M.Y. ZUBAIDA,COIMBATORE vs. ACIT, CENTRAL CIRCLE-1, COIMBATORE

PER MANU KUMAR GIRI, JM:

Captioned appeals filed by the different assessees are directed against the orders of the ld. Commissioner of Income Tax (Appeals)-18, Chennai [hereinafter referred to as “the Ld. CIT(A)”], dated 31.01.2022 & 13.01.2022, whereby the appeals of

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the assessees against the assessments framed section 153A r.w.s. 143(3) & u/s.143(3) and of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), for the Assessment Years 2012-13 and 2013-14 were disposed of on the basis of the settlement under the Direct Tax Vivad Se Vishwas Act, 2020.

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settlement under the Vivad Se Vishwas Scheme. The Appellant, bona fide believing that the dispute stood finally and conclusively settled, did not pursue the matter any further. The Appellant submits that, subsequently, the Department took the view that the Appellant had not made the correct payment towards the disputed demand under the Scheme, and by a communication dated 20.08.2025 the Ld. PCIT, Central-2, Chennai cancelled the Form-5 earlier issued on 31.12.2021. Consequent thereto, a giving-effect order dated 04.09.2025 (DIN & Letter No. ITBA/COM/F/17/2025- 26/1080370791(1)) was passed by the Assistant Commissioner of Income Tax, Central Circle-1, Coimbatore, holding that in view of Section 4(6) of the Finance Act (2), 2020, all proceedings and claims withdrawn under Section 4 of the Vivad Se Vishwas Act, and all consequences thereof under the Income-tax Act, stood revived, and raising a demand of Rs.79,46,164/- against the Appellant. The detailed dates and events capturing the above facts are tabulated below: Date Particulars 31.12.2021 Form 5 issued to the appellant under the Vivad Se Vishwas Scheme 31.01.2022 Impugned Order/Order of the First Appellate Authority 20.08.2025 Communication of the PCIT cancelling the Form 5

04.09.2025 Effect giving order passed giving effect to the communication of the PCIT 3 It was only upon receipt of the said communication cancelling the Form- 5 settlement and reviving the original demand that the Appellant became aware that the appeal earlier treated as withdrawn before the Ld. CIT(A) stood revived in substance. The Appellant thereafter sought legal advice in the matter, and upon being so advised that an appeal has to be filed against the CIT(A), the present appeal came to be filed at the earliest without any further loss of time. Page - 3 - of 10

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The delay of 1443 days in filing the present appeal is thus solely attributable to the Appellant's bona fide belief, consequent upon the issuance of Form-5, that the dispute stood finally settled and that no appeal survived for adjudication, and to the subsequent revival of the matter only upon cancellation of the Form-5 and the process of obtaining legal advice thereafter. The delay is neither willful nor deliberate and is not on account of any negligence on the part of the Appellant. In such circumstances, the Petitioner/Appellant submits that the delay in filing the appeal was due to circumstances beyond the control of the Appellant and prays that the delay of 1443 days in filing the appeal may be condoned, considering the reasonable cause explained above, for adjudication of the issues on merits in the interest of justice. Dated at Chennai this the 04th day of August, 2026.

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ITA No. 1438 & 1439/Chny/2026(AY 2012-13 & 2013-14) M.Y. Zubaida VS ACIT CC-1 & Mohamed Khader Yousuf VS ACIT CC-1 :: - 5 - :: 3.1 During the pendency of the appeals, both the assessee opted to settle the tax dispute under the Direct Tax Vivad Se Vishwas Act, 2020 (hereinafter referred to as “the VSVS”). Accordingly, the assessee filed Form Nos. 1 and 2 on 27.02.2021. Pursuant thereto, Form No. 3 was issued on 17.09.2021 and, upon furnishing Form No. 4, Form No. 5 was issued by the designated authority on 31.12.2021, thereby accepting the settlement in full and final settlement of the tax arrears for the relevant assessment year. 3.2 In view of the issuance of Form No. 5, the assessee bona fide understood that the tax dispute had attained finality under the VSVS and that no further proceedings survived before the appellate authorities. Consequently, the appeal pending before the Ld. CIT(A) came to be treated as withdrawn/disposed of in consequence of the settlement under the VSVS. The assessee, therefore, did not pursue any further appellate remedy. 3.3 The assessee has further submitted that, subsequently, the Department took a view that the requisite payment towards the disputed demand under the VSVS had not been correctly made. Consequently, by communication dated 20.08.2025, the learned Principal Commissioner of Income Tax, Central-2, Chennai cancelled the Form No. 5 which had earlier been issued on 31.12.2021. 3.4 Thereafter, a giving-effect order dated 04.09.2025 bearing DIN & Letter No. ITBA/COM/F/17/2025-26/1080370791(1) was passed by the Assistant Commissioner of Income Tax, Central Circle-1, Coimbatore, whereby, inter alia, it was held that in view of section 4(6) of the Finance Act (No. 2), 2020, the proceedings Page - 5 - of 10

