- The Vivad Se Vishwas Scheme was launched in 2020 to settle pending tax disputes in the area of Direct Taxes.
- It is an effort to unblock 9.32 trillion rupees (as of November 30, 2019) that has been blocked by over 483,000 appeals that are pending in several appellate tribunals.
- On March 17, 2020, the President gave his consent to the plan, which then led to it becoming the Direct Tax Vivad se Vishwas Act, 2020.
- The following are covered under the Act - Special Leave Petitions (SLPs) pending before the Supreme Court as on 31st January 2020, Writ Petitions pending before High Court or Supreme Court, Appeals pending before appellate forums like Income Tax Appellate Tribunal (ITAT), Commissioner (Appeals), High Court or Supreme Court.
- According to the argument, the respondent No. 1 made an error by failing to understand that under Section 2(1)(a)(i) of the VSV Act, read in conjunction with Sections 2(1)(b) and 2(1)(n), the only prerequisite for being eligible to resolve a dispute through the VSV Scheme is that the appeal must be "pending" before an appellate forum, which includes the CIT(A) and ITAT.
- It was argued that because the petitioner had received the assessment order on June 23, 2017, the deadline of July 22, 2017, for filing an appeal under Section 246A of the Income Tax Act, 1961 (the "Act, 1961") before the CIT(A), had passed.
- It was further argued that the petitioner submitted an application for a delay pardon and an appeal against the assessment order to the CIT(A) after a delay of around two years from the day the statute of limitations expired.
- The Bench stated that the definition of "pending" under Section 2(1)(a) of the VSV Act was the main question of scrutiny in this matter.
- The Division Bench cited Raja Kulkarni v. The State of Bombay [AIR 1951 Bom 105], in which it was determined that the decision regarding whether an appeal is valid or competent rests solely with the appellate court before which the appeal is filed. However, nothing prevents a party from filing an appeal that may ultimately be determined to be incompetent, such as when it is determined to be barred by limitation.
- Another authority relied upon as authority by the bench is Commissioner of Central Excise, Bolpur v. Ratan Melting & Wire Industries [CIVIL APPEAL NO. 4022 OF 1999]. Here it was decided that when the Supreme Court or High Court declare the law on a question coming up for consideration, the view expressed by the Supreme Court or High Court has to be given effect and not the circular issued by the CBDT, was also cited as authority.
- As a result, the Central Board of Direct Taxes’ (CBDT) FAQ No. 59 of Circular No. 21/2020 is illegal to the extent that it considers the admission of an appeal before the filing of a declaration as a prerequisite for the appeal to be considered pending and qualified for settlement under the VSV Act.
- The Bench ordered respondent No. 1 to treat the appeal filed against the assessment order u/s 143(3) for assessment year 2014–15 before CIT(A) as pending.
- FAQ No. 59 issued by CBDT was to be annulled to the extent mentioned.
- The respondents were further instructed to provide amended Forms 3 by concluding within eight weeks both pending appeals against the assessment order for assessment year 2014–15 (i.e., the quantum appeal before CIT(A) and the appeal against the imposition of penalty before ITAT).
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