Sanjay Sureshchand Jain v. The Principal Commissioner Of Income Tax 1

IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/SPECIAL CIVIL APPLICATION NO. 14533 of 2021 FOR APPROVAL AND SIGNATURE: HONOURABLE MS. JUSTICE SONIA GOKANI andHONOURABLE MR. JUSTICE RAJENDRA M. SAREEN ========================================================== ========================================================== SANJAY SURESHCHAND JAIN Versus THE PRINCIPAL COMMISSIONER OF INCOME TAX 1 ==========================================================Appearance: MS VAIBHAVI K PARIKH(3238) for the Petitioner(s) No. 1DS AFF.NOT FILED (N) for the Respondent(s) No. 1========================================================== CORAM:HONOURABLE MS. JUSTICE SONIA GOKANI andHONOURABLE MR. JUSTICE RAJENDRA M. SAREEN Date : 30/09/2021 ORAL JUDGMENT (PER : HONOURABLE MS. JUSTICE SONIA GOKANI) 1 Rule. Ms. Mauna Bhatt, learned Senior Standing Counsel waives service of notice of rule for and on behalf of the respondent. Matter is taken up for final hearing at the admission stage with the consent of the learned counsel on both the sides. 3 Brief facts leading to the filing of the present petition under Article 226 of the Constitution of India are as follows:- “7. The Petitioner, therefore, prays that thisHon’ble Court be pleased to issue a writ ofmandamus or a writ in the nature of mandamusor a writ of certiorari or a writ in the nature ofcertiorari or any other appropriate writ, directionor order and be pleased to: (a)direct the Respondent to accept thedeclaration filed by the Petitioner under the Vivadse vishwas scheme for the Assessment Year2008-09; (b)pending the admission, hearing and final disposal of this petition, direct the Respondent toaccept the declaration filed by the Petitionerunder the Vivad se vishwas Scheme for theAssessment Year 2008-09; (c) any other and further relief deemed just andproper be granted in the interest of justice; (d)to provide for the cost of this petition.” 3.1 During the Financial Year 2007-08 relevant to the Assessment Year 2008-09, the petitioner was engaged in the business of trading of art silk cloth.A survey action under section 133A of the Act was carried out in the case of the petitioner on 3.2 3.3 3.4 22.02.2008. The excess stock of Rs.88,88,000/- wasfound. Statement of Shri Nareshchand PrahladKishan Jain was recorded, who admitted that thesaid cash and excess stock representedunaccounted income and it was also agreed to paytaxes thereafter. The petitioner had filed return of income for the yearunder consideration on 30.03.2010 declaring totalincome of Rs.34,30,580/- after making addition ofRs.49,11,937/- considering the difference betweenexcess stock declared during survey and the amountdeclared while filing the return of income. In appeal before the first appellate authority, thepetitioner had ventilated the grievances. However, itdismissed the appeal on 16.02.2012. It was clarifiedthat the order dated 16.02.2012 was not servedupon the petitioner for considerably long period andon 03.03.2020 only after several reminders, suchorder was served upon the petitioner. An application was moved on 09.01.2014 afterthe order of the appellate authority to enable the petitioner to file second appeal against the dismissalon 16.02.2012. After reiterative requests on11.09.2015,28.03.2016,18.02.2020and19.02.2020, a copy had been received on03.03.2020. The petitioner had paid full tax andinterest of Rs.25,96,812/- arising out of theassessment order, but even after payment of tax andinterest, the Assessing Officer vide letter dated30.01.2020 directed the petitioner to payRs.24,01,792/- under section 220(2) of the Act. The petitioner, therefore, once again requested tofurnish a copy of appellate order, which wasultimately served on 03.03.2020 as mentionedabove. An application was moved on 09.01.2014 afterthe order of the appellate authority to enable the petitioner to file second appeal against the dismissalon 16.02.2012. After reiterative requests on11.09.2015,28.03.2016,18.02.2020and19.02.2020, a copy had been received on03.03.2020. The petitioner had paid full tax andinterest of Rs.25,96,812/- arising out of theassessment order, but even after payment of tax andinterest, the Assessing Officer vide letter dated30.01.2020 directed the petitioner to payRs.24,01,792/- under section 220(2) of the Act. The petitioner, therefore, once again requested tofurnish a copy of appellate order, which wasultimately served on 03.03.2020 as mentionedabove. The petitioner filed second appeal against the orderof the appellate authority on 19.03.2020. The petitioner was advised to file benefit under theVivad se Vishwas Act, 2020 (to be referred as “theAct of 2020), for settling the dispute