I A Housing Solution Privatelimited v. Principal Commissioner Ofincome Tax-4

$~ *IN THE HIGH COURT OF DELHI AT NEW DELHI +W.P.(C) 3560/2022, CM APPL. 10522/2022 & CM APPL. 10523/2022 I A HOUSING SOLUTION PRIVATELIMITED ..... PetitionerThrough:MrSalilKapoor,MrSumitLalchandani,MrVibhuJain,Ms.Ananya Kapoor, Advocates. versus PRINCIPAL COMMISSIONER OFINCOME TAX-4 ..... RespondentThrough:Mr Abhishek Maratha, Sr. St.Counsel Income Tax Dept. +W.P.(C) 3561/2022 SRISHTII INFRA HOUSING PVT. LTD...... PetitionerThrough:MrSalilKapoor,MrSumitLalchandani, Mr VibhuJain,Ms. Ananya Kapoor, Advocates. versus PRINCIPAL COMMISSIONER OFINCOME TAX-7 ..... RespondentThrough:Mr Sunil Agarwal, Sr. St. Counselwith Mr Tushar Gupta, Jr. St.Counsel and Mr Utkarsh Tiwari,Appearingfortherespondent(Income Tax Dept.) % Reserved On: 19[th]September, 2022Date of Decision: 02[nd]November, 2022 Signature Not Verified CORAM:HON'BLE MR. JUSTICE MANMOHANHON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA J U D G M E N T MANMOHAN, J: 1.By way of the present writ petitions, Petitioners seek a direction to theRespondents to accept the declaration/application (Form 1 and Form 2) dated04[th]March, 2021 filed by the Petitioners as valid declarations and to acceptbalance disputed amount as stipulated by Respondents in Forms 3 dated 07[th]May, 2021 and 22[nd]June, 2021 issued under Direct Tax Vivad Se Vishwas Act,2020 (‘VSV Act’). ARGUMENTS ON BEHALF OF THE PETITIONER 2.Learned Counsel for the Petitioners stated that Petitioners had filed Form1 as well as Form 2 within the time stipulated as per the provisions of VSV Acton 04[th]March, 2021 and Form No. 3 was issued to Petitioners on 07[th]May,2021 and 22[nd]June, 2021. He stated that the Petitioner Companies were unableto pay the disputed amount as determined by Respondents in Form 3 prior tothe last date, namely, 31[st]October, 2021 due to death of a Director of thecompanies, who was looking after the taxation and other affairs on 20[th]July,2021. 3.Learned Counsel for the Petitioners stated that the delay in payment wasnot intentional and the Petitioners always intended to settle the dispute with theIncome tax department and avail the benefit of VSV Act. He contended that not condoning the delay in payment would be against the very object and purposeof the Scheme as the object of the scheme is to reduce litigation and collectrevenue. 4.Learned Counsel for Petitioners submitted that the Rajasthan High Courtin similar facts in Agroha Electronics Through its Proprietor Vs. Union ofIndia Through Secretary, Ministry of Finance (Department of Revenue) andAnr., S.B.Civil Writ Petition No.10571/2020 dated 25[th]March, 2021 haddirected the Respondents to accept the amount as specified in SVLDRS-3 andgive benefit of Sabka Vishwas Scheme to the Petitioners upon payment ofinterest at the rate of 9% per annum till the date the amount was paid. Therelevant portion of the said Judgment relied upon by learned counsel forPetitioners is reproduced hereinbelow:- “After hearing learned counsel for the parties and perusing thematerial available on record, this Court deems it fit that in thegiven facts and circumstances that the petitioner is a bona fidebusinessman and is prepared to pay the amount in question inaccordance with the scheme along with interest for the periodwhich he has defaulted in scheme and looking into the extremepandemic conditions of COVID and the death of the petitioner’sfather, this is a fit case for invocation of the powers under Article226 of the Constitution of India. In view of the above, the present writ petition is allowed and therespondents are directed to accept the amount as specified inSVLDRS-3 Form No.L280120SV301549 dated 28.01.2020 andgive the petitioner benefit of Sabka Vishwas Scheme. The amountstipulatedtobepaidonorbefore30.06.2022shallbeaccompanied by interest at the rate of 9% per annum till the datethe amount is paid. The compliance of this order shall be made bythe petitioner within a period of three weeks from today.” Signature Not Verified In view of the above, the present writ petition is allowed and