Direct Tax Vivad Se Vishwas Act| Delay Can Be Condoned In Unforeseen Circumstances: Allahabad High Court

The Allahabad High Court, on Friday, allowed petitioner to avail benefits under Direct Tax Vivad Se Vishwas Act, 2020 despite a delay of 3 days in filing application under the Act. Condonation of delay, in unforeseen circumstances does not lead to extension of the scheme, held the Court.

The Parliament enacted the Direct Tax Vivad Se Vishwas Act, 2020 (2020 Act) for the resolution of disputed tax to relieve the taxpayers from paying interest and penalty on the escaped tax. As per the above Act, 2020, any person wanting to pay the disputed tax should submit a declaration u/s 4 of the 2020 Act before the designated authority. After receiving such declaration, the Authority shall grant a certificate to the declarant containing particulars of the tax arrears and the amount payable. Thereafter, the amount is to be paid by the deadline decided by the Ministry of Finance.

For Assessment Year 2010-11, the petitioner submitted his declaration on 5.6.2020 as required u/S 4 of the 2020 Act. Declaration certificate of designated authority in Form-III as per Section 5 of the Act, 2020 was also uploaded on the portal on 9.11.2020. The petitioner was required to pay Rs. 18,67,137/- on or before 31.12.2020.

Ministry of Finance, by various notifications, extended the last date for payment under the scheme. Since the final last date was on a Sunday, the Petitioner dropped of the cheque. However, since it was a Sunday, the payment receipt was issued on 3.11.2021. After that, the Petitioner was prohibited from availing of benefits under the 2020 Act due to the delay of three days.

Chairman, Central Board of Direct Taxes rejected the application of the Petitioner for condonation of delay on the ground that the last date of deposit was 31.10.2021 as per the notification and the same cannot be extended further.

Counsel for Petitioner argued that unforeseen and extraneous circumstances and legal impediments should be factored in for condoning delay in depositing the balance amounts. Reliance was placed on Shekhar Resorts Ltd. vs. Union of India and others, wherein the Apex Court held that condonation of delay in case of a legal impediment is not an extension of the scheme but a remedial measure.

Counsel for Respondent relied on M/s Ken Computek Pvt. Ltd. vs. Designated Committee (SVLDRS) and others wherein the Apex Court has observed that “the last date to deposit the balance of tax, prescribed under the scheme under the Act, 2020, cannot be extended.”

The bench comprising of Justices Siddhartha Verma and Arun Kumar Singh Deshwal observed that the Apex Court in Shekhar Resorts Ltd. vs. Union of India and others and the Delhi High Court in I.A. Housing Solution Pvt. Ltd. vs. Principal Commissioner of Income Tax-4, in similar fact scenario had extended the benefit of the scheme to the petitioner. Thus, the petitioner, herein, was liable to get the benefit as he had established his bonafide by depositing the cheque on the last day. His accident was an unforeseen circumstance beyond the control of the petitioner.

With respect to the decision relied upon by the Respondent, the Court held

“While in the judgement of M/s Ken Computek Pvt. Ltd. vs. Designated Committee (SVLDRS) and others, passed in SLP (C) No. 2116 of 2023, the Apex Court did not consider the issue of condoning the delay in extraordinary circumstances but only observed that benefit of scheme cannot be extended from the time prescribed under the scheme.”

Accordingly, the writ petition was allowed.

Case Title: Digvendra Pratap Singh vs. Union Of India And 2 Others [Writ Tax No. - 1510 of 2022]

Case Citation: 2023 LiveLaw (AB) 255

Counsel for Petitioner: Anoop Trivedi, Senior Advocate assisted by Ami Tandon, Abhinav Gaur, Vibhu Rai.

Counsel for Respondent: A.S.G.I., Naveen Chandra Gupta

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