ITA No. 1438 & 1439/Chny/2026(AY 2012-13 & 2013-14) M.Y. Zubaida VS ACIT CC-1 & Mohamed Khader Yousuf VS ACIT CC-1 :: - 6 - :: and claims which stood withdrawn pursuant to the settlement under the VSVS and the consequences thereof under the Income Tax Act stood revived. Consequently, a demand of Rs.79,46,164/- was raised against the assessee. 3.5 The assessee contends that it was only upon receipt of the aforesaid communication/order cancelling Form No. 5 and reviving the original demand that it became aware that the proceedings which had earlier been treated as withdrawn pursuant to the VSVS were, in substance, revived. It is submitted that thereafter the assessee sought legal advice and, on being advised that an appeal was required to be filed before this Tribunal against the order of the Ld. CIT(A), the present appeals were filed without any further undue delay. The learned Authorised Representative submitted that the delay was neither intentional nor deliberate. The assessee had acted upon the solemn and legitimate belief arising from the issuance of Form No. 5 that the dispute had been finally settled under the VSVS and that no further appellate proceedings survived. It was only after cancellation of Form No. 5 in August, 2025 and the consequential order dated 04.09.2025 that the assessee had a reason to pursue the matter further. It was, therefore, pleaded that the delay may be condoned in the interest of substantial justice and the appeals may be restored to the file of the Ld. CIT(A) for adjudication on merits. 4. The learned Departmental Representative, on the other hand, opposed the condonation of delay and submitted that the assessee had approached the Tribunal after an inordinate delay and, therefore, the explanation furnished should be examined strictly. We have heard the rival submissions and perused the material Page - 6 - of 10

ITA No. 1438 & 1439/Chny/2026(AY 2012-13 & 2013-14) M.Y. Zubaida VS ACIT CC-1 & Mohamed Khader Yousuf VS ACIT CC-1 :: - 7 - :: available on record. The issue before us at this stage is whether the assessee has demonstrated sufficient and reasonable cause for the delay in filing the appeals. 5. We have heard the rival submissions and perused the record. It is an admitted position from the material placed before us that Form No. 5 was issued in favour of the assessee on 31.12.2021 under the VSVS. Once Form No. 5 was issued, the assessee was justified in proceeding on the bona fide understanding that the tax arrears/dispute covered by the declaration had been settled in terms of the Scheme and that the pending appellate proceedings had consequently ceased to survive. The subsequent cancellation of Form No. 5 by the learned PCIT, Central-2, Chennai, vide communication dated 20.08.2025 and the consequential giving- effect order dated 04.09.2025 materially altered the position. In particular, the Department itself treated the proceedings which had earlier been withdrawn pursuant to the VSVS as having revived. Thus, the very basis on which the assessee had not pursued the appellate remedy stood subsequently disturbed by the Department. In these circumstances, the explanation furnished by the assessee that it bona fide believed that the dispute had attained finality pursuant to Form No. 5 cannot, in our considered opinion, be rejected as fanciful or lacking in bona fides. The assessee had acted on the basis of an order/document issued by the designated authority under a statutory dispute-resolution scheme. The subsequent cancellation thereof was an event which occurred substantially after the disposal of the appeal by the Ld. CIT(A). It is also relevant that, after the cancellation of Form No. 5 and the consequential giving-effect order dated 04.09.2025, the Page - 7 - of 10

