Columbus Overseas LLP Vs DCIT (ITAT, Jaipur Bench)
Unpaid Vivad Se Vishwas Settlement Cannot Close Tax Appeal: Jaipur ITAT Orders Fresh Hearing
The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) has restored an assessee’s appeal after finding that its proposed settlement under the Direct Tax Vivad Se Vishwas Scheme, 2020 had not been completed because the settlement amount was never paid.
In Columbus Overseas LLP v. DCIT, Circle-1, Jaipur, ITA No. 1037/JPR/2026, pronounced on 4 November 2026, the Tribunal held that the assessee retained the right to have its appeal decided on merits.
The CIT(A) had dismissed the appeal as withdrawn after referring to the scheme application and Form 3. The Tribunal set aside that order because no settlement had ultimately been finalised.
Background: Construction Business Faced Three Additions
The assessee, engaged in construction and development, declared total income of ₹40,63,100 for Assessment Year 2017-18.
Its return was selected for scrutiny. The Assessing Officer completed the assessment under Section 143(3) after making three additions.
These comprised ₹72,90,377 towards brokerage expenditure, treated as relating to an earlier period; ₹45,98,691 towards alleged suppression of sale consideration; and ₹3,25,000 under Section 43B.
The assessee’s appeal grounds described the sale-consideration dispute as concerning flats sold to its partner and the Section 43B dispute as relating to non-deposit of VAT under the composition scheme.
The assessee challenged these adjustments before the CIT(A), National Faceless Appeal Centre.
Assessee Opted for Vivad Se Vishwas Scheme
During the appellate proceedings, the assessee sought settlement under the Vivad Se Vishwas Scheme, 2020.
It filed Forms 1 and 2, and Form 3 was issued on 11 December 2020.
The CIT(A) subsequently referred to a letter dated 10 September 2021, through which the assessee had furnished the Form 3 issued by the Principal Commissioner of Income Tax.
On that basis, the appellate authority treated the dispute as having entered the settlement route and accepted the request for withdrawal of the pending appeal.
However, the later proceedings revealed a material distinction between applying for settlement and actually completing it.
Settlement Amount Was Never Deposited
Before the Tribunal, the assessee acknowledged that it had opted for the scheme and received Form 3.
Its representative explained that the assessee could not arrange and deposit the settlement amount. Consequently, the proposed settlement could not be finalised.
The assessee also stated that this fact had been communicated to the CIT(A).
The Tribunal recorded that the Departmental Representative did not controvert these facts.
The undisputed position was therefore that the scheme process had been initiated, but the payment required to complete the proposed settlement had not been made.
CIT(A) Dismissed Appeal Without Deciding Additions
Despite the non-payment, the CIT(A), through its order dated 17 December 2025, treated the appeal as infructuous and dismissed it as withdrawn.
The authority relied on the assessee having opted for resolution under the scheme and having produced Form 3.
It did not examine the merits of the disputed brokerage expenditure, sale consideration or VAT-related disallowance.
The assessee approached the Tribunal, arguing that an unsuccessful settlement attempt should not prevent adjudication of its original challenge to the assessment.
Its principal grievance was therefore the loss of a merits hearing, rather than a request to enforce the uncompleted settlement.
Tribunal Condoned 51-Day Filing Delay
The appeal before the ITAT was delayed by 51 days.
Through an affidavit, the assessee explained that the LLP had remained inactive and had not conducted business for approximately seven to eight years.
The CIT(A)’s order was served through the portal, but the assessee became aware of it only in April 2026, when it visited its counsel’s office.
The Tribunal accepted the explanation as sufficient cause. Referring to Collector, Land Acquisition v. Mst. Katiji, it adopted a liberal approach and condoned the delay.
It then examined the challenge to the dismissal of the first appeal.
Right to Merits Hearing Survived Failed Settlement
The Tribunal held that the CIT(A)’s order could not stand when no settlement had been finalised.
It observed that the dismissal may have resulted from an inadvertent mistake. The material fact remained that the assessee had been unable to deposit the amount and the underlying assessment disputes had not been adjudicated.
In those circumstances, the Tribunal recognised the assessee’s right to obtain a decision on merits.
It therefore set aside the impugned order and directed the CIT(A) to decide the appeal afresh after providing an adequate opportunity of hearing.
Appeal Restored; Additions Remain Undecided
The appeal was allowed for statistical purposes.
The Tribunal did not delete the three assessment additions or determine their correctness. Those issues remain for fresh examination by the CIT(A).
The ruling distinguishes an application for settlement from a completed settlement. On the undisputed facts, issuance of Form 3 did not justify closing the appeal when the amount remained unpaid and the settlement had failed.
Cases Discussed
- Collector, Land Acquisition vs MST Katiji — (1987) 2 SCC 107; relied on for condonation of delay.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT JAIPUR
The Appellant, Columbus Overseas LLP (hereinafter referred to as the ‘assessee’) by filing the present appeal, sought to set aside the impugned order dated 17.12.2025 passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the ‘CIT(A)’] qua assessment year 2017-18 on the grounds inter-alia that:-
“1. In the facts and circumstances of the case and in law, Learned CIT(A) has erred in dismissing the appeal of the assessee on the basis of form no. 3 issued by Pr. CIT-1, Jaipur whereas the assessee could not deposit the eligible amount under the Vivad se Vishwas Scheme-2020. Therefore, the appeal should be decided on merits.
