Sanchayita Lahkar

The High Court of Gujarat at Ahmedabad, Division Bench of Justice Bhargav D. Karia and Justice Pranav Trivedi held that an appeal manually filed by a Non-Resident Indian is valid for the purpose of availing benefits under the Direct Tax Vivad Se Vishwas Scheme, 2024. The Bench was dealing with a petition where the assessee had challenged the communication from the tax authorities rejecting the declaration filed under the scheme on the ground that the appeal was not submitted online and hence invalid. The Court quashed the rejection order and directed the authorities to process the declaration in accordance with the DTVSV Scheme within twelve weeks.

The petitioner, Tejal Mayur Rao, a Non-Resident Indian, filed a petition under Article 227 of the Constitution of India challenging the communication dated 21 January 2025 issued by the income tax authorities rejecting her declaration under the Direct Tax Vivad Se Vishwas (DTVSV) Scheme, 2024. The rejection was on the ground that her appeal was invalid as it had been filed manually and not through the prescribed online mode.

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The petitioner had preferred an appeal in Form No.35 on 4 June 2020 against the assessment order for the Assessment Year 2012-13, wherein an addition of Rs. 32,71,000 was made under Section 69A of the Income Tax Act, 1961. As the petitioner did not possess an Aadhaar card linked with her PAN, she was unable to file the appeal electronically as required by Rule 45 of the Income Tax Rules, 1962. The appeal was accompanied by a statement of facts, grounds of appeal, and proof of payment of fees.

The department issued a deficiency memo on 28 April 2023 citing non-payment of taxes on returned income. Subsequently, the petitioner filed Form No.1 under the DTVSV Scheme, 2024, based on the pending appeal. The tax authority later sought clarification and ultimately rejected the declaration on the basis that no valid appeal was pending before the Commissioner of Income Tax (Appeals) as on 22 July 2024, the specified date under the scheme.

Aggrieved by the rejection, the petitioner approached the High Court seeking to set aside the communication and direct the authorities to consider the declaration under the scheme.

The Bench recorded that, according to FAQ No.36, “such cases are eligible for settlement under the Scheme as appeal was pending as on 22.07.2024. Disputed tax will be calculated in the same manner as if the appeal pending on 22.07.2024 is yet to be disposed of.” It held that this clarification was binding and directly applicable to the petitioner’s case.

The Court observed that it was not in dispute that the petitioner had filed an appeal manually on 4 June 2020 and that it remained pending as on 22 July 2024. Consequently, the rejection of the declaration on the basis that the appeal was invalid was not justified. Referring to precedent, the Bench cited Tushar Agro Chemicals v. Principal Commissioner of Income Tax-1 (2022) and Atul Roshanlal Gupta v. Principal Commissioner of Income Tax (2024), where similar questions had arisen under previous settlement schemes.

In Tushar Agro Chemicals, the Court had relied on the Supreme Court judgment in Commissioner of Income Tax v. Shatrusailya Digvijaysingh Jadeja, which held that under similar schemes, it was not for the authority to determine the validity or competence of an appeal once filed and pending. The High Court quoted the Supreme Court’s reasoning that “when a section contemplates pendency of an appeal, what is required for its application is that an appeal should be pending, and there is no need to introduce the qualification that it should be valid or competent.”

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It further observed, “The Designated Authority was not justified in rejecting the declaration filed by the petitioner on the ground that appeal filed by the petitioner was an invalid appeal as the appeal was very much pending as on 22.07.2024 even if the same was held to be invalid subsequently.”

The Bench stated, “The impugned communication dated 22.01.2025 displayed on the portal of the department, rejecting the declaration in Form No.1 filed by the petitioner under the DTVSV Scheme, 2024, is hereby quashed and set aside.” It further directed the respondent authority “to process the declaration in Form No.1 filed by the petitioner under the DTVSV Scheme, 2024.”

“Such exercise shall be completed within a period of 12 weeks from the date of receipt of copy of this order.”

Advocates Representing the Parties:

For the Petitioner: Mr. Hiren J. Trivedi, Advocate
For the Respondents: Ms. Maithili D. Mehta, Senior Standing Counsel; Mr. Varun K. Patel, Senior Standing Counsel

Case Title: Tejal Mayur Rao v. Principal Commissioner of Income Tax 1 & Ors.
Case Number: R/Special Civil Application No. 7839 of 2025
Bench: Justice Bhargav D. Karia and Justice Pranav Trivedi