for the yearunder consideration. As per the Act of 2020, theappellant would include a person in whose case an 6 6.1 order has been passed by the Assessing Officer/Commissioner of Income-Tax (Appeals) Income TaxAppellate Tribunal/High Court on or before thespecified date, which is on 31.01.2020 and the timelimit for filing any appeal or Special Leave Petitionagainst such order by that person has not expiredas on that date. The petitioner opted for availing the benefit underthe Act of 2020 and accordingly, declaration wasfiled in Form No.1 and 2 on 17.01.2020. He alsointimated the authority on 16.07.2020 thatalthough the order of the first appellate authority ispassed on 16.02.2020, it was received on03.03.2020 and, therefore, the time for filing anappeal against such order had not expired on thespecified date i.e. 31.01.2020. The petitioner sinceinadvertently selected wrong option in Part-B of thedeclaration, the same was rejected.the Act of 2020 and accordingly, declaration wasfiled in Form No.1 and 2 on 17.01.2020. He alsointimated the authority on 16.07.2020 thatalthough the order of the first appellate authority ispassed on 16.02.2020, it was received on03.03.2020 and, therefore, the time for filing anappeal against such order had not expired on thespecified date i.e. 31.01.2020. The petitioner sinceinadvertently selected wrong option in Part-B of thedeclaration, the same was rejected. The petitioner filed another declaration in thestatutory forms No.1 and 2 on 26.01.2021 byselecting credit option, which permitted the filing ofstatutory forms No.1 and 2 on 26.01.2021 byselecting credit option, which permitted the filing of declaration in respect of an appeal yet to be filed asit was provided in the portal that pending appealwould include “ appeal to be filed”. The petitioner when checked the status of thedeclaration on the on-line portal on 22.02.2021, hewas informed that his declaration was rejected onthe count that the date of communication of theappellate order as per the report of the AssessingOfficer cannot be ascertained as such order waspassed eight years ago. However, in response to theletter of Assessing Officer dated 23.01.2019, he paidRs.20,71,112/- on 18.03.2019. Therefore, thecontention of the department that payment wasmade eight years ago, while rejecting the declarationfiled by the petitioner, was factually incorrect andcontrary to the facts of the instant case. It is the grievance of the petitioner that action ofrespondent in rejecting the declaration filed by thepetitioner under the Act for Assessment Year 2008-09 is illegal and without jurisdiction. Hence, thepresent petition with the following prayers: “7.The Petitioner, therefore, prays that thisHon’ble Court be pleased to issue a writ ofmandamus or a writ in the nature ofmandamus or a writ of certiorari or a writ inthe nature of certiorari or any otherappropriate writ, direction or order and bepleased to: It is the grievance of the petitioner that action ofrespondent in rejecting the declaration filed by thepetitioner under the Act for Assessment Year 2008-09 is illegal and without jurisdiction. Hence, thepresent petition with the following prayers: “7.The Petitioner, therefore, prays that thisHon’ble Court be pleased to issue a writ ofmandamus or a writ in the nature ofmandamus or a writ of certiorari or a writ inthe nature of certiorari or any otherappropriate writ, direction or order and bepleased to: (a)direct the respondent to accept thedeclaration filed by the Petitioner under theVivad se vishwas scheme for the AssessmentYear 2008-09; (b)pending the admission, hearing and finaldisposal of this petition, direct theRespondent to accept the declaration filed bythe Petitioner under the Vivad se vishwasscheme for the Assessment Year 2008-09; (c)any other and further relief deemed justand proper be granted in the interest ofjustice; (d)to provide for the cost of this petition. The petitioner has approached this Court seeking issuance of writ of mandamus or any otherappropriate writ where this Court on 29.09.2021, while issuing urgent notice, passed the followingorder:- “1. The petitioner is before this Court seekingfollowing main relief :- 7. Petitioner, therefore, prays that this Hon’bleCourt be pleased to issue writ of mandamusor a writ in nature of mandamus or a writ ofcertiorari or a writ in nature of certiorari orany other appropriate writ, direction or orderand be pleased to : (a) direct the respondent to accept thedeclaration filed by the petitioner under the Vivad se vishwas Scheme for the Assessmentyear 2008- 09. 