2. In the facts and circumstances of the case and in law, Learned CIT(A) has erred in confirming the addition of Rs. 72,90,377/- on account of brokerage expenses for the sales booked during the year under consideration.
3. In the facts and circumstances of the case and in law, Learned CIT(A) has erred in confirming the addition of Rs. 45,98,691/- as suppression of sales consideration for the flats sold to its partner.
4. In the facts and circumstances of the case and in law, Learned CIT(A) has erred in confirming the addition of Rs. 3,25,000/- on account of non-deposit of VAT under composition scheme.
5. The assessee craves your indulgence to add amend or alter all or any grounds of appeal before or at the time of hearing.”
2. Briefly stated, facts necessary for consideration and adjudication of the issues at hand are: Assessee being into the business of construction and development declared total income at Rs. 40,63,100/- for the year under consideration, which was subjected to scrutiny. Declining the contentions raised by the assessee, the AO proceeded to make addition of Rs. 72,90,377/- on account of claiming prior period brokerage expenditure, made addition of Rs. 45,98,691/- on account of suppression of sales consideration and Rs. 3,25,000/- on account of disallowance of expenditure u/s 43B of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and thereby framed the assessment u/s 143(3) of the Act.
3. At the very outset, it is brought to the notice of the Bench that the present appeal is barred by limitation on account of delay of 51 days. The assessee by moving an affidavit sought to condone the delay of 51 days on the grounds inter-alia that the impugned order passed by the ld. CIT(A) was served on the portal, but the assessee being inactive and not doing any business since last 7-8 years could not get the notice of the impugned order; that the assessee came to know about the impugned order in the month of April-2026, when he visited the office of his counsel; that the delay is neither deliberate, nor intentional.
4. We are of the considered view that when the assessee is a LLP inactive/not doing any business since last 7-8 years, they had a “sufficient cause” not to lay hand on the order passed by the Ld. CIT(A). Digital era has come up with many pros and cons and many of the times litigants’, who are not tech-savvy have suffered a lot as they did not get the information about passing of order against them, particularly when their lawyers are not responsible enough. So following the law laid down by Hon’ble Supreme Court in case of Collector, Land Acquisition vs MST Katiji, (1987) 2 SCC 107, liberal interpretation is being given to the provisions of condonation of delay under limitation Act, we find it a “sufficient cause” to condone the delay, hence the delay of 51 days is hereby condoned. The appeal is being heard on merits. 5. Assessee carried the matter before the Ld. CIT(A) by way of filing appeal, who has dismissed the same as withdrawn. Being aggrieved with the impugned order passed by the Ld. CIT(A), assessee has come up before the Tribunal by way of filing the present appeal.
6. We have heard Ld. ARs for the assessee and Ld. DR for the Revenue and perused the record available on file.
7. At the very outset, it is brought to the notice of the Bench by the Ld. ARs for the parties to the appeal that the present appeal has not been decided on merits, rather dismissed as withdrawn on the ground that since the dispute has been settled under Vivas Se Vishwas Scheme, 2020 (for short VSVS, 2020), the appeal has become infructuous.
8. For ready perusal para 5.2 and 6 of the impugned order are extracted as under :-
“5.2 In the present appeal, it is seen that the appellant has applied for resolution under VSVS,2020 and has produced vide its letter dated 10.09.2021, the Form No. 3 issued by the principal Commissioner of Income-tax. In view of the above, the appellant’s request is accepted.
6. In view of the above, the appeal of the appellant is treated as infructuous as the appellant has opted for resolution under the Direct Tax vivid Se Vishwas Scheme, 2020 and the same is dismissed as the appellant has requested for withdrawal of the pending appeal. Accordingly, the appeal is dismissed as withdrawn.”
9. However Ld. AR for the assessee brought on record the fact that “no doubt the assessee had opted for settlement under VSVS Act, 2020, by filing Form Nos. 1 and 2 and Form No. 3 were also issued to him on 11.12.2020, but he could not arrange/deposit the settled amount, which fact was duly intimated to the Ld. CIT(A). These facts have not been controverted by Ld. DR for the Revenue.
10. Perusal of the impugned order passed by the Ld. CIT(A) goes to show that the appeal has been dismissed having been become infructuous as the assessee had opted for settlement under VSVS Act, 2020”.
11. In the face of the fact narrated in the preceding paras, it may be due to inadvertent mistake as no settlement could be finalized. In these circumstances the impugned order passed by the Ld. CIT(A) is not sustainable, hence liable to be set aside as the assessee has got the right to get its appeal decided on merits.
12. Resultantly, the impugned order passed by the Ld. CIT(A) is set aside to be decided afresh after providing adequate opportunity of being heard to the assessee and the present appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 04/11/2026 .
