Restoration of appeal under settlement scheme allowed where Tribunal wrongly refused revival despite request for merits adjudication.

The Tribunal's refusal to entertain a miscellaneous application under Section 254(2) and restore an appeal treated as withdrawn under the Vivad Se Vishwas scheme was held unsustainable. Where the assessee had opted for settlement, made substantial payment, and later sought restoration so the tax dispute could be decided on merits while preserving the settlement remedy, the Tribunal ought to have revived the appeal instead of declining to do so. The result was in favour of the assessee, with restoration directed for adjudication on merits.

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Issues: Whether the Tribunal was justified in rejecting the miscellaneous application under Section 254(2) of the Income-tax Act, 1961 and declining to restore the appeal that had earlier been treated as withdrawn in view of the settlement scheme.

Analysis: The appeal before the Tribunal had been disposed of without adjudication on merits when the assessee opted to pursue settlement under the Vivad Se Vishwas framework. The subsequent rejection of the miscellaneous application prevented revival of the original appeal, even though the appellant had already made substantial payment under the scheme and sought restoration so that the tax dispute could be decided on merits and the settlement remedy could remain available. In these circumstances, the Tribunal ought to have permitted restoration instead of refusing to revive the appeal.

Conclusion: The rejection of the miscellaneous application was unsustainable and the appeal ought to have been restored for decision on merits; the finding is in favour of the assessee.

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