Mr. Sham v. Dated : 22[Nd] September 2021

Digitally signedby GAURIGAURIAMITAMITGAEKWADGAEKWADDate:2021.09.2914:47:06 +0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAYCIVIL APPELLATE JURISDICTION WRIT PETITION NO.3850 OF 2021 ---- Mr. Suyog Bhave i/b. Adv. Farzeen Khambatta for petitioner. Mr. Sham V. Walve for respondents. ---- CORAM : K.R. SHRIRAM & M.S. KARNIK, JJ. DATED : 22[nd] SEPTEMBER 2021 ORAL JUDGMENT : (PER K.R. SHRIRAM, J.) 1Since pleadings are completed, we decided to dispose this petition at the admission stage itself. Rule. Rule made returnable forthwith. Heard by consent of parties. 2Petitioner has filed this petition aggrieved by an order ofrejection dated 30[th] January 2021 passed by respondent no.1 rejectingpetitioner’s declaration and undertaking filed under the provisions of DirectTax Vivad Se Vishwas Act 2020 (the VSV Act). 3Petitioner had filed her returns for the Assessment Year 2012-2013. The assessment was reopened under Section 147 of the Income TaxAct, 1961 (the Act). Petitioner filed a response to the notice issued andbased on the response received from petitioner, an assessment order dated18[th] December 2019 came to be passed. Petitioner had returned income ofRs.94,91,780/- and the total income assessed under Section 143 (3) readwith Section 147 of the Act was also Rs.94,91,780/-. The total incomeunder Section 288A was, therefore, the returned income, i.e.,Rs.94,91,780/-. Interest under Section 234B, 234C and 234D was chargedas per calculation given in ITNS-150 which was part of the order (It lookslike it should be Section 234A, 234B AND 234C because the calculation ofinterest states Section 234A, 234B and 234C and even in the petition, it isstated Section 234A, 234B and 234C). Section 234A relates to interest for defaults in furnishing return of income, Section 234B relates to interestfor defaults in payment of advance tax, Section 234C relates to interest fordeferment of advance tax. The demand raised by the Assessing Officer onthe interest component was Rs.16,86,800/-. Unhappy with this demand,petitioner filed an appeal before the Commissioner of Income Tax (Appeals)under Section 246A and challenged the amount of disputed demand in thesum of Rs.16,86,800/-. This appeal was filed on 17[th] March 2020, almosttwo months after the time to file appeal expired. The assessment orderdated 18[th] December 2019 was received by petitioner on the same day andthe 30 days expired on 17[th] January 2020. 4In the meanwhile, the VSV Act came into force and petitionerdecided to take the benefit of the VSV Act. Petitioner, therefore, filed adeclaration and undertaking in Form 1 under the VSV Act and offered tosettle the disputed amount of Rs.16,86,800/-. According to petitioner, asstated in the declaration and undertaking in Form 1, the amount payableunder the VSV Act, on or before 31[st] March 2021, was Rs.4,21,700/- andthereafter, Rs.5,06,040/-. This declaration was filed on 18[th] December 2020.On 31[st] January 2021 petitioner received an order of rejection of itsdeclaration under the VSV Act and the reason for rejection reads as under : “There is no disputed income, as the return filed by assesseehas been accepted in assessment proceedings. The assess hasdisputed interest charged u/s 234A/B/C of the Act. Since,interest charged is mandatory and there is disputed income.”has been accepted in assessment proceedings. The assess hasdisputed interest charged u/s 234A/B/C of the Act. Since,interest charged is mandatory and there is disputed income.” 5Petitioner also received a communication dated 30[th] January2021 whereby petitioner was informed that petitioner’s application forcondonation of delay in filing the appeal under Section 246A has beenallowed and the delay was condoned. Therefore, petitioner filed a revisedForm 1 under the VSV Act on 30[th] January 2021 informing about thecondonation of delay. On 17[th] March 2021, petitioner received an orderrejecting its revised declaration in Form 1, in which the reason given is asunder : 5Petitioner also received a communication dated 30[th] January2021 whereby petitioner was informed that petitioner’s application forcondonation of delay in filing the appeal under Section 246A has beenallowed and the delay was condoned. Therefore, petitioner filed a revisedForm 1 under the VSV Act on 30[th] January 2021 informing about thecondonation of delay. On 17[th] March 2021, petitioner received an orderrejecting its revised declaration in Form 1, in which the reason given is asunder : “The Form-1 in this case was rejected earlier. The assesseehas again filed Form-1 with same particulars. The issue isrelated to charging interest u/s. 234A, 234B and 234C. Sincethere is no disputed income, the case is rejected.” Aggrieved by this rejection, petitioner has approached this Court. 