therespondents are directed to accept the amount as specified inSVLDRS-3 Form No.L280120SV301549 dated 28.01.2020 andgive the petitioner benefit of Sabka Vishwas Scheme. The amountstipulatedtobepaidonorbefore30.06.2022shallbeaccompanied by interest at the rate of 9% per annum till the datethe amount is paid. The compliance of this order shall be made bythe petitioner within a period of three weeks from today.” Signature Not Verified ARGUMENTS ON BEHALF OF THE RESPONDENTS 5.Per contra, learned counsel for the Respondents submitted that paymenthad to be mandatorily made within fifteen days of determination of thedemand. He stated that there was no provision permitting the Respondents toextend the time for payment. He submitted that the VSV Act was mandatory innature as it provided for consequences on account of non-compliance. Hespecifically relied upon Sections 4(6)(b) and 5(1)&(2) of the VSV Act whichare reproduced hereinbelow:- (6) The declaration under sub-section (1) shall be presumednever to have been made if,- (b) the declarant violates any of the conditions referred to inthis Act: xxxxxxxxxxxx 5(1) The designated authority shall, within a period of fifteendays from the date of receipt of the declaration, by order,determinetheamountpayablebythedeclarantinaccordance with the provisions of this Act and grant acertificate to the declarant containing particulars of the taxarrear and the amount payable after such determination, insuch form as may be prescribed. (2) The declarant shall pay the amount determined undersub-section (1) within fifteen days of the date of receipt of thecertificate and intimate the details of such payment to thedesignated authority in the prescribed form and thereuponthe designated authority shall pass an order stating that thedeclarant has paid the amount.” 6.He submitted that the Supreme Court in Hemalatha Gargya Vs.Commissioner of Income Tax, A.P. and Anr., (2003) 9 SCC 510 while dealingwith a pari materia provision, namely, Section 67(2) of Voluntary Disclosureof Income Scheme, 1997 (‘VDI Scheme’), has held as under:- “9. The use of the word “shall” in a statute, ordinarily speaking,means that the statutory provision is mandatory. It is construed assuch unless there is something in the context in which the word isused which would justify a departure from this meaning. There isnothing in the language of the provisions of the Scheme whichwould justify such a departure. On the other hand the provisions ofSection 67(2) make it abundantly clear that if the declarant fails topay the tax within the period of three months as specified, thedeclaration filed shall be deemed never to have been made underthe Scheme. In other words the consequences of non-compliancewith the provisions of Section 67(1) relating to the payment havebeen provided. It is well settled that when consequences of thefailure to comply with the prescribed requirement is provided bythe statute itself, there can be no manner of doubt that suchstatutoryrequirementmustbeinterpretedasmandatory(See: Maqbul Ahmad v. Onkar Pratap Narain Singh [AIR 1935 PC85 : 62 IA 80] AIR at p. 88).” 7.Consequently, according to him, the time to make payment under theVSV Act has to be strictly construed and the same cannot be extended by therespondents. REJOINDER ARGUMENTS 8.In rejoinder, learned counsel for the Petitioners stated that the limitationto make payment stood extended in light of Supreme Court’s orders in Suo Signature Not Verified 7.Consequently, according to him, the time to make payment under theVSV Act has to be strictly construed and the same cannot be extended by therespondents. REJOINDER ARGUMENTS 8.In rejoinder, learned counsel for the Petitioners stated that the limitationto make payment stood extended in light of Supreme Court’s orders in Suo Signature Not Verified Moto Writ Petition (Civil) No.3/2020 dated 23[rd]March, 2020, 23[rd]September,2021 and 10[th]February, 2022 wherein the Court extended the time limitationtill 28[th]February, 2022 and ordered/directed that the period of limitation in allpetitions/applications/suits/appeals/all other proceedings within the period oflimitation prescribed under the general law of limitation or under Special Laws(both Central and/or State) proceedings, irrespective of the limitationprescribed under the general law or Special Laws whether condonable or not,shall stand extended. 