2. The denial of opportunity to participate inthe Vivad se Vishwas Scheme known as directTax Act, 2020, the petitioner is before thisCourt on the ground that the impugned actionon the part of the respondent of rejecting theDeclaration filed by him for the A.Y. 2008-09is contrary to the Scheme of the Act. 3. Wehave heard learned Senior AdvocateMr.Tushar Hemani appearing with learnedadvocate Ms.Vaibhavi Parikh for thepetitioner. According to him the order ofassessment was of 31.12.2010 and the CITAppeal order was 16.02.2012. The same wasreceived by the petitioner on 03.03.2020 andhence the time limit for filing the appealbefore the Income Tax Appellate Tribunal wasnot over. He had preferred Declaration on26.01.2021. 4. He has taken us through section 287 of theIncome Tax Act read with Rule 127 of theIncome Tax Rules to urge that theendorsement “Left” on the envelope would nothave made the authority compliance in wakeof this detailed provision. 5. Issue URGENT NOTICE, returnable on 30.09.2021. D.S. Today is permitted.” This Court has heard Mr. Tushar Hemani, learned Senior Advocate appearing with Ms. VaibhaviParikh, learned advocate for the petitioner, and Ms.Mauna Bhatt, learned advocate appearing with Mr.M.R. Bhatt, learned Senior Advocate for therespondent. 11 The case is covered by the decision of this Court rendered in the case of Tushar Agro Chemicals and he Principal Commissioner of Income-tax passed in Special Civil Application No. 6232 of 2021 on31.07.2021. The relevant findings and observations of the Court are necessary to be reproduced as under: “7. Before adverting to the submissions made by the learned Advocates for the parties, it would begermane to reproduce the definition of the‘Appellant’ as contained in Section 2(i)(a) of the saidAct as well as the definition of the ‘specified date’ ascontained in Section 2(i)(n) thereof: “2. (1) In this Act, unless the context otherwiserequires,— (a)"appellant" means (i) a person in whose case an appeal or a writpetition or special leave petition has been filedeither by him or by the income-tax authority or byboth, before an appellate forum and such appeal orpetition is pending as on the specified date; of the Court are necessary to be reproduced as under: “7. Before adverting to the submissions made by the learned Advocates for the parties, it would begermane to reproduce the definition of the‘Appellant’ as contained in Section 2(i)(a) of the saidAct as well as the definition of the ‘specified date’ ascontained in Section 2(i)(n) thereof: “2. (1) In this Act, unless the context otherwiserequires,— (a)"appellant" means (i) a person in whose case an appeal or a writpetition or special leave petition has been filedeither by him or by the income-tax authority or byboth, before an appellate forum and such appeal orpetition is pending as on the specified date; (ii) a person in whose case an order has been passed by the Assessing Officer, or an order hasbeen passed by the Commissioner (Appeals) or theIncome Tax Appellate Tribunal in an appeal, or bythe High Court in a writ petition, on or before thespecified date, and the time for filing any appeal orspecial leave petition against such order by thatperson has not expired as on that date; (iii) a person who has filed his objections before the Dispute Resolution Panel under section 144C of theIncome-tax Act, 1961 (43 of 1961) and the DisputeResolution Panel has not issued any direction on orbefore the specified date; (iv) a person in whose case the Dispute Resolution Panel has issued direction under sub-section (5) of section 144C of the Income-tax Act and theAssessing Officer has not passed any order undersubsection (13) of that section on or before thespecified date; (v) a person who has filed an application for revisionunder section 264 of the Income-tax Act and suchapplication is pending as on the specified date;" [Explanation.—For the removal of doubts, it ishereby clarified that the expression "appellant" shallnot include and shall be deemed never to have beenincluded a person in whose case a writ petition orspecial leave petition or any other proceeding hasbeen filed either by him or by the income-taxauthority or by both before an appellate forum,arising out of an order of the SettlementCommission under Chapter XIX-A of the Income-taxAct, and such petition or appeal is either pending oris disposed of.] 8. As per Section 2(i)(n), "specified date" means the 31st day of January, 2020; 9. In the light of the aforestated provisions, let’s examine as to whether the petitioner could be saidto be an “Appellant” within the meaning of Section2(i)(a) of the said Act or not. In the present Petition,there are certain undisputed facts. It is not disputedthat the Appeal filed by the Petitioner electronicallyon 17.5.2016 against the order of assessment dated25.2.2016 is pending with the Appellate Authority,though there was delay