2024 (2) TMI 1550 - HC - Income Tax

Taxpayer's Appeal Timing Clarified: Cause of Action Determined by Certified Order Date Under Vivad se Viswas Act

HC analyzed the appellant's application under the Direct Taxes Vivad se Viswas Act, 2020. The court held that the cause of action to file an appeal arose ... Rejection of application under the Vivad se Viswas Act, 2020 - as alleged no appeal was pending as on the specified date - HELD THAT:- Since no appeal was pending on 02.05.2020, his application has been rightly rejected. In the present case, as per Annexure Income Tax Department have themselves, on an application made by the appellant, supplied him the certified copy of the order. This letter is not in dispute between the parties. Once the certified copy was given on 10.07.2020, the appellant’s right to file an appeal arose on that date, as he could not have filed an appeal without the certified copy of the assessment order. Hence, for all intents and purposes the cause of action to file an appeal arose on 10.07.2020. Hence, after 10.07.2020, the appellant could have made an application under Act No.03 of 2020, and his case could not have been rejected on the ground that he had made an application on 02.05.2020 under the said Act. Even, if he had made an application to take the benefit of that scheme, the said application was not carrying the certified copy of the order, and hence, the application in itself was incomplete. On 02.05.2020, no appeal was pending, as the appellant did not have the certified copy of the order. On the application made by the appellant on 02.05.2020, his application was rejected vide Annexure No.11, on the ground that no appeal was pending before any appellate forum. Hence, his application under Vivad se Viswas Act, was rejected. In the present case, the certified copy of the order dated 09.12.2019 was given by the Income Tax Department on 10.07.2020 - Annexure No.8. The cause of action to file an appeal before the appellate authority arose on 10.07.2020. Since certified copy was given on 10.07.2020, the appellant has thirty days’ time to file an appeal. Since the impugned order was already passed Annexure No.11, the appellant had no other option but to approach this Court. His only remedy was to approach this Court against the order dated 02.05.2020. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the Court are:(a) Whether the appellant's application under the Direct Taxes Vivad se Viswas Act, 2020 (hereinafter 'the Act') was rightly rejected on the ground that no appeal was pending as on the specified date (02.05.2020);(b) The correct interpretation and application of Section 2(1)(a)(i) and Section 2(1)(a)(ii) of the Act in determining the appellant's eligibility to file an application under the Act;(c) The determination of the date on which the appellant's cause of action to file an appeal arose, specifically whether it was the date of receipt of the assessment order or the date of the application under the Act;(d) Whether the appellant's application dated 02.05.2020 can be considered valid despite the certified copy of the assessment order being supplied only on 10.07.2020;(e) The appropriate remedy available to the appellant when the application under the Act was rejected on procedural grounds.2. ISSUE-WISE DETAILED ANALYSISIssue (a) and (b): Legality of rejection of application under Vivad se Viswas Act and interpretation of Section 2(1)(a)(i) and (ii)The relevant legal framework is the Direct Taxes Vivad se Viswas Act, 2020, specifically Section 2(1)(a), which defines 'appellant' for the purposes of the Act. Clause (i) applies to persons with an appeal or writ petition pending before an appellate forum as on the specified date, while clause (ii) applies to persons in whose case an order has been passed on or before the specified date and the time to file an appeal or special leave petition against such order has not expired as on that date.The Court examined the learned Single Judge's reasoning that since the appellant made an application under the Act on 02.05.2020, that date must be taken as the date of knowledge of the order, placing the appellant under clause (i) (pending appeal) rather than clause (ii) (order passed but appeal time not expired). The Single Judge rejected the application on the basis that no appeal was pending on 02.05.2020.The Court carefully analyzed the definitions and the factual matrix, emphasizing that the appellant did not have a certified copy of the assessment order until 10.07.2020, which was essential to file an appeal. Without the certified copy, the appellant could not have filed an appeal, and thus no appeal was pending as on 02.05.2020.Issue (c) and (d): Date of cause of action to file appeal and validity of application dated 02.05.2020The Court relied on the undisputed fact that the Income Tax Department supplied the certified copy of the order dated 09.12.2019 only on 10.07.2020 (Annexure No.8). The Court held that the appellant's right and cause of action to file an appeal arose only on 10.07.2020, the date on which the appellant received the certified copy.The Court reasoned that since the appellant could not file an appeal without the certified copy, the application under the Act made on 02.05.2020 was premature and incomplete, lacking the certified copy of the order. Therefore, the rejection of the application on the ground that no appeal was pending was justified under the interpretation of the Act.However, the Court observed that the appellant's application dated 02.05.2020 should be treated as an application made after the receipt of the certified copy on 10.07.2020, thereby falling under Section 2(1)(a)(ii) of the Act, since the order had been passed and the time for filing an appeal had not expired as on 10.07.2020.Issue (e): Appropriate remedy and directions to respondentThe Court noted that after the rejection of the application under the Act, the appellant's only remedy was to approach the High Court. The Court directed that the writ petition be treated as an application under the Act made after the certified copy was supplied on 10.07.2020.The Court ordered that the respondent consider the appellant's application dated 02.05.2020 in light of the fact that the certified copy was received on 10.07.2020 and that the appellant's case falls within Section 2(1)(a)(ii) of the Act.The Court thus allowed the appeal and remanded the matter to the respondent for fresh consideration consistent with these findings.3. SIGNIFICANT HOLDINGSThe Court held:'Once the certified copy was given on 10.07.2020, the appellant's right to file an appeal arose on that date, as he could not have filed an appeal without the certified copy of the assessment order. Hence, for all intents and purposes the cause of action to file an appeal arose on 10.07.2020.''Even if he had made an application to take the benefit of that scheme on 02.05.2020, the said application was not carrying the certified copy of the order, and hence, the application in itself was incomplete.''Since the impugned order was already passed, the appellant had no other option but to approach this Court. His only remedy was to approach this Court against the order dated 02.05.2020.''This petition itself be treated as an application after the certified copy was filed by the appellant, and the appeal is being allowed giving directions to the respondent to consider the application dated 02.05.2020, keeping in view that the certified copy was given to the appellant on 10.07.2020, and his case falls under Section 2(1)(a)(ii).'The core principle established is that the date of receipt of the certified copy of the assessment order is critical in determining the appellant's eligibility under the Vivad se Viswas Act, 2020, and the cause of action to file an appeal arises only upon receipt of such certified copy. Applications made prior to receipt of the certified copy, even if premature or incomplete, can be treated as valid if considered in light of the date of receipt of the certified copy.Accordingly, the final determination was that the appellant's application under the Act was wrongly rejected on procedural grounds, and the matter was remanded for fresh consideration in accordance with the correct legal position and facts.