9.He submitted that Section 10(2) of the VSV Act authorised CBDT toissue special orders setting forth directions or instructions as to the guidelines,principles or procedures to be followed by the authorities in any work relatingto the Act if the Board deemed it is necessary in the public interest to do. Hecontended that there was no similar provision in the VDI Scheme. Heemphasised that the Supreme Court in Hemalatha Gargya (supra) specificallyobserved that “In any event, it is doubtful whether the Board could haveempowered the Commissioner to extend the time fixed by Sections 66 and 67 ofthe Scheme under Section 119(2)(b) of the Income Tax Act, 1961 given thewording of the Scheme and the fact that the Scheme does not form part of theIncome Tax Act, 1961 at all”. 10.He lastly submitted that in an ordinary situation, the provisions of laware to be mandatorily applied and relief on equitable consideration cannot begranted. However, in extraordinary and exceptional situation like death andCovid, the non-grant of relief on equitable consideration would be irrational. COURT’S REASONING IN RECOGNITION OF INTERMITTENT LOCKDOWN ON ACCOUNT OFTHE COVID-19 PANDEMIC THE SCHEME WAS AMENDED SEVERALTIMES TO EXTEND THE DEADLINE FOR PAYMENT. MOREOVER,DEATH OF THE MANAGING DIRECTOR OF THE COMPANIES WAS ANEXTRAORDINARY AND EXCEPTIONAL EVENT. 11.Having heard learned counsel for the parties, this Court is of the viewthat the timeline to pay under the VSV was not mandatory as the last datestipulated under the VSV Act (3 of 2020) was extended by virtue of Taxationand Other Laws (Relaxation of Certain Provisions) Act, 2020. A tabular chartshowing the extension of the deadlines to pay under the VSV Scheme isreproduced hereinbelow:- “CHART FOR VIVAD SE VISHWAS SCHEME EXTENSIONS S.No.Notification No.Due date onDateonorDateonororbeforebefore whichbefore whichwhichamount shallamount shalldeclaration isbe payable asbe payable asto be filedperthirdperfourthcolumnofcolumnofTabletoTabletosection 3section 31.Notification31/12/20--No.35/2020/F.No.370142/23/2020-TPL2.Notification31/12/2031/03/2101/04/21No.84/2020/F.No.IT(A)/1/2020-TPL Signature Not Verified 12.This Court is further of the opinion that the delay in payments of theamounts, in the present cases are attributable to unforeseen and extraneouscircumstances that were beyond control of the Petitioners. In fact, the countrywas intermittently in lockdown on account of the COVID-19 pandemic from25[th]March, 2020. In recognition of these difficulties as pointed outhereinabove, the Scheme was amended several times to extend the deadline forpayment. Moreover, death of the Managing Director of the companies was anextraordinary and exceptional event which would render non-grant of relief onequitable consideration irrational. RELIANCE BY THE RESPONDENTS ON HEMALATHA GARGYA (SUPRA)IS MISCONCEIVED ON FACTS AND UNTENABLE IN LAW. VSV ACT IS ABENEFICIAL PIECE OF LEGISLATION WHOSE PROVISIONS MUST BEINTERPRETED LIBERALLY. RELIANCE BY THE RESPONDENTS ON HEMALATHA GARGYA (SUPRA)IS MISCONCEIVED ON FACTS AND UNTENABLE IN LAW. VSV ACT IS ABENEFICIAL PIECE OF LEGISLATION WHOSE PROVISIONS MUST BEINTERPRETED LIBERALLY. 13.Further, the reliance by the Respondents on the judgment of the SupremeCourt in Hemalatha Gargya (supra) is misconceived on facts and untenable inlaw as in the said case, the Supreme Court was concerned with theinterpretation of the Voluntary Disclosure of Income Scheme (for short ‘VDIScheme’) which permitted declarant-assessee: a. to disclose income chargeable to tax for which no return of incomehad been filed by the assessee;had been filed by the assessee; b. to disclose the income chargeable to tax where the return of incomehad been filed by the assessee but, that income had not been disclosedin the return;had been filed by the assessee but, that income had not been disclosedin the return; c. to disclose the income chargeable to tax where the return of incomehad been filed without disclosing the full and true material factsnecessary for the assessment of that income.had been filed without disclosing the full and true material factsnecessary for the assessment of that income. 