Rakesh Garg v. PCIT Ajmer

Case snapshot

Sections / provisions: Vivad Se Vishwas Scheme and CBDT Circular dated 4-12-2020

Questions before the Court / Tribunal

• Rakesh Garg Vs PCIT Ajmer Forum-Rajasthan High Court Date-17th February 2022 Sub-Whether Appeal filed before ITAT after the cut-off date of 31/1/2020 and delay in filing the appeal having been condoned, the application under the Vivad Se Vishwas Act 2020 is eligible to be accepted or is to be rejected in terms of FAQ No 59 clarified by CBDT. The Rajasthan high court in this case was considering a writ petition where the appellant had challenged the rejection of the application for settlement of the penalty levied u/s 271B of the Act amounting to Rs 1.50 lacs under the VSV Scheme on the pretext that the appeal as well as application for condonation of delay was filed after the issuance of the Circular dated 04-12-2020 by CBDT wherein while clarifying the said position in answer to fAQ NO 59, the CBDT had mandated that the appeal must be filed before the date of issuance of the Circular.…
• Which factual, statutory and procedural conditions controlled the requested relief?
• How did the forum apply the governing provisions to the evidence and procedural history recorded in this case?

Material facts and procedural background

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR (1)D.B. Civil Writ Petition No. 4178/2021 Rakesh Garg Son Of Shri Kailash Chand Garg, Aged About 44 Years, Having His Address At 2, Pragati Colony, Near St. Stephen School, Madanganj, Kishangarh, Ajmer. ----Petitioner Versus 1. Principal Comissioner Of Income Tax, Ajmer, Having Its Office At New Central Revenue Building, Jaipur Road, Civil Lines, Ajmer. 2. Central Board Of Direct Taxes, New Delhi, Having Its Office At North Block, Central Secretariat, New Delhi - 110001 Through Its Chairman. ----Respondents Connected with (2) D.B. Civil Writ Petition No. 4201/2021 Rakesh Garg Son Of Shri Kailash Chand Garg, Aged About 44 Years, Having His Address At 2, Pragati Colony, Near St. Stephen School, Madanganj, Kishangarh, Ajmer. ----Petitioner Versus 1. Principal Commissioner Of Income Tax, Ajmer, Having Its Office At New Central Revenue Building, Jaipur Road, Civil Lines, Ajmer. 2. Central Board Of Direct Taxes, New Delhi Having Its Office At North Block, Central Secretariat, New Delhi110001 Through Its Chairman. ----Respondents (3) D.B. Civil Writ Petition No. 4199/2021 Rakesh Garg Son Of Shri Kailash Chand Garg, Aged About 44 Years, Having His Address At 2, Pragati Colony, Near St. Stephen School, Madanganj, Kishangarh, Ajmer ----Petitioner Versus (Downloaded on 19/02/2022 at 09:37:43 PM)

(2 of 13) [CW-4178/2021] 1. Principal Comissioner Of Income Tax, Ajmer, Having Its Office At New Central Revenue Building, Jaipur Road, Civil Lines, Ajmer. 2. Central Board Of Direct Taxes, New Delhi, Having Its Office At North Block, Central Secretariat, New Delhi - 110001 Through Its Chairman. ----Respondents For Petitioner(s) : Mr. Siddharth Ranka For Respondent(s) : Ms. Parinitoo Jain through VC HON'BLE THE CHIEF JUSTICE MR. AKIL KURESHI HON'BLE MR. JUSTICE SUDESH BANSAL Judgment 17/02/2022 All these petitions arise out of a common background. They have been heard together and would be disposed of by this common judgment. Facts being substantially similar may be recorded from writ petition No.4178/2021. Petitioner is an individual and is engaged in the business of manufacturing and trading of textile articles and also in the business of share and derivative trading. For the assessment year 2014-15 the assessee had filed the return of income on 30.11.2014 declaring total income of Rs.4,22,850/-.This included a short term capital gain of Rs.27,960/-. The revenue authorities were of the opinion that petitioner’s speculative and non-speculative transactions were required to be calculated separately and the turn over of the assessee was more than the threshold limit prescribed for compulsory audit under Section 44AB of the Income Tax Act, 1961 (for short ‘ the Act’) still the assessee had not filed the audit report. With respect to the declared income the revenue had no (Downloaded on 19/02/2022 at 09:37:43 PM)

