VSV application cannot be rejected merely because the condonation of delay in filing appeal was not accepted: Delhi HC

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VSV application cannot be rejected merely because the condonation of delay in filing appeal was not accepted: Delhi HC

 

Medeor Hospital Ltd. (W.P.(C) 12116/2021)

Facts:

  1. The application under Vivad Se Vishwas Scheme of the petitioner was rejected by the AO, since, the petitioner was ineligible to settle the quantum appeal for Assessment Year 2014-15 pending before CIT(A) on the grounds that (i) appeal had been filed before CIT(A) after limitation period for filing the appeal had expired, (ii) FAQ-59 did not cover the case of the petitioner and (iii) an order under Section 249(3) condoning delay was necessary for eligibility under VSV Act.
  1. The FAQ-59 in CBDT Circular No.21/2020 dated 4th December, 2020 is reproduced hereinbelow:-

“Q-59. Whether the taxpayer in whose case the time limit for filing of appeal has expired before 31 Jan 2020 but an application for condonation of delay has been filed is eligible? Ans. If the time limit for filing appeal expired during the period from 1 st April 2019 to 31 at Jan. 2020 (both dates included in the period), and the application for condonation is filed before the date of issue of this circular, and appeal is admitted by the appellate authority before the date of filing of the declaration, such appeal will be deemed to be pending as on 31st Jan 2020.”

Hon. Delhi HC held as below:

  1. 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 or competent.  In Raja Kulkarni v. The State of Bombay reported in AIR 1954 SC 73, the Hon SC has held that “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.”
  1. When Supreme Court or High Courts 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.
  1. Forms 3 dated 23rd January, 2021 and 12th February, 2021 attached as Annexures P-16 and P-21 as well as the FAQ No.59 of Circular No.21/2020 dated 4th December, 2020 issued by CBDT to the extent mentioned hereinabove are quashed and respondent No.1 is directed to treat the appeal filed against the assessment order under Section 143(3) for assessment year 2014-15 before CIT(A) on 24th May, 2019 as pending as on 31st January, 2020.
  1. The respondents are also directed to issue revised Forms 3 by settling both the appeals against the assessment order for assessment year 2014- 15 (i.e. quantum appeal pending before CIT(A) and the appeal against levy of penalty pending before ITAT) in accordance with the provisions of VSV Act within eight weeks.

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