2023 (12) TMI 653 - HC - Income Tax

Deceased assessee's declaration under Direct Tax Vivaad se Vishwas Act cannot be rejected for appeal pendency condition

The HC set aside orders rejecting a declaration under the Direct Tax Vivaad se Vishwas Act, 2020. The Designated Authority had rejected the deceased ... Validity of orders passed by the Designated Authority under the Direct Tax Vivaad se Vishwas Act, 2020 - Scope of the power of the CBD to issue clarification / circular - said authority has rejected the declaration filed by the deceased assessee on the ground that the condition regarding pendency of appeal as on 31.01.2020 is not satisfied - what is the meaning of the word “pending” in Section 2(1)(a) of the Act of 2020? - HELD THAT:- When a section contemplates pendency of an appeal, what is required is that an appeal should be pending and in such a case there is no need to introduce the qualification that it should be valid, competent or admitted. In Raja Kulkarni v. The State of Bombay [1953 (11) TMI 17 - SUPREME COURT] the Supreme Court has held that “whether an appeal is valid, competent or admitted is a question entirely for the appellate court before whom the appeal is filed to decide and this determination is possible only after the appeal is heard but there is nothing to prevent a party from filing an appeal which may ultimately be found to be incompetent, e.g. when it is held to be barred by limitation. From the mere fact that such an appeal is held to be unmaintainable on any ground whatsoever, it does not follow that there was no appeal pending before the Court”. To the same effect is the law laid down by the judgments of the Supreme Court in the cases of Tirupati Balaji Developers (P) Ltd. v. State of Bihar & Ors [2004 (4) TMI 575 - SUPREME COURT] and Commr. of Income Tax, Rajkot Versus Shatrusailya Digvijaysingh Jadeja [2005 (9) TMI 362 - SUPREME COURT] In the said cases, it has been held that an appeal does not cease to be an appeal though irregular and incompetent. Though Section 10 of the VSV Act gives power to the CBDT to issue directions, yet this Court is of the view that the said Section is similar to Section 119 of the Act, 1961. Consequently, the CBDT under Section 10 of VSV Act cannot issue circulars adverse to the assessee. It is also settled law that when the Supreme Court or High Court declare the law on a question arising for consideration, then the view expressed by the Supreme Court or the High Court has to be given effect to and not the circular issued by the CBDT. Consequently, the FAQ No.59 of Circular No.21/2020 dated 4th December, 2020 issued by CBDT to the extent it contemplates a condition of admission of appeal before filing of declaration as a condition precedent in order for the appeal to be treated as pending and to be eligible for settlement under the VSV Act is contrary to law, and accordingly the word “admission” needs to be ignored. In our view, appeal would be pending as soon as it is filed and up untill such time it is adjudicated upon and a decision is taken qua the same. The orders of rejection dated 31.03.2021 and 15.04.2021 are bad in law and therefore, the same are accordingly set aside. The respondent No. 1 is directed to process the claim of the petitioner under the provisions of the 2020 Act. Issues involved:The case involves a challenge to orders passed under the Direct Tax Vivaad se Vishwas Act, 2020 regarding the rejection of a declaration filed by a deceased assessee on the ground of appeal not being pending as of a specified date.Details of the Judgment:Challenge to Orders under DTVSV Act, 2020:The petitioner, as the legal heir of the deceased assessee, challenged the rejection of the declaration under the DTVSV Act, 2020 based on the condition of appeal pendency as of 31.01.2020. The petitioner had filed an appeal with an application for condonation of delay before the circular clarifying eligibility was issued on 04.12.2020.Interpretation of 'Pending' Appeal:The court deliberated on the meaning of 'pending' appeal as per the Act of 2020. It was emphasized that an appeal should be considered pending upon filing, regardless of its validity or competency, as per precedents from Supreme Court cases like Raja Kulkarni v. The State of Bombay and others.Validity of Circulars and FAQs:The court highlighted that circulars issued by the CBDT should not be adverse to the assessee and must align with statutory provisions. It cited the Supreme Court's stance in UCO Bank, Calcutta vs. Commissioner of Income Tax, W.B., emphasizing that circulars contrary to the law have no legal standing.Impact of Supreme Court Decisions:The judgment emphasized that when the Supreme Court or High Court declares the law on a matter, their view should be followed over circulars issued by authorities. The court referred to Commissioner of Central Excise, Bolpur vs. Ratan Melting & Wire Industries to support this stance.Decision and Order:Ultimately, the court set aside the rejection orders dated 31.03.2021 and 15.04.2021, directing the designated authority to process the petitioner's claim under the provisions of the 2020 Act. The petition was allowed with no order as to costs.