Gujarat High Court Upholds NRI's Right to Tax Settlement Despite Manual Appeal Filing
Court directs processing of DTVSV Scheme declaration, stresses appeal validity on specified date
In a landmark decision, the Gujarat High Court has directed the Principal Commissioner of Income Tax to process a declaration filed under the Direct Tax Vivad Se Vishwas Scheme, 2024 (DTVSV Scheme, 2024) by Tejal Mayur Rao, a Non-Resident Indian (NRI), whose manual appeal was initially rejected due to non-compliance with online filing requirements. The court underscored that the appeal's validity should be based on its pendency as of the specified date, rather than adherence to procedural norms that posed practical challenges for NRIs.
The bench, comprising Justices Bhargav D. Karia and Pranav Trivedi, deliberated on the petition challenging the rejection of Rao's declaration under the DTVSV Scheme, aimed at resolving pending income tax disputes and reducing litigation. The court emphasized that the appeal, manually filed due to the absence of an Aadhar-linked PAN, was pending as of July 22, 2024, the specified date under the scheme, thus qualifying Rao for settlement benefits.
Despite the appeal's manual filing, which contravened Rule 45 of the Income Tax Rules, 1962, the court ruled that such procedural issues should not disqualify an applicant from scheme benefits. It cited the Central Board of Direct Taxes (CBDT) guidance, affirming eligibility for cases where appeals were pending on the specified date, irrespective of subsequent rejection or disposability.
The judgment referenced previous cases, including Tushar Agro Chemicals and Atul Roshanlal Gupta, reinforcing that even irregular or incompetent appeals should be considered pending if filed before the specified date. The court's decision aligns with the scheme's objective to end litigation and generate timely revenue, providing taxpayers with certainty and peace of mind.
Rao's counsel argued that the scheme requires only the pendency of proceedings on the specified date, not an assessment of the appeal's validity. The court agreed, instructing the tax authorities to process Rao's declaration within 12 weeks, thereby affirming the rights of NRIs facing administrative hurdles.
This decision marks a significant precedent for similar cases, ensuring that NRIs can access dispute resolution mechanisms without being penalized for practical limitations in filing appeals.
Bottom Line:
Direct Tax Vivad Se Vishwas Scheme, 2024 - Declaration under Form No.1 cannot be rejected solely on the ground that the appeal was not filed online as per Rule 45 of the Income Tax Rules, 1962 - Appeal filed manually by a Non-Resident Indian without Aadhar card linked PAN should be considered as valid if it was pending on the specified date under the scheme.
Statutory provision(s): Sections 88 to 99 of the Finance (No.2) Act, 2024, Rule 45 of the Income Tax Rules, 1962, Direct Tax Vivad Se Vishwas Scheme, 2024
