M/S. Kamineni Builders vs Union Of India
2021 Latest Caselaw 2767 Tel

              THE HON'BLE SRI JUSTICE T.VINOD KUMAR
                                      AND
                THE HON'BLE SRI JUSTICE K.LAKSHMAN


                   WRIT PETITION No.19619 of 2021



O R D E R:(per Hon'ble Sri Justice T.Vinod Kumar)


       The petitioner has filed the present Writ Petition - i) to declare

Circular No.21 of 2020, dated 04.12.2020, issued by the 2nd respondent, as

null, void and unconstitutional, insofar as it relates to the clarification issued

with regard to Question No.59 as contrary to the Direct Tax Vivad Se

Vishwas Act, 2020 (for short, 'the DTVSV Act 2020'), and ii) to declare the

impugned proceeding, issued by the 3rd respondent, in Receipt

No.281635711050321, dated 20.04.2021, with the 'Remark' noted therein,

whereby the petitioner's declaration/application in Forms 1 and 2 filed on

05.03.2021 under the DTVSV Act 2020 was rejected, as illegal, arbitrary and

contrary to the scheme of the DTVSV Act 2020, and consequently, to direct

the 3rd respondent to accept the petitioner's application in Forms 1 and 2

under the DTVSV Act 2020.

Back ground facts :

2. It is the contention of the petitioner that the 4th respondent had

completed the assessment of the petitioner for the Assessment Year 2013-

14 under Section 143(3) of the Income-Tax Act, 1961 (for short, 'the Act of

1961') on 23.03.2016; that aggrieved thereby, the petitioner filed an appeal

under Section 246A of the Act of 1961 before the Commissioner of Income

Tax (Appeals) (for short, 'the CIT'), on 08.05.2016; that the said appeal was

dismissed by the CIT on 06.02.2019; that assailing the said order, the

petitioner preferred further appeal before the Income Tax Appellate Tribunal

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(for short, 'the Tribunal') on 23.02.2021, along with an application to

condone the delay in filing such appeal; and that the Tribunal condoned the

delay in filing the appeal by order dated 22.03.2021, and allowed the

petitioner to withdraw the appeal to avail the benefit under the DTVSV Act

2020.

3. It is further contended by the petitioner that, in similar

circumstances, when a challenge to Circular No.21 of 2020, dated

04.12.2020, was laid before a Division Bench of this Court, in the case of

Boddu Ramesh v/s. Designated Authority1 (W.P.No.12038 of 2021),

this Court (to which one of us, TVK,J, is a Member) was pleased to allow the

said writ petition, vide order dated 28.06.2021, wherein it was held that the

restriction sought to be imposed by the above said circular conferring the

benefit only to appeals filed on or before 04.12.2020 has no significance and

what is required to be seen is the "pendency of the appeal" with an

application for condonation of delay and the appeal being admitted by the

appellate authority before the date of filing of declaration.

4. It is the contention of the petitioner that since the last date for filing

declaration in Forms 1 and 2 was extended from time to time till 31.03.2021

and the petitioner having filed an appeal before the Tribunal on 23.02.2021

along with an application for condonation of delay and the Tribunal having

condoned the delay on 22.03.2021, the declaration filed by the petitioner on

05.03.2021 would have to be considered as having been filed before the

specified date; and that the rejection of the declaration filed by the

petitioner under the DTVSV Act 2020 with the 'Remark', dated 20.04.2021,

issued by the 3rd respondent, is contrary to the said decision rendered by

this Court in the above writ petition in W.P.No.12038 of 2021.

1 (2021) 128 Taxmann.com 13 (Telangana)

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Contentions of the respondents :

5. Per contra, learned Senior Standing Counsel appearing for the

respondents seeks to sustain the impugned proceeding and the 'Remark'

noted in the impugned proceeding. Though the learned Senior Standing

Counsel does not dispute that the issue in the present writ petition is

covered by the decision rendered by this Court in the case of Boddu

Ramesh (supra), on instructions submits that the department has not

accepted the above said judgment and authorization has been issued to

prefer SLP thereagainst. However, he would fairly submit that, as of today,

the said order is in force and the operation of the same has not been

suspended.

Consideration by the Court :

6. Heard Sri R. Siva Raman, learned counsel appearing for Sri N.Vijay,

learned counsel for the petitioner; Sri K.Raji Reddy, learned Senior Standing

Counsel appearing for respondents 2 to 4; and Sri Namavarapu Rajeshwar

Rao, learned Assistant Solicitor General appearing for the 1st respondent.

We have noted the contentions urged by the learned counsel appearing for

the respective parties.

7. This Court, in the decision rendered in Boddu Ramesh's case

(supra) had observed in paras 30 to 35 as under:

'30. It is to be noted that the date for filing of declaration under the Act of 2020 opting to avail the benefit of Scheme was originally notified as 30.03.2020, which was extended from time to time, including up to 31.12.2020.

