Case Law Details
Venkata Reddy Sathi Vs ITO (ITAT Visakhapatnam)
The Visakhapatnam Bench of the Income Tax Appellate Tribunal (ITAT) allowed the assessee’s appeal after holding that a bona fide mistake in withdrawing the wrong appeal did not defeat settlement under the Direct Tax Vivad Se Vishwas Scheme, 2020.
The assessee had filed the return of income for AY 2016-17 declaring total income of Rs. 4,75,040. Subsequently, reassessment proceedings were initiated under Section 148, and a reassessment order was passed on 23.05.2023. The assessee challenged the reassessment order before the CIT(A) on 06.06.2023. Separately, a penalty order under Section 271(1)(c) dated 01.01.2024 was also challenged before the CIT(A) on 20.01.2024. Both appeals remained pending.
During the pendency of these appeals, the assessee filed a declaration under the Direct Tax Vivad Se Vishwas Scheme, 2020 on 22.07.2024. The Designated Authority subsequently issued Form-1 on 31.01.2025, Form-2 on 13.02.2025, Form-3 on 25.02.2025, and Form-4 on 01.04.2025.
After receiving Form-2, the assessee applied before the CIT(A) to withdraw the appeal. However, due to a bona fide and inadvertent mistake, the withdrawal application was filed in the penalty appeal instead of the quantum appeal. Meanwhile, the CIT(A) passed the impugned order dated 05.02.2025 in the quantum appeal. The assessee believed that the appeal had been dismissed as withdrawn in view of settlement under the Vivad Se Vishwas Scheme.
The assessee realised the mistake only after receiving a notice under Section 142(1) dated 11.08.2025 from the Faceless Assessment Unit, which revealed that the quantum appeal had not been withdrawn and that the CIT(A) had already passed an order setting aside the matter to the Assessing Officer. Thereafter, the assessee filed the present appeal before the Tribunal on 20.08.2025, resulting in a delay of 112 days.
The assessee sought condonation of delay, contending that the delay was neither wilful nor deliberate but arose from a bona fide misunderstanding regarding withdrawal of the appeal. The Departmental Representative did not seriously oppose the condonation, noting that the dispute had already been settled under the Direct Tax Vivad Se Vishwas Scheme, 2020 and that the CIT(A) had passed the order without being informed about the settlement.
The Tribunal observed that the dispute before it as well as before the CIT(A) had already been settled under the Vivad Se Vishwas Scheme and that Form-4 had been issued on 01.04.2025. In these circumstances, the Tribunal held that the impugned order of the CIT(A) could not survive.
Accordingly, in the interest of justice, the ITAT set aside the impugned order passed by the CIT(A) and treated the appeal filed before the CIT(A) as withdrawn in view of the settlement under the Direct Tax Vivad Se Vishwas Scheme, 2020. The assessee’s appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT VISAKHAPATNAM
This appeal by the Assessee is directed against the Order dated 05.02.2025 of the learned CIT(A)-National Faceless Appeal Centre [in short “NFAC], Delhi, for the assessment year 2016-2017.
2.There is a delay of 112 days in filing the present appeal before the Tribunal. The assessee has filed a petition/affidavit for condonation of delay.
3. The learned Authorised Representative of the Assessee has submitted that the assessee is an individual and filed his return of income for the year under consideration u/sec.139 of the Income Tax Act [in short “the Act”], 1961 declaring total income of Rs.4,75,040/-. Thereafter, the case of the assessee was reopened by issuing notice u/sec.148 of the Act on 29.07.2022 and re-assessment order was passed by the Assessing Officer on 23.05.2023. The assessee filed an appeal against the re-assessment order before the learned CIT(A) on 06.06.2023. Thereafter, the Assessing Officer also passed penalty order u/sec.271(1)(c) of the Act on 01.01.2024 which was also challenged by the assessee by filing an appeal before the learned CIT(A) on 20.01.2024. The learned Authorised Representative of the Assessee has thus submitted that both the appeals against the assessment order as well as against the penalty order were pending adjudication before the learned CIT(A) and in the meantime, the assessee also filed the declaration under Direct Tax Vivad Se Vishwas Scheme, 2020 on 22.07.2024. The Designated Authority issued Form-1 under Direct Tax Vivad Se Vishwas Scheme on 31.01.2025 and Form-2 on 13.02.2025. After receipt of Form-2 the assessee filed an application before the learned CIT(A) for withdrawal of the appeal however due to bonafide and an inadvertent mistake that application was filed in the penalty appeal instead of quantum appeal pending before the learned CIT(A). The learned CIT(A) in the meantime passed the impugned order on 05.02.2025 and assessee was under the belief and impression that the appeal of the assessee was dismissed as withdrawn in view of dispute settled under Direct Tax Vivad Se Vishwas Scheme. Since the learned CIT(A) has set aside the matter back to the file of Assessing Officer and only when the assessee received a notice u/sec.142(1) of the Act dated 11.08.2025 from the Faceless Assessment Unit he realised that the learned CIT(A) has already passed the order in the quantum appeal and the appeal was not dismissed as withdrawn as applied by the assessee in view of the dispute settled under Direct Tax Vivad Se Vishwas Scheme. The learned Authorised Representative of the Assessee has also referred to Form-3 issued by the Designated Authority on 25.02.2025 as well as Form-4 on 01.04.2025. He has thus submitted that immediately after receiving the notice u/sec.142(1), the assessee filed the present appeal on 20.08.2025 resulting delay of 112 days in filing the appeal. Thus, the learned Authorised Representative of the Assessee has submitted that the delay in filing the appeal is neither wilful nor deliberate but due to the Bonafide misunderstanding about the withdrawal of the appeal before the learned CIT(A).
4. On the other hand, the learned DR has not seriously objected to the condonation of delay as the dispute is already settled under Direct Tax Vivad Se Vishwas Scheme, 2020 and the learned CIT(A) has passed the impugned order due to non-communication of the fact about the settlement of the dispute under Direct Tax Vivad Se Vishwas Scheme, 2020.
5. We have considered the rival submissions as well as the relevant material on record. It is manifest from record that the dispute involved in the appeal before us as well as before the learned CIT(A) was settled under Direct Tax Vivad Se Vishwas Scheme, 2020 and the Designated Authority issued Form-4 on 01.04.2025 which is reproduced as under:
5.1. In view of the above fact that the dispute is already settled under Direct Tax Vivad Se Vishwas Scheme, 2020, the impugned order passed by the learned CIT(A) would not survive. Accordingly, in the facts and circumstances of the case and in the interest of justice, we set aside the impugned order passed by the learned CIT(A) and treating the appeal filed by the assessee before the learned CIT(A) being withdrawn in view of settlement of the dispute under Direct Tax Vivad Se Vishwas Scheme, 2020. We Order accordingly.
6. In the result, appeal of the Assessee is allowed.
Order pronounced in the open Court on 14.05.2026.
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