Facts of the Case

The petitioner-assessee challenged the rejection of Forms 1 and 2 filed under the Direct Tax Vivad Se Vishwas Act, 2020. The Assessing Officer had significantly enhanced taxable income for AY 2011–12 by disallowing deductions under Section 80IC and adding agricultural income.

The Commissioner of Income Tax (Appeals) allowed the assessee’s appeal, which was subsequently challenged by the Revenue before the Tribunal. The Tribunal initially dismissed the Revenue’s appeal based on a mistaken understanding of prior rulings.

Later, the Revenue filed a Miscellaneous Application under Section 254(2), which was allowed, leading to restoration of the appeal for fresh hearing. Meanwhile, the assessee filed declarations under the 2020 Act, which were rejected on the ground that no appeal was pending as of the specified date (31.01.2020).

 Issues Involved

  1. Whether an appeal restored through a Miscellaneous Application under Section 254(2) can be considered “pending” as on the specified date under the Vivad Se Vishwas Act.
  2. Whether dismissal of an appeal based on a factual error qualifies as dismissal “in limine.”
  3. Whether the doctrine of “relation back” applies to restored appeals for determining eligibility under the scheme.

 Petitioner’s Arguments

  • The appeal should be treated as pending since the Miscellaneous Application was filed before the specified date and later allowed.
  • The Tribunal’s earlier dismissal was based on a factual mistake and not on merits.
  • Restoration of appeal revives the proceedings, making the assessee eligible under the Vivad Se Vishwas scheme.

 Respondent’s Arguments

  • The Vivad Se Vishwas Act does not explicitly include Miscellaneous Applications within its scope.
  • The Tribunal’s earlier order was passed after considering facts and thus cannot be termed as dismissal in limine.
  • Therefore, no appeal was pending on the specified date.

 Court’s Findings / Analysis

  • The Tribunal’s dismissal of the Revenue’s appeal was based on a mistaken assumption regarding earlier decisions.
  • Such dismissal qualifies as “in limine” since it lacked substantive adjudication on merits.
  • The Miscellaneous Application was filed and pending as on the specified date (31.01.2020).
  • The Court relied on FAQ No. 61 of Circular No. 21/2020, which clarifies eligibility where MA is pending and relates to an appeal dismissed in limine.
  • The doctrine of “relation back” was applied, meaning restoration of appeal revives it retrospectively.

Court Order / Decision

  • The writ petition was allowed.
  • Orders rejecting Forms 1 and 2 were set aside.
  • The Revenue was directed to reconsider the declarations under the Vivad Se Vishwas Act in accordance with law.

 Important Clarifications

  • An appeal restored under Section 254(2) is deemed to be pending from the original date due to the doctrine of relation back.
  • Dismissal based on factual error qualifies as dismissal in limine.
  • Taxpayers can claim benefits under the Vivad Se Vishwas Scheme even if appeal revival occurs after the specified date, provided MA was pending earlier.

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2021:DHC:1450-DB/RAS26042021CW39212021_160250.pdf

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