(3 of 13) [CW-4178/2021] dispute. However on account of above noted breach, proceedings for penalty under Section 271B under the Act were initiated. This culminated into a penalty order dated 26.06.2018 passed by the assessing officer imposing the penalty of Rs.1,50,000/-. The assessee’s appeal was dismissed by the CIT (appeals) on 07.05.2019. Against this order the assessee had filed the appeal before Income Tax Appellate Tribunal on 09.12.2020. Along with the appeal the assessee had also filed an application for condonation of delay. The delay was condoned by the tribunal by an order dated 28.01.2021. In the meantime the legislature framed the direct tax Vivad se Vishwas Scheme, 2020. It was brought into effect from 17.03.2020.

This act contains provisions for settlement of pending direct tax disputes. The term appellant has been defined under Section 2(1)(a) which reads as under:- “(a) “appellant” means— (i) a person in whose case an appeal or a writ petition or special leave petition has been filed either by him or by the income-tax authority or by both, before an appellate forum and such appeal or petition is pending as on the specified date; (ii) a person in whose case an order has been passed by the Assessing Officer, or an order has been passed by the Commissioner (Appeals) or the Income Tax Appellate Tribunal in an appeal, or by the High Court in a writ petition, on or before the specified date, and the time for filing any appeal or special leave petition against such order by that person has not expired as on that date; (iii) a person who has filed his objections before the Dispute Resolution Panel under section 144C of the Income-tax Act, 1961 and the Dispute Resolution Panel has not issued any direction on or before the specified date; (iv) a person in whose case the Dispute Resolution Panel has issued direction under sub-section (5) of section 144C of the Income-tax act and the Assessing Officer has not passed any order under sub-section (13) of that section on or before the specified date; (Downloaded on 19/02/2022 at 09:37:43 PM)

(4 of 13) [CW-4178/2021] (v) a person who has filed an application for revision under section 264 of the Income-tax Act and such application is pending as on the specified date;” The term “declarant” has been defined in Section 2(1)(c) of the Act as to mean a person who files declaration under Section 4. The term “disputed penalty” is defined under Section 2(1)(i) as to mean penalty determined in any case under the provisions of the Income Tax Act, 1961 where— (i) such penalty is not levied or leviable in respect of disputed income of disputed tax, as the case may be; and (ii) an appeal has been filed by the appellant in respect of such penalty.

Appellant / petitioner / assessee submissions

(6 of 13) [CW-4178/2021] authority on 25.02.2021 which was rejected on 22.03.2021 in following terms:- “The assessee is not eligible to avail benefit under VSVS as there was no appeal pending as on 31.01.2020. Further the appeal filed by assessee before Honble ITAT is not covered by the circular issued by CBDT dated 04.12.2020 as the appeal in this case has been filed after the issuance o fthis circular. Therefore assessee is not eligible to avail benefit under VSVS. Assessee was requested to offer her comment vide this office letter no.ITBA/COM/F/17/2020-21/1031493613(1) DATED 15.03.2021. The assessee was requested to submitted its reply by 17.03.2021. However no reply received from assessee. Hence the declaration filed by assessee in form-1&2 under VSVS is rejected.” It can thus be seen that the declaration of the petitioner was rejected on the ground that the CBDT circular dated 04.12.2020 does not cover his case.

Revenue / respondent submissions

The judgment does not separately label the respondent’s submissions in an independently extractable passage. No contention is inferred; read the full record.

Court / Tribunal analysis and reasoning

The petitioner was desirous of taking benefit of the said settlement scheme contained in the Act of 2020 and therefore applied before the designated authority on 09.09.2020. This application was rejected by an order dated 19.12.2020. After the delay condonation application filed by the petitioner was allowed by the tribunal he again filed an application before the designated (Downloaded on 19/02/2022 at 09:37:43 PM)

(8 of 13) [CW-4178/2021] for condonation of delay must have been filed before the date of issuance of circular. The petitioner fulfills all other conditions namely the time for filing appeal has expired during the period from 1st April 2019 to 31 st Jan 2020, that he had filed an application for condonation of delay which was pending. He had also filed an appeal before the date of filing of the declaration. We are informed that there is no stage of formal admission of the appeal or condonation application before the tribunal and therefore the reference to this term of admission of appeal in the circular is superfluous. In this context the question arises whether the specification of the filing of the application for condonation before the date of circular is sacrosanct as to destroy the right of assessee to apply for settlement if even though all other conditions are specified.