of 40 days occurred in filingthe said Appeal. It is also not disputed that the saiddelay has not been condoned by the AppellateAuthority since the filing of the Appeal. It is statedat the bar by the learned Senior Advocate Mr.Hemani, and not disputed by the learned SeniorStanding Counsel Mrs. Mauna Bhatt that there isno practice of registering an application forcondonation of delay separately at the office of theCIT (Appeals), and the same is heard along with theAppeal itself. Even in the prescribed Form No.35,there was Column No. 15, where the Petitioner –Appellant was required to mention about thenumber of days of delay occurred in filing the Appeal. It has also emerged from the record of thePetition that the Appellate Authority itself hadissued various notices to the Petitioner with regardto the hearing of the said Appeal. Now, theDeclaration made by the Petitioner under the saidAct has been rejected as shown in the portal, on thefollowing grounds: Appeal. It has also emerged from the record of thePetition that the Appellate Authority itself hadissued various notices to the Petitioner with regardto the hearing of the said Appeal. Now, theDeclaration made by the Petitioner under the saidAct has been rejected as shown in the portal, on thefollowing grounds: “In your case, the AO has reported that “As perform-35 the demand notice against the assessmentorder has been served on 25.2.2016. However,applicant has filed appeal on 17.05.2016, which isbeyond the time limit prescribed for filing appealbefore CIT appeal. It has has been reported by theAO that leter to CIT appeal have been issuedregarding any condonation order passed for delay infiling of appeal by the assessee. However, till dateno reply has been received from the CIT appeal.Further, as per minutes of meeting held with CBDTChairman and Members through video Conferenceon 04.01.2021, it was conveyed that order disposingcondonation applications of the assessee will bepassed in all cases within week by CsIT (AU)s.However, no information has been received fromNFAC / respective CsIT (AU)s as to whether thedelay has been condoned in this case. Under thecircumstance, declaration filed is hereby rejected.” 10. At this juncture, it would be relevant to refer tothe decision of Supreme Court in case ofCommissioner of Income Tax v. ShatrusailyaDigvijaysingh Jadeja, relied upon by the learnedSenior Advocate Mr. Hemani, in which the S.C. hadan occasion to deal with the issue, as to whether,the department could have rejected the Declarationfiled under the similar scheme called Kar VivadSamadhan Scheme, introduced vide the Finance[No.2] Act 1998, on the ground that the Revision /Appeal filed by the concerned Petitioner was timebarred or was not valid. In the said case, theSupreme Court considered the object of the saidScheme as also the other earlier decisions, andobserved as under: “13. In our view, the Scheme was in substance arecovery scheme though it was nomenclatured as a"litigation settlement scheme" and was not similarto the earlier Voluntary Disclosure Scheme. Asstated above, the said Scheme was a complete Codeby itself. Its object was to put an end to all pendingmatters in the form of appeals, reference, revisionsand writ petitions under the IT Act/WT Act. Keepingin mind the above object, we have to examinesection 95(i)(c) of the Scheme, which was differentfrom appeals under section 246, revisions undersection 264, appeals under section 260A etc. of theIT Act and similar provisions under the W.T. Act.Under the I.T. Act, there is a difference betweenappeals, revisions and references. However, thosedifferences were obliterated and appeals, revisionsand references were put on par under section 95(i)(c) of the Scheme. The object behind section 95(i)(c)in putting on par appeals, references and revisionswas to put an end to litigation in various forms andat various stages under the IT Act/Wealth Tax Actand, therefore, the rulings on the scope of appealsand revisions under the IT Act or on VoluntaryDisclosure Scheme, will not apply to this case. 15. In the case of Dr. Mrs. Renuka Delta (supra),this Court has held on interpretation of section 95(i)(c) that if the appeal or revision is pending on thedate of the filing of the declaration under section 88of the Scheme, it is not for the DA to hold that theappeal/revision was "sham", "ineffective" or"infructuous" as it has. 15. In the case of Dr. Mrs. Renuka Delta (supra),this Court has held on interpretation of section 95(i)(c) that if the appeal or revision is pending on thedate of the filing of the declaration under section 88of the Scheme, it is not for the DA to hold that theappeal/revision was "sham", "ineffective" or"infructuous" as it has. 16. In the case