, despite being filed after the limitation period with a condonation application. The court also examined whether the communication from the Commissioner of Income Tax (Appeals) asking for submissions on merits indicated that condonation had been allowed. The petitioner contended that the appeal was pending and the appellate authority's letter showed the delay had been condoned. The revenue argued that there was no order condoning the delay, so the appeal was not validly pending. The court analysed Section 2(1)(a) of the VSV Act and the CBDT Circular dated December 4, 2020, question 59, which deemed an appeal pending if the time limit expired during April 1, 2019 to January 31, 2020, the condonation application was filed before the circular date, and the appeal was admitted before the date of filing the declaration. The court relied on the Delhi High Court decision in Shyam Sunder Sethi v. Pr. Commissioner of Income Tax-10 and Ors., which held that the word 'admitted' should not be equated with pendency; an appeal is pending from the time it is filed until disposal, and the VSV Act only requires pendency, not admission. The Bombay High Court respectfully agreed with this interpretation. The court also found that the Commissioner of Income Tax (Appeals)'s letter dated January 20, 2021 calling for submissions on merits indicated that condonation had been allowed, making the rejection on the absence of a condonation order incorrect. The court held that the rejection order dated February 26, 2021 was bad in law and set it aside. Respondent no.2 was directed to process the forms filed by the petitioner under the provisions of the VSV Act. The writ petition was disposed of with no order as to costs.
Headnote
A) Direct Tax - Vivad Se Vishwas Act, 2020 - Eligibility and Pending Appeal - Direct Tax Vivad Se Vishwas Act, 2020, Section 2(1)(a)(i), Section 2(1)(a)(n) - The assessee filed its income tax return for AY 2017-18 declaring loss, was assessed under Section 144 of the Income Tax Act, 1961, and filed an appeal on February 6, 2020 beyond limitation with condonation of delay; the specified date was January 31, 2020 and the declaration was filed on January 21, 2021 - The court held that an appeal is pending from the date of filing until adjudication and the Act does not require admission before the specified date; therefore the appeal was pending as on the specified date making the assessee eligible - Held that rejection on the ground of no formal condonation order was unsustainable (Paras 5-9). B) Income Tax - Condonation of Delay - Implied Condonation by Appellate Authority - Income Tax Act, 1961, Section 246A - The Commissioner of Income Tax (Appeals) sent a communication dated January 20, 2021 asking the assessee to furnish ground-wise written submissions on merits if not opting for the VSV Scheme; the court inferred that this communication meant the delay condonation application had been allowed - Thus respondent no.2's rejection on the ground that there was no order condoning delay was incorrect - Held that the appellate authority's call for submissions implied condonation and pendency of the appeal (Paras 3-4, 8). C) Direct Tax - CBDT Circular Q.59 - Deemed Pendency of Appeal - Direct Tax Vivad Se Vishwas Act, 2020, Section 2(1)(a) - Circular dated December 4, 2020, Q.59 provided that an appeal would be deemed pending as on January 31, 2020 if the time limit expired during April 1, 2019 to January 31, 2020 and the condonation application was filed before the date of the circular; the Delhi High Court in Shyam Sunder Sethi held that the word 'admitted' should be read as 'pending' and admission is not a precondition - The court respectfully agreed and applied this interpretation where the appeal was filed on February 6, 2020 before the circular date - Held that the appeal was pending as required under the VSV Act (Paras 6-7).
Issue of Consideration
Whether an appeal filed after the statutory time limit with an application for condonation of delay was pending as on the specified date under Section 2(1)(a) of the Direct Tax Vivad Se Vishwas Act, 2020, making the assessee eligible to file a declaration; and whether respondent no.2's rejection of the declaration was valid.
Final Decision
The writ petition was disposed of. The rejection order dated February 26, 2021 was set aside as bad in law. Respondent no.2 was directed to process the forms filed by the petitioner under the provisions of the Direct Tax Vivad Se Vishwas Act, 2020. No order as to costs.
Law Points
- Appeal filed with condonation of delay is pending from filing until adjudication
- admission is not required for pendency under Direct Tax Vivad Se Vishwas Act
- 2020
- CBDT Circular Q.59 dated 04-12-2020 applies to appeals filed before circular date
- Appellate authority's call for submissions on merits implies condonation of delay
- Declaration under VSV Act filed within prescribed period is valid
