In a recent ruling, the Delhi High Court ruled that review petitions qualify as “pending litigation” under the Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV Act) expanding the scope of the DTVSV Act beyond appeals, writ petitions, or Special Leave Petitions (SLPs).
NRA Iron and Steel Pvt Ltd, the petitioner challenged the rejection of its declaration under the Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV Act). The dispute arose from the assessment for Assessment Year (AY) 2009–10 where the petitioner challenged the Income Tax Department’s demands.
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The petitioner initially succeeded before the Commissioner of Income Tax (Appeals) (CIT(A)). On February 26, 2018, the High Court also upheld the ITAT’s decision in favor of the petitioner.
The revenue took this matter before the Supreme Court through a Special Leave Petition (SLP), which was allowed on March 5, 2019, reversing the decisions in favor of the petitioner.
The petitioner also filed a review petition in the Supreme Court on November 18, 2019, seeking a reconsideration of the order. This review petition was dismissed on February 4, 2020. The Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV) was established on March 18, 2020, as a dispute resolution scheme to reduce tax litigation.
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On December 26, 2020, the petitioner filed a declaration under the DTVSV Act through the Income Tax Department’s e-portal. The Income Tax Department rejected the declaration because no appeal, writ petition, or SLP was pending as of the specified cutoff date, January 31, 2020, and a review petition did not qualify as a “pending appeal.”
A revised declaration filed on January 28, 2021, was also rejected stating that the review petition filed by the petitioner and not the department did not fall within the definition of “pending litigation” under the DTVSV Act.
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Aggrieved, the petitioner filed a writ petition before the Delhi High Court (Present case) arguing that a review petition is an extension of the appeal process and should be treated as “pending litigation” for the DTVSV Act. The petitioner’s counsel explained the remedial and beneficial intent of the legislation.
The respondent countered that the DTVSV Act applies to cases where appeals, writ petitions, or SLPs were pending on the cutoff date and that the review petition was different from an appeal so did not qualify.
The bench comprising Justice Yashwant Varma and Justice Ravinder Dudeja analyzed the legislative intent and objectives of the DTVSV Act, including its purpose to reduce litigation, generate timely revenue, and relieve both taxpayers and the government of prolonged disputes.
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The court referenced clarifications issued by the Central Board of Direct Taxes (CBDT) which stated that even certain miscellaneous applications and arbitration proceedings pending on the cutoff date could qualify under the scheme.
The court observed that a review petition is limited in scope, it is still an extension of the original appellate process. The dismissal of the review petition after the cutoff date did not make ineffective its pending status as of January 31, 2020.
The court observed that a narrow interpretation excluding review petitions would defeat the purpose of the Act particularly when other pending applications were allowed to qualify. So, the court set aside the rejection order dated February 13, 2021, and directed the Income Tax Department to accept and process the revised declaration filed by the petitioner on January 28, 2021, as per the provisions of the DTVSV Act.
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