of Raja Kulkarni v. The State ofBombay reported in AIR 1954 SC 73, this Court laiddown that when a section contemplates pendency ofan appeal, what is required for its application isthat an appeal should be pending and in such acase there is no need to introduce the qualificationthat it should be valid or competent. Whether anappeal is valid or competent is a question entirelyfor the appellate court before whom the appeal isfiled to decide and this determination is possibleonly after the appeal is heard but there is nothing to prevent a party from filing an appeal which mayultimately be found to be incompetent, e.g., when itis held to be barred by limitation. From the merefact that such an appeal is held to beunmaintainable on any ground whatsoever, it doesnot follow that there was no appeal pending beforethe Court. 17. To the same effect is the law laiddown by the judgment of this Court in the case ofTirupati Balaji Developers (P) Ltd. v. State of Bihar& Others reported in (2004) 5 SCC 1, in which ithas been held that an appeal does not cease to bean appeal though irregular and incompetent.” 11. In view of the aforestated legal position, thereremains no shadow of doubt that appeal could besaid to be pending, even if the delay occurred infiling the same was not condoned and even if it wasallegedly irregular or incompetent. In the instantcase therefore also, the Respondent could not haverejected the Declaration Form of the Petitioner filedunder the said Act merely on the ground that theAppeal was not valid or competent, as the delayoccurred in filing the Appeal was not condoned bythe Appellate Authority. In the opinion of the Court,the Respondent had to only take into consideration,as to whether, the Petitioner had filed an Appeal,and the same was pending on the ‘specified date’ i.e.31.1.2020. It was not for the Respondent to decide,as to whether, such Appeal was irregular orincompetent or invalid in the eye of law. 12. In that view of the matter, the impugnedcommunication dated 22.2.2021, displayed on thePortal of the Department, rejecting the Declarationfiled by the Petitioner under the said Act, deservesto be quashed and set aside, and is accordinglyquashed and set aside. The Respondent is directedto accept the said Declaration under the said Act forthe assessment year under consideration, ifotherwise is valid.” 12 Reverting to the facts on hands, it is abundantlyclear from the record itself that the delay hadoccurred only on account of non-supply of copy ofthe order, which was passed on 16.02.2012. Despiteseveral reminders, the order came to be served uponthe petitioner on 03.03.2020 and, therefore, if onthe specified date i.e. on 31.01.2020, which was thetime limit for filing an appeal or Special LeavePetition, the petitioner could not file the same, hecannot be held liable for such indolent attitude onthe part of the respondents. The petitioner had alsodisclosed this aspect while posting on the portal andwhile applying under the Vivad se vishwas schemethat the time limit for filing the appeal before theIncome Tax Appellate Tribunal (“ITAT” for short) hadnot expired, because CIT (Appeals) order was notserved upon the petitioner on 31.01.2020. Thesecond appeal was filed before the ITAT on19.03.2020 within the time limit after the service ofthe order of 16.02.2012. This is reflective of filing ofthe appeal well within the time. Declaration, which was filed in the form No.1 of 17.06.2020, also hasbeen revised and, therefore, the respondent ought tohave taken into consideration whether the petitionerhad filed the appeal and the same was pending onthe specified date i.e. on 31.01.2020. It was, thusnot for the respondent to decide as to whether suchappeal was irregular, incompetent or invalid in theeyes of law in wake of the aforementionedcircumstances. In that view of the matter the impugnedcommunication displayed on the portal ofdepartment rejecting the declaration filed by thepetitioner under this Act of 2020 deserves to bequashed with the following operative order. Resultantly, the impugned communication dated11.02.2021 displayed on the portal of theDepartment rejecting the declaration for thepetitioner under the VSV Act is quashed and setaside. The respondents are directed to accept thedeclaration under the said Act for the A.Y. 2008-2009. It is clarified that the issue of condonation of SUDHIR delay in the pending appeal before the Tribunal, ifresults against the petitioner, the consequentialeffect on the proceedings of VSV Act is permitted. Itis also being clarified that the outcome of the veryappeal on merits will have no bearing oncethreshold of the application of condonation iscleared by the petitioner. (MS. SONIA GOKANI, J. ) (RAJENDRA M. SAREEN,J)