14.Consequently, the VDI Scheme provided a one-time opportunity to theassessees to declare the undisclosed income which was concealed by theassessees and at the same time, provided them with immunity from penalty andprosecution under the provisions of the Act for not voluntarily disclosing theincome chargeable to tax. Hence, the VDI Scheme was in the nature of anamnesty scheme which provided a window to the assessees to come cleanwithout any adverse consequences under the provisions of the Act. It was inthis context that the Apex Court observed that “....Where the assessees seek to claim the benefit under the statutory scheme they are bound to comply with theconditions under which the benefit is granted there is no application of anyequitable consideration when the provisions of scheme are stated in such plainlanguage”. 15.In fact, while interpreting a similar scheme “Kar Vivad SamadhanScheme”, the Supreme Court in Commissioner of Income Tax, Rajkot VersusShatrusailya Digvijaysingh Jadeja, 2005 (9) TMI 362 SC held that the objectof the said Scheme was to settle tax arrears locked in litigation at a substantialdiscount and it provided that any tax arrears could be settled by paying theprescribed amount of tax arrears, and it offered benefits and immunities frompenalty and prosecution. The Supreme Court held that the “Kar VivadSamadhan Scheme” was in substance a recovery scheme though it wasnomenclatured as a "litigation settlement scheme" and was not similar to theearlier VDI Scheme. It further held that the object of “Kar Vivad SamadhanScheme” was to put an end to all pending matters in the form of appeals,reference, revisions and writ petitions under the IT Act/WT Act and the objectwas to put an end to litigation in various forms and at various stages under theIT Act/Wealth Tax Act and therefore the rulings on the scope of appeals andrevisions under the IT Act or VDI Scheme will not apply. 16.As opposed to the VDI Scheme, the VSV Act is a beneficial piece oflegislation enacted by Parliament with the avowed object to provide forresolution of disputes whereby the assessee is permitted to settle the disputepending before any appellate authority, resulting in reduction in litigation andgeneration of timely revenue for the government. Consequently, being a Page 10 of 13 beneficial/remedial statute, the provisions of VSV Act must be interpreted in amanner which advances the purpose for which it is enacted as a strictinterpretation of the VSV Act will defeat the very purpose for which it wasintroduced by the legislature. 17.Moreover, the principle of a judgment rendered in a normal circumstancecannot be applied to abnormal and extraordinary circumstances such as Covidwherein the organisation of the Petitioners were affected due to death of aDirector and that too when the Petitioners in no manner derived any benefitbecause of delay. Page 10 of 13 beneficial/remedial statute, the provisions of VSV Act must be interpreted in amanner which advances the purpose for which it is enacted as a strictinterpretation of the VSV Act will defeat the very purpose for which it wasintroduced by the legislature. 17.Moreover, the principle of a judgment rendered in a normal circumstancecannot be applied to abnormal and extraordinary circumstances such as Covidwherein the organisation of the Petitioners were affected due to death of aDirector and that too when the Petitioners in no manner derived any benefitbecause of delay. THOUGH RESPONDENTS HAVE NO POWER TO CONDONE THE DELAYINPAYMENT,YETTHISCOURTINEXTRAORDINARYWRITJURISDICTION CAN PASS ANY ORDER NECESSARY TO REMEDYINJUSTICE. 