31. Subsequently the time for filing declarations under the Act of 2020 was finally extended by Notification No.9/2021 dt.26.02.2021 up to 31.03.2021. So petitioners application filed on 08.02.2021, was with in time.

32. However, while providing answer to Q.No.59, in Circular No.21/2020 issued on 04.12.2020, the last date for filing

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declaration under the Act of 2020 was considered as 31.12.2020, as notified by the Government at the relevant point in time.

33. It is only on 31.12.2020, the time for filing declarations under the Act of 2020 was extended for further period.

34. In the answer provided to Q.No. 59 in circular No 21/2020, it is stated that even "if the limitation for filing appeal has expired before 31.01.2020, i.e., the 'specified date', if an application for condonation of delay is filed on or before the date of issue of Circular, and the delay is condoned, the appeal should be deemed to be pending as on 31.01.2020".

35. This would have to be considered, in our opinion, as applicable even in relation to further extension of time granted for filing declarations till 31.03.2021, and cannot be restricted either up to the date of issue of circular (ie. 04.12.2020) or even the date for filing declaration mentioned therein ((ie.) 31.12.2020, as there cannot be any differentiation in delay as it stands on the same footing be it of a day or more.'

8. This Court, having come to the conclusion, while allowing the said

writ petition, as above, further held in paras 37and 38 as under:

'37. Therefore, we are unable to persuade ourselves to confine the benefit of "deemed pendency of appeal" only if an application for condonation is filed on or before 04.12.2020, as in our view no significance can be attached to the said date of issue of the circular, since, what is required to be considered is the pendency of the appeal with an application for condonation and the admission of the appeal as on the date of filing of declaration.'

38. Thus, in our view, even after 04.12.2020, if an appeal is filed with an application for condonation of delay and the appeal is admitted by the appellate authority before the date of filing of the declaration, the benefit is to be extended, as otherwise, it would lead to creation of separate class of persons among the declarants, without any reasonable basis, resulting in discrimination thereby violating Article 14 of the Constitution of India.'

9. In the light of the above decision, in the facts of the present case, it

is to be seen that the petitioner has filed an appeal along with an application

for condonation of delay on 23.02.2021; the Tribunal having admitted the

appeal, has taken up the same for hearing on 22.03.2021; and by

condoning the delay in filing such appeal, the Tribunal permitted the

petitioner to withdraw the appeal to avail the benefit of the DTVSV Act

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2020. The Tribunal, while dismissing the appeal of the petitioner as

withdrawn, however, granted liberty to the petitioner to revive the appeal, if

the petitioner's case is not accepted in the DTVSV scheme by the Revenue

for whatsoever may be the reason on a subsequent date.

10. During the pendency of appeal before the Tribunal, the petitioner has

filed declaration in Form 1 and 2 under DTVSV Act, 2020 on 05.03.2021,

i.e., before 31.03.2021, the last date specified for filing declaration.

11. Thus, on the date of filing of declaration in Forms 1 & 2 by the

petitioner under the DTVSV Act, 2020, the appeal was pending before the

Tribunal along with an application for condonation of delay in filing such

appeal. Further, the fact of Tribunal accepting the appeal filed by the

petitioner on 23.02.2021, by condoning the delay on 22.03.2021, would

amount to the appeal against the order of the CIT dated 06.02.2019 as

having been filed in time. The result of both the above facts would lead to

inevitable conclusion that the declaration filed by the petitioner on

05.03.2021 would have to be considered as validly filed.

12. Further, this Court also cannot lose sight of the fact of the concession

made by the respondents before the Tribunal, which has been recorded by

the Tribunal as under:

'5. Ld. DR submitted that if the assessee desires to avail the Vivad Se Vishwas scheme, the revenue has no objection.'

13. As the respondents did not oppose the condonation of delay and also

the prayer of the petitioner to withdraw the appeal to avail the benefit of the

DTVSV Act 2020, it is not open for the respondents now to turn around and

reject the declaration filed in Forms 1 & 2 with the 'Remark' as -

'as no appeal is pending as on the date specified date i.e. 31.01.2020, as per Section 2 of the DTVSV Act 2020, and the

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assessee is not an eligible declarant. Also the condonation is not filed before the date of issue of Circular No.21 of 2020 dated 04.12.2020. So, the applicant is not an eligible declarant. Hence, the application filed by the appellant is hereby rejected.'

14. Since, this Court had already taken the view that no significance can

be attached to the date of 04.12.2020 specified in Circular No.21 of 2020

while providing answer to Question No.59; that the same would have to be

considered as applicable even in relation to further extension of time

granted for filing declaration up to 31.03.2021 and cannot be restricted, the

declaration filed by the petitioner under DTVSV Act, 2020 on 05.03.2021

would have to be considered as validly filed, and that the petitioner is

eligible to avail the benefit under the DTVSV Act, 2020.