(9 of 13) [CW-4178/2021] 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. 36. If Board circular is construed in such a restrictive manner, as is contended by respondents, the same would run contrary to the scheme of the Act of 2020 and the powers exercised by Board under Section 10 and 11 to issue directions or orders in public interest or to remove difficulties. 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. 39. In the present case, the petitioner having filed an appeal before Tribunal along with an application for condonation and the Tribunal, having heard the matter on 05.02.2021 by condoning the delay, it is to be construed as 'pending' appeal as on the date of filing of declaration on 08.02.2021.

42. Thus, considered from any angle, the declaration/application submitted by the petitioner on 08.02.2021 or the revised declaration/application submitted in Form 1 and 2 on 31.03.2021 cannot be considered as 'invalid' and liable for 'rejection'.” This judgment of the Telangana High Court in case of Boddu Ramesh (supra) was followed by the Division Bench of Gujarat High Court in case of Maheshbhai Shantilal Patel V. PCIT dated 23.09.2021 reported in 2021 (9) TMI 1237. The following observations may be noted:- “35 Therefore, when the Circular has been issued by the CBDT on 04.12.2020 answering to one of the Frequently Asked Questions, it is not expected of the Revenue to contend contrary to the said guidelines (Downloaded on 19/02/2022 at 09:37:43 PM)

Operative decision and relief

41. Alternatively, it is to be noted that since, the last date for filing declaration had been extended up to 31.03.2021 and the Tribunal, having found cogent reasons to condone the delay and allowing the appeal filed by the petitioner and remitting the matter back to the CIT by its order dt.15.02.2021, would automatically revive and restore the appeal, which was dismissed by the CIT by his order dt.18.09.2019. Thus, by order of the Tribunal dt.15.02.2021, the appeal of the petitioner before of the CIT filed on 19.02.2019 would stand revived, and such restoring of appeal relates back the original date of filing, which is within the "specified date" as per Act of 2020.

31.01.2020. It is also necessary to know that the last date for declaration was finalised as 31.03.2021 and in the case of the present petitioner, his declaration has been filed once delay was condoned before the was over. Had it been the case of the date of declaration having expired, prior to the delay having been condoned, answer possibly could be otherwise and not so simple, but, here the assessee's timely allowance of condonation of delay by ITAT on dated 23.02.2020 would not in any manner hamper his path of his case being considered under the VsV Act as an Appellant. 38 Resultantly, the petition is allowed, quashing and setting aside the order of rejection by the respondent authority on dated 30.03.2021.

We are informed that the scheme for settlement was extended from time to time and finally the last extension ended on 31.03.2021. The interpretation that we have adopted therefore does not make a right of a person to seek settlement open ended. It has a terminal point of 31.03.2021 in any case. In the result the petitions are allowed. Impugned orders dated 22.03.2021 are set aside. The declarations of the petitioners (Downloaded on 19/02/2022 at 09:37:43 PM)

Ratio and legal principle

The narrow proposition associated with Rakesh Garg v. PCIT Ajmer concerns rakesh garg vs pcit ajmer forum-rajasthan high court date-17th february 2022 sub-whether appeal filed before itat after the cut-off date of 31/1/2020 and delay in filing the appeal having been condoned, the application under the vivad se vishwas act 2020 is eligible to be accepted or is to be rejected in terms of faq no 59 clarified by cbdt. the rajasthan high court in this case was considering a writ petition where the appellant had challenged the rejection of the application for settlement of the penalty levied u/s 271b of the act amounting to rs 1.50 lacs under the vsv scheme on the pretext that the appeal as well as application for condonation of delay was filed after the issuance of the circular dated 04-12-2020 by cbdt wherein while clarifying the said position in answer to faq no 59, the cbdt had mandated that the appeal must be filed before the date of issuance of the circular.… The proposition cannot be separated from the judgment’s facts, the governing statutory version, the forum’s jurisdiction, and the exact relief recorded in D.B. Civil Writ Petition No. 4178/2021.