6The VSV Act was enacted to provide for resolution of disputedtax and for matters connected therewith and incidental thereto. In the VSVAct, there is no provision to exclude interest charged under Section 234A,234B or 234C of the Act as stated in the order impugned. Moreover, underSection 3 of the VSV Act, it is provided that where a declarant files underthe provisions of this Act a declaration to the designated authority inaccordance with the provisions of Section 4 in respect of tax arrear, thennotwithstanding anything contained in the Income Tax Act or any other lawfor the time being in force, the amount payable by the declarant under thisAct, where tax arrear relates to disputed interest amount payable under the Act, on or before 31[st] March 2020 will be 25% of disputed interest and ifpaid after 1[st] April 2020 but before the last date, 30% of disputed interest.The tax arrear is defined under Section 2 (1) (o) to mean “….. disputedinterest ….”. The disputed interest is defined under Sub Clause h (ii) of SubSection 1 of Section 2 to mean “the interest determined in any case underthe provisions of the Income Tax Act, 1961 where an appeal has been filedby the appellant in respect of such interest”. Appellant means under Clausea (i) of Sub Section 1 of Section 2 “a person in whose case an appeal or awrit petition or special leave petition has been filed either by him or by theIncome Tax Authority or by both, before an appellate forum and such appealor petition is pending as on the specified date”. Therefore, petitioner waseligible to file this declaration under the VSV Act for the disputed interestthat was charged under Section 234A or Section 234B or Section 234C. Theconcerned authority was, therefore, not correct in rejecting the declarationof petitioner for reasons quoted above. 7In the affidavit in reply filed by one K.P.C. Rao, PrincipalCommissioner of Income Tax and affirmed on 16[th] August 2021, a newground is raised that the appeal filed by petitioner was not pending on thespecified date, i.e., 31[st] January 2020 because the appeal has been filed onlyon 17[th] March 2020, after a delay of two months. It is also alleged that thedelay in filing the appeal has not been condoned before the date ofdeclaration in Form 1 and 2 under the DTVSV Act, i.e., 30[th] January 2021. As noted above, the delay had been condoned by 30[th] January 2021 and acopy of that communication is annexed to the rejoinder. In our view, theaffiant K.P.C. Rao, who has affirmed the affidavit in reply on 16[th] August2021, ought to have been aware that on 30[th] January 2021 acommunication has been addressed to petitioner that the delay has beencondoned. 8In the affidavit in reply, reliance has been placed to Question 59 and answer thereto in the CBDT Circular No.21 of 2020 dated 4[th] December 2020. Question 59 and answer thereto reads as under : Q.59. Whether the taxpayer in whose case the time limit forfiling of appeal has expired before 31[st] Jan 2020 but anapplication for condonation of delay has been filed iseligible? As noted above, the delay had been condoned by 30[th] January 2021 and acopy of that communication is annexed to the rejoinder. In our view, theaffiant K.P.C. Rao, who has affirmed the affidavit in reply on 16[th] August2021, ought to have been aware that on 30[th] January 2021 acommunication has been addressed to petitioner that the delay has beencondoned. 8In the affidavit in reply, reliance has been placed to Question 59 and answer thereto in the CBDT Circular No.21 of 2020 dated 4[th] December 2020. Question 59 and answer thereto reads as under : Q.59. Whether the taxpayer in whose case the time limit forfiling of appeal has expired before 31[st] Jan 2020 but anapplication for condonation of delay has been filed iseligible? Ans. If the time limit for filing appeal expired during theperiod from 1[st] April 2019 to 31[st] Jan 2020 (both datesincluded in the period), and the application for condonationis filed before the date of issue of this circular, and appeal isadmitted by the appellate authority before the date of filingof the declaration, such appeal will be deemed to be pendingas on 31[st] Jan 2020. 