15. At this juncture, it may be useful to refer to the contents of Economic

Survey for the year 2017-18 and in particular reference to Chapter 9 titled

'Ease of Doing Business, Next Frontier: Timely Justice'. Under the said

Chapter, in sub-heading titled 'Central Government Taxes: A case study', it

has been stated as under:

'9.20 Pendency, arrears and delays just are not feature of Courts and Tribunals, but also the Tax Departments and their multilayered process.

9.21 As of March, 2017, there were approximately 1,37,176 direct tax cases under consideration at the level of ITAT, High Courts and Supreme Court. Just 0.2% of these cases constituted nearly 56% of the total demand value: and 66% of pending cases, each less than Rs.10 lakhs in claim amount, added up to a mere 1.8% of the total locked up value of pending cases.

9.22 The picture is not dissimilar in the case of indirect taxes. As of the quarter ending March, 2017, a total of 1.45 lakh appeals were pending with the Commissioner (Appeals), CESTAT, HCs and the SC together, that were valued by the Department at 2.62 lakh crores. Together, the claims for indirect and direct tax struck in litigation (Appellate Tribunal and upwards) by the quarter ending March, 2017, amounted to nearly 7.58 lakh crores, over 4.7 per cent of GDP. For the Department, these numbers, especially the value of amounts involved, have been rising sharply overtime.

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9.23 What is interesting is that the success rate of the Department at all three levels of Appeal - Appellate Tribunals, High Courts, and Supreme Court - and for both direct and indirect tax litigation is under 30%. In some cases, it is as low as 12%. The Department unambiguously looses 65% of its cases. Over a period of time, the success rate of the Department has only been declining, while that of the assessees has been increasing.

9.24 Nonetheless, the Department is the largest litigant. The Department's appeals constitute nearly 85% of the total number of appeals filed in the case of direct taxes, though that number seems to have improved in the case of indirect taxes. Of the total number of direct tax cases pending by the quarter ending March, 2017, the Department initiated 88% of the litigation at ITATs and Supreme Court and 83% of the litigation pending at High Courts.

9.25 The picture that emerges over a period of time is the following: even though the Department's strike rate has been falling considerably over a period of time, it is undeterred, and persists in pursuing litigation at every level of the judicial hierarchy. Since tax litigation constitutes a large share of the work load of High Courts and the Supreme Court, Courts and the Department may gain from a reduction in appeals pursued at higher level of the judiciary. Less might be more.'

16. A step in addressing the above concern was undertaken by the

Ministry of Finance, firstly, by way of increasing/enhancing monetary limit

for filing of appeals by the Department at all the three levels. Thereafter,

'Sabka Vishwas (Legacy Dispute Resolution) Scheme -2019' was announced

in relation to indirect tax disputes and thereafter the DTVSV Act, 2020 is

enacted to free up the locked revenues in Direct Taxes.

17. This Court, in Boddu Ramesh''s case (supra), taking note of the

speech of the presenter of the Bill before the Parliament and the Statement

of Objects and reasons appended to the DTVSV Act, 2020, held that the

DTVSV Act, 2020, is a beneficial piece of legislation, and interpretation of

the same should be in such a manner which would go to achieve the object

for which the same was enacted.

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18. Further, this Court, in M/s. Dongfang Electric Corporation Ltd. v.

Designated Authority2, held that - "the DTVSV Act, 2020 being a

beneficial piece of legislation, resort should be made to liberal interpretation

rather than literal interpretation, which would render the entire scheme

inoperable".

19. Applying the ratio of the above two decisions to the facts of the

present case, and for the reasons detailed herein above, it is to be held that

the rejection of the declaration filed by the petitioner under DTVSV Act,

2020 in Forms 1 and 2 on 05.03.2021. with the 'Remark' noted on

20.04.2021, by the 3rd respondent, on the basis of answer to Q.No.59, vide

Circular No.21 dated 04.12.2020, cannot be sustained.

20. Accordingly, the Writ Petition is allowed and the impugned order of

the 3rd respondent, in Receipt No.281635711050321 dated 20.04.2021, with

the 'Remark' as noted therein, is hereby set aside; the 3rd respondent is

hereby directed to accept the declaration Forms 1 and 2 filed by the

petitioner on 05.03.2021; process the same in accordance with the DTVSV

Act, 2020; issue Form 3; and accept the payment from the petitioner as

declared in Form 1 filed, before the due date as notified.

21. Pending miscellaneous petitions, if any, shall stand closed in the light

of this final order. No order as to costs.

_____________________ JUSTICE T.VINOD KUMAR

__________________ JUSTICE K.LAKSHMAN Date: 24 .09.2021 GJ Issue Copy by 25.09.2021. B/o-GJ.

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THE HON'BLE SRI JUSTICE T.VINOD KUMAR AND THE HON'BLE SRI JUSTICE K.LAKSHMAN

WRIT PETITION No.19619 of 2021 (Order of the Bench delivered by the Hon'ble Sri Justice T.Vinod Kumar)

Dt: .09.2021

GJ