Pending appeal and later condonation can validate Kar Vivad Samadhan Scheme declarations under settlement law.

An appeal filed against an order refusing to condone delay was treated as a pending appeal for section 95(i)(c) of the Finance (No. 2) Act, 1998, because an appeal with a condonation application retains its appellate character in law. The declarations under the Kar Vivad Samadhan Scheme, 1998 could therefore not be rejected on the ground that no appeal was pending. The later condonation of delay and restoration of the appeals was also relevant, since subsequent events during the pendency of proceedings could be considered and the allowance of the appeals related back to their filing, validating the declarations and supporting consequential relief.

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Issues: (i) Whether an appeal filed against an order refusing to condone delay could be treated as a pending appeal for the purposes of section 95(i)(c) of the Finance (No. 2) Act, 1998. (ii) Whether the subsequent condonation of delay and restoration of the appeals could be taken into account while testing the validity of the rejection of declarations under the Kar Vivad Samadhan Scheme, 1998.

Issue (i): Whether an appeal filed against an order refusing to condone delay could be treated as a pending appeal for the purposes of section 95(i)(c) of the Finance (No. 2) Act, 1998.

Analysis: The relevant statutory question turned on the meaning of "pending" in the Scheme. The Court applied the settled principle that an appeal accompanied by an application for condonation of delay remains an appeal in law, and that dismissal or consideration on limitation does not erase the appellate character of the proceeding. It distinguished the situation where the revision itself was already barred and no delay had been condoned from a case where an appeal against refusal to condone delay was itself validly instituted and subsisting.

Conclusion: Yes. Such an appeal was pending within the meaning of section 95(i)(c), and the declarations could not be rejected on the footing that no appeal was pending.

Issue (ii): Whether the subsequent condonation of delay and restoration of the appeals could be taken into account while testing the validity of the rejection of declarations under the Kar Vivad Samadhan Scheme, 1998.

Analysis: The Court applied the doctrine that subsequent events arising during the pendency of proceedings may be considered to mould relief. Since the Tribunal later allowed the appeals and condoned the delay, the appellate proceedings before the first appellate authority stood validated and related back to the date of presentation. On that footing, the declarations filed under the Scheme had to be treated as having been made during pending appeals.

Conclusion: Yes. The subsequent condonation and allowance of the appeals supported the assessee's entitlement under the Scheme and undermined the rejection order.

Final Conclusion: The rejection of the declarations was unsustainable, and the petitioner's declarations under the Scheme were held to be valid, with consequential relief directed for payment of the tax liability within the time granted by the Court.

Ratio Decidendi: An appeal accompanied by, or involving, a bona fide challenge to an order on condonation of delay remains a pending appeal in law for the purposes of a settlement scheme; subsequent condonation may be taken into account, and such later event can relate back to validate the declaration.

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