18.Though this Court is in agreement with the submission of learnedcounsel for the respondents that the power to condone the delay with regard todelay in payment is not vested with the Departmental Authorities, yet thisCourt under its inherent powers in extraordinary writ jurisdiction under Article226 of the Constitution of India can pass any order necessary to remedy theinjustice. The Supreme Court in B.C.Chaturvedi v. Union of India, (1995) 6SCC 749 has held “It deserves to be pointed out that the mere fact that there isno provision parallel to Article 142 relating to the High Courts, can be noground to think that they have not to do complete justice”. 19.One of us (Manmohan, J) in Siddharth International Public School v.Motor Accident Claim Tribunal, (2016) SCC OnLine Del 4797, para 41 hasheld, “it is settled law that this Court has extremely broad jurisdiction under Article 226 of the Constitution and under the said Article it can pass whateverorders are necessary for doing equity and justice. The Supreme Court in N.S.Mirajkar v. State of Maharashtra, 1966 3 SCR 744 has held that “unlike ainferior court, in respect of a High Court, which is also a Court of Record, it isassumed that every action is within its jurisdiction, unless expressly shownotherwise”. 20.Consequently, the power of the High Court under Article 226 of theConstitution of India to grant relief in extraordinary and exceptionalcircumstances cannot be taken away or curtailed by any legislation. 21.In fact, the Supreme Court in Dal Chandra Rastogi v. CBDT (2019) 104taxmann.com 341 (SC) wherein the assessee had filed a declaration ofundisclosed income under the Income Declaration Scheme, 2016 and had failedto pay the third installment of the remaining 50 per cent of tax, surcharge andpenalty permitted the assessee to make late deposit of tax under IncomeDeclaration Scheme subject to interest at the rate of 12% per annum. It ispertinent to mention that there was no provision for late deposit of tax in theIncome Declaration Scheme, 2016. Yet the Supreme Court taking note of thegenuine hardship faced by the assessee and short delay in payment, ruled infavour of the taxpayer. NO PREJUDICE CAUSED TO THE RESPONDENTS BY ACCEPTING THEPRAYER OF THE PETITIONERS. RATHER, SUCH ACTION SHALL HELPACHIEVE THE OBJECTIVES OF THE VSV ACT. 22.This is also a fit case where no prejudice will be caused to theRespondentsbyacceptingtheprayerofthePetitioners.Rather,theRespondents benefit and achieve the purpose of the Scheme, namely, to reduce pendency of cases, generate timely revenue for the government and providecertainty and savings of resources that would be spent on the long-drawnlitigation process. 23.Consequently as the delay in payment in the present cases wereunintentional and supported by justifiable reasons, this Court is of the opinionthat the cause of substantial justice deserves to be preferred, and thisunintentional delay deserves to be condoned. This approach will only furtherthe object and purpose of the VSV Act. RELIEF 22.This is also a fit case where no prejudice will be caused to theRespondentsbyacceptingtheprayerofthePetitioners.Rather,theRespondents benefit and achieve the purpose of the Scheme, namely, to reduce pendency of cases, generate timely revenue for the government and providecertainty and savings of resources that would be spent on the long-drawnlitigation process. 23.Consequently as the delay in payment in the present cases wereunintentional and supported by justifiable reasons, this Court is of the opinionthat the cause of substantial justice deserves to be preferred, and thisunintentional delay deserves to be condoned. This approach will only furtherthe object and purpose of the VSV Act. RELIEF 24.Keeping in view the aforesaid, the present writ petitions are allowed andthe respondents are directed to accept the declarations/applications (Forms-1and2)dated04[th]March,2021filedbythepetitionersasvaliddeclarations/applications within two weeks and accept the balance disputedamounts as stipulated by respondents in Forms-3 dated 07[th]May, 2021 and 22[nd]June, 2021 issued under VSV Act along with simple interest @ 9% per annumtill the date the amounts are paid within four weeks. MANMOHAN, J NOVEMBER 02, 2022TS MANMEET PRITAM SINGH ARORA, J