ITA No. 1438 & 1439/Chny/2026(AY 2012-13 & 2013-14) M.Y. Zubaida VS ACIT CC-1 & Mohamed Khader Yousuf VS ACIT CC-1 :: - 8 - :: assessee took steps to obtain legal advice and thereafter filed the present appeals. The explanation furnished by the assessee, considered in its entirety and in the peculiar facts and circumstances of the present case, constitutes sufficient cause for the delay. 6. We are conscious of the fact that the delay is substantial. However, the length of the delay by itself cannot be the sole determining factor when the explanation furnished demonstrates circumstances which reasonably prevented the assessee from pursuing the appellate remedy. The object of limitation provisions is not to confer an advantage on a party who has acted upon circumstances beyond its control, particularly where the dispute has subsequently revived on account of cancellation of the settlement itself. We, therefore, find merit in the petitions filed by the assessee. In the peculiar facts and circumstances of the case, and in the interest of substantial justice, we hold that the assessee has demonstrated sufficient and reasonable cause for the delay in filing the present appeals. Accordingly, the delay of 1439 days as noted by the Registry / 1443 days as stated in the assessee's affidavit is hereby condoned. 7. Having condoned the delay, we proceed to consider the substantive grievance of the assessee. It is evident from the orders of the Ld. CIT(A) that the appeals before the first appellate authority were disposed of on the basis of the Form No. 5 issued under the VSVS and the assessee's appeal was treated as withdrawn/disposed of pursuant to the settlement. Subsequently, however, Form No. 5 itself was cancelled by the learned PCIT on 20.08.2025 and, pursuant thereto, the Department passed the Page - 8 - of 10

ITA No. 1438 & 1439/Chny/2026(AY 2012-13 & 2013-14) M.Y. Zubaida VS ACIT CC-1 & Mohamed Khader Yousuf VS ACIT CC-1 :: - 9 - :: giving-effect order dated 04.09.2025 reviving the proceedings and raising the demand against the assessee. Thus, the factual and legal position which prevailed at the time when the Ld. CIT(A) disposed of the appeals no longer remains the same. 8. In our considered view, once the settlement under the VSVS, on the basis of which the appeals had been treated as withdrawn/disposed of, has subsequently been cancelled and the original proceedings have been stated to have revived, the assessee ought to have an effective appellate remedy against the original assessment orders. The assessee cannot be left without an adjudication on the merits of its substantive grounds merely because, at an earlier point of time, the appeal was treated as disposed of consequent to the then subsisting Form No. 5. 9. We make it clear that we are not expressing any opinion on the merits of the additions/disallowances made in the assessment orders. In view of the subsequent developments, we deem it appropriate and just to set aside the impugned orders of the Ld. CIT(A) and restore the appeals to the file of the Ld. CIT(A) for fresh adjudication on merits in accordance with law. Needless to say, the Ld. CIT(A) shall provide reasonable and adequate opportunity of being heard to the assessee and shall adjudicate the grounds raised by the assessee on their merits, without being influenced by any observations made by us in the present order. The assessee shall be at liberty to place on record all relevant documents and such other material as may be relevant for proper adjudication of appeals. Since the appeals are being restored to the file of the Ld. CIT(A) for adjudication afresh, all grounds raised by the assessee are kept open. Page - 9 - of 10

ITA No. 1438 & 1439/Chny/2026(AY 2012-13 & 2013-14) M.Y. Zubaida VS ACIT CC-1 & Mohamed Khader Yousuf VS ACIT CC-1 :: - 10 - :: 10. In the result, both the appeals filed by the captioned assessees are allowed for statistical purposes. Order pronounced in open court on 03rd day of September, 2026 in Chennai.

Sd/- Sd/- (एस. आर. रघुनाथा) (मनु कुमार िग�र) (S.R.RAGHUNATHA) (MANU KUMAR GIRI) लेखा सद*य/ACCOUNTANT MEMBER �या�यक सद*य/JUDICIAL MEMBER चे�नई/Chennai, +दनांक/Dated: 03rd September, 2026 SNDP, Sr. PS आदेश क ��त,ल-प अ.े-षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF

SANDE Digitally signed by SANDEEP EP KUMAR Date: 2026.09.08 KUMAR 09:47:14 +05'30'

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