For working-paper purposes, the decision should be cited only after matching the material facts and reading the passages under the judgment-grounded record above. The editorial outcome label “Quashed / set aside” is a navigation aid; it does not replace the operative order or explain every issue in a multi-issue case.

Why this judgment matters

This decision is relevant when a file raises the same central question identified in the source headnote: Rakesh Garg Vs PCIT Ajmer Forum-Rajasthan High Court Date-17th February 2022 Sub-Whether Appeal filed before ITAT after the cut-off date of 31/1/2020 and delay in filing the appeal having been condoned, the application under the Vivad Se Vishwas Act 2020 is eligible to be accepted or is to be rejected in terms of FAQ No 59 clarified by CBDT. The Rajasthan high court in this case was considering a writ petition where the appellant had challenged the rejection of the application for settlement of the penalty levied u/s 271B of the Act amounting to Rs 1.50 lacs under the VSV Scheme on the pretext that the appeal as well as application for condonation of delay was filed after the issuance of the Circular dated 04-12-2020 by CBDT wherein while clarifying the said position in answer to fAQ NO 59, the CBDT had mandated that the appeal must be filed before the date of issuance of the Circular.… Its practical value lies in the way the Rajasthan High Court connected the governing provisions—Vivad Se Vishwas Scheme and CBDT Circular dated 4-12-2020—to the procedural posture and evidence before it.

The authority level is High Court. That affects persuasive or binding weight, but authority level alone is never enough. Territorial jurisdiction, statutory period, the identity of the challenged order, and later appellate treatment must all be checked before the case is used in advice, a submission, or litigation strategy.

Practitioner action points

• Begin with the complete judgment and mark the paragraphs supporting the exact proposition relied upon.
• Match the statutory version of Vivad Se Vishwas Scheme and CBDT Circular dated 4-12-2020 and the decision date 2022-02-17; do not assume the current text is identical.
• Compare the notice, assessment, appeal or other procedural sequence with the chronology recorded in this case.
• Verify the stated later-history status and any review, appeal, SLP, curative or rectification proceedings before citation.
• Record why the client’s evidence is materially similar, and also record any fact capable of distinguishing the result.

Does this case match your facts?

Detailed reliance and distinction analysis

Identity check. Confirm that the cited cause title is Rakesh Garg v. PCIT Ajmer, the proceeding is D.B. Civil Writ Petition No. 4178/2021, and the decision is dated 2022-02-17. These fields are taken from the judgment record and should appear exactly in the citation note.

Bench check. The judgment identifies the coram as Hon'ble Chief Justice Akil Kureshi; Hon'ble Mr. Justice Sudesh Bansal. A later order by another bench, a larger bench, or a higher forum may alter the weight or interpretation of the proposition.

Provision check. The source associates the dispute with Vivad Se Vishwas Scheme and CBDT Circular dated 4-12-2020. The practitioner should place the historical statutory text next to the current text and identify every amendment, proviso, explanation, rule or notification that could change the analysis.

Fact check. The source issue is not a free-standing abstract rule. It arises from the concrete record summarized above. A reliable application note should list the common facts, the different facts, and whether each difference affects jurisdiction, admissibility, limitation, burden, computation or relief.

Remedy check. The recorded result is Quashed / set aside. Where a matter is remanded, set aside, partly allowed, or disposed with directions, the exact operative language is more important than a binary winner/loser label.

History check. The current closure state is Review / appeal / SLP status: check pending. If that state is pending, the page does not assert that no later case exists. It means the check remains open and must be completed at the point of professional reliance.

Section / provision impact

• Vivad Se Vishwas Scheme and CBDT Circular dated 4-12-2020 — apply the exact version considered in the judgment.

Case network

• PCIT v. Valley Iron & Steel Co. Ltd. — Court / Tribunal to be verified · Quashed / set aside
• Footcandles Film Pvt. Ltd. Vs . Income Tax Officer – TDS – 1 — Court / Tribunal to be verified · Quashed / set aside
• Vasavi Developers v. DCIT — ITAT Hyderabad · Quashed / set aside
• Jayapriya Company v. DCIT — ITAT Chennai · Quashed / set aside

Related Finin2min resources

• Case Law Hub
• Search all 592 judgments
• Explore Penalty, Prosecution & Enforcement

Full judgment and source control

Read / download packaged judgment record

Source class: Official primary source search pending · Repository status: Published