9This has been dealt with by this Court in Writ Petition (lodging) No.12932 of 2021 dated 21[st] September 2021 in which paragraphs 6 to 9 read as under : 6. The Central Board of Direct Taxes issued a Circular datedDecember 4, 2020 in which question 59 and answer theretoreads as under :- "Q.59. Whether the taxpayer in whose case the time limit forfiling of appeal has expired before 31[st] Jan 2020 but anapplication for condonation of delay has been filed iseligible? Answer : If the time limit for filing appeal expired during theperiod from 1st April 2019 to 31st Jan, 2020 (both datesincluded in the period), and the application for condonationis filed before the date of issue of this circular, and appeal isadmitted by the appellate authority before the date of filingof the declaration, such appeal will be deemed to be pendingas on 31[st] Jan 2020." 7. Therefore, where the time limit for filing of appeal hasexpired before January 31, 2020 but an appeal with anapplication for condonation is filed before the date of theCircular, i.e., December 4, 2020, such appeal will be deemedto be pending as on January 31, 2020. In the answer toquestion 59 expression used is "an appeal is admitted by theappellate authority before the date of filing of thedeclaration". This has been dealt with by a Division Bench ofDelhi High Court in the case of Shyam Sunder Sethi Vs. PR.Commissioner of Income Tax-10 and ors. in Writ Petition (C)2291/2021 and CMAPPL. 6677/2021 dated 3rd March, 2021wherein it is held that an appeal would be "pending" in thecontext of Section 2(1)(a) of the VSV Act when it is first filedtill its disposal and the Act does not stipulate that the appealshould be admitted before the specified date, it only advertsto its pendency. The Court opined that the respondent couldnot have wrongly equated admission of the appeal withpendency. The Court, therefore, held that the appeal wouldbe pending as soon as it is filed and up until such time it isadjudicated upon and a decision is taken qua the same. Werespectfully agree with the view expressed by the DivisionBench in Shyam Sunder Sethi (supra). 8. In the case at hand, the time limit to file appeal expired onJanuary 18, 2020, and the condonation of delay applicationwas filed on February 6, 2020, before December 4, 2020, thedate of the Circular, the appeal would be pending as requiredunder the VSV Act. In any event, the Commissioner ofIncome Tax (Appeals) himself has addressed a letter datedJanuary 20, 2021 asking the petitioner to furnish ground-wise submissions on the grounds of appeal if petitioner wasnot opting for VSV Scheme, 2020. This itself would mean thedelay also has been condoned. 9. In our view, order of rejection dated February 26, 2021 isbad in law and is accordingly set aside. Respondent no.2 isdirected to process the forms filed by petitioner under theprovisions of VSV Act. 8. In the case at hand, the time limit to file appeal expired onJanuary 18, 2020, and the condonation of delay applicationwas filed on February 6, 2020, before December 4, 2020, thedate of the Circular, the appeal would be pending as requiredunder the VSV Act. In any event, the Commissioner ofIncome Tax (Appeals) himself has addressed a letter datedJanuary 20, 2021 asking the petitioner to furnish ground-wise submissions on the grounds of appeal if petitioner wasnot opting for VSV Scheme, 2020. This itself would mean thedelay also has been condoned. 9. In our view, order of rejection dated February 26, 2021 isbad in law and is accordingly set aside. Respondent no.2 isdirected to process the forms filed by petitioner under theprovisions of VSV Act. 10In our view, therefore, the order of rejection issued by respondent no.1 is bad in law. Respondent no.1 is directed to process the declaration cum undertaking filed by petitioner under the provisions of VSV Act and pass orders accordingly. 11Petition disposed with no order as to costs. 12If the amount as determined under the revised Form 3 is notpaid within one week thereof only in that case, premium of 10% on theinterest of the amount payable should be paid by petitioner. (M.S. KARNIK, J.) (K.R. SHRIRAM, J.)