Court deems late appeal timely under VsV Act, orders acceptance in tax dispute resolution

The court held that once the petitioner's appeal was condoned by the ITAT, it should be considered as filed within the original timeline, making it pending as of the specified date under the VsV Act. Emphasizing the Act's aim to resolve tax disputes and reduce litigation, the court quashed the rejection order, directing the respondent to accept the petitioner's declaration for participation in the VsV Scheme. The petitioner was required to comply with tax payment obligations by a specified date, with procedural facilitation by the respondent as per the law.

---

---

Issues Involved:
1. Rejection of declaration forms under the Direct Tax Vivad se Vishwas Act, 2020 (VsV Act).
2. Eligibility of the petitioner as an appellant under the VsV Act.
3. Interpretation of the specified date and conditions for pending appeals under the VsV Act.
4. Application of CBDT circular and FAQs in determining eligibility.
5. Impact of COVID-19 pandemic on procedural timelines.

Detailed Analysis:

1. Rejection of Declaration Forms:
The petitioner challenged the rejection of declaration Forms No.1 and 2 filed under the VsV Act and VsV Rules, arguing it was contrary to law and violated fundamental rights. The forms were rejected by respondent No.1, and the petitioner sought relief from the High Court, including the acceptance of the application and a stay on penalty proceedings initiated under section 274 read with section 271(1)(c) of the Income Tax Act.

2. Eligibility of the Petitioner as an Appellant:
The core issue was whether the petitioner qualified as an "appellant" under the VsV Act, which required that an appeal be pending as on the specified date, 31.01.2020. The petitioner had filed an appeal before the ITAT, which was delayed due to hospitalization and the COVID-19 pandemic. The ITAT condoned the delay on 23.02.2021, allowing the petitioner to argue the case on merits or opt for the VsV Scheme.

3. Interpretation of the Specified Date and Conditions for Pending Appeals:
The VsV Act defines an appellant as one whose appeal is pending as on the specified date. The petitioner’s appeal was not filed within the original timeline but was condoned by the ITAT. The court examined whether the condonation of delay would relate back to the original filing date, thus making the appeal pending as of the specified date.

4. Application of CBDT Circular and FAQs:
The respondents argued that the petitioner’s appeal was not pending as of the specified date, citing a CBDT circular dated 04.12.2020. FAQ No.59 of the circular stated that appeals filed with condonation applications before 04.12.2020 and admitted before filing the declaration would be deemed pending as of 31.01.2020. The petitioner contended that this interpretation was restrictive and discriminatory, violating Article 14 of the Constitution.

5. Impact of COVID-19 Pandemic on Procedural Timelines:
The court considered the impact of the COVID-19 pandemic on procedural timelines, noting the extensions provided by the Apex Court and various notifications. The petitioner’s delay in filing the appeal was attributed to hospitalization and pandemic-related restrictions, which were deemed valid reasons for condonation.

Judgment:
The court held that the petitioner’s appeal, once condoned by the ITAT, should be considered as if filed within the original timeline, making it pending as of the specified date. The court emphasized that the VsV Act aimed to resolve tax disputes and reduce litigation, and a restrictive interpretation would contradict this intent. The court quashed the rejection order dated 30.03.2021 and directed the respondent to accept the petitioner’s declaration within three days, allowing participation in the VsV Scheme. The petitioner was instructed to comply with tax payment requirements by 30.09.2021, with all procedural actions to be facilitated by the respondent in accordance with the law.

---