RAJIV MALHOTRA,CHANDIGARH vs. ITO WARD 5(5), CHANDIGARH, CHANDIGARH

That on the facts, circumstances and legal position of the case, Worthy CIT(A), in Appeal No. NFAC/2017-18/ 10046004 has erred in passing order dtd. 12.02.2026 in contravention of provisions of S. 250 of Income Tax Act, 1961 (hereinafter referred to as "Act").

That on facts, circumstances and legal position of the case, the Worthy CIT(A) has erred in treating the appeal as infructuous merely on the ground that the appellant had filed a declaration under the Direct Vivad Se Vishwas Scheme, 2024, without appreciating that the filing of declaration alone does not automatically render the appeal infructuous unless the declaration is accepted and the conditions of the scheme are fully complied with.

That on facts, circumstances and legal position of the case, the Worthy CIT(A) failed to appreciate that unless the proceedings under the Direct Vivad Se Vishwas Scheme are finally concluded and the tax determined under the scheme is duly paid, the appeal cannot be treated as withdrawn or dismissed as infructuous.

That on the facts, circumstances of the case, the order passed by Worthy CIT(A) deserves to be quashed since the same has been passed without affording reasonable opportunity of being heard to the appellant.

The facts of the case are that the present appeal of the assessee was dismissed on the premise that the assessee had opted for the Vivad se Vishwas Scheme, 2024 (VSVS) and, consequently, the appeal was rendered infructuous. The learned CIT(A), in the impugned order, recorded that the appellant had filed Form No. 1 dated 27.12.2024 and that Form No. 2 had subsequently been issued by the Principal Commissioner of Income-tax, Chandigarh, determining the amount payable under the scheme. On that basis, the appeal was not adjudicated on merits and was dismissed as infructuous.

It is the contention of the assessee before us that no declaration/application under the Vivad se Vishwas Scheme, 2024 was ever filed by it in respect of the impugned proceedings. Thus, the very factual premise on which the learned CIT(A) proceeded to dismiss the appeal is stated to be incorrect.

The learned AR submitted that the impugned order of the learned CIT(A) deserves to be set aside since the appeal has been dismissed on an erroneous factual assumption. It was submitted that the assessee/SSC had not opted for or filed any declaration under the Vivad se Vishwas Scheme, 2024 in respect of the present dispute.

It was further submitted that the learned CIT(A) has proceeded on the basis that Form No. 1 dated 27.12.2024 was filed by the appellant and that Form No. 2 was thereafter issued by the Principal Commissioner of Income-tax, Chandigarh. However, according to the learned AR, no such application/declaration was made by the assessee and, therefore, there was no occasion to treat the pending appeal as withdrawn or infructuous.

The learned AR accordingly submitted that the appeal ought to have been adjudicated by the learned CIT(A) on merits. Since the dismissal has taken place without examination of the grounds raised in appeal and solely on the aforesaid erroneous premise, the matter may appropriately be restored to the file of the learned CIT(A) for fresh adjudication in accordance with law.

The learned Departmental Representative relied upon the order of the learned CIT(A). It was submitted that the learned CIT(A) had dismissed the appeal after taking note of the provisions of the Direct Tax Vivad Se Vishwas Scheme, 2024 and the material stated to be available on record. The learned DR, however, fairly submitted that if the assessee had in fact not filed any declaration under the said scheme, the factual position may be verified and the matter may be dealt with in accordance with law.

We have heard the rival submissions and perused the material available on record. The impugned order shows that the learned CIT(A) dismissed the appeal without adjudicating the issues raised therein, on the specific premise that the appellant had opted for the Vivad se Vishwas Scheme, 2024. The learned CIT(A) recorded that Form No. 1 was filed on 27.12.2024 and that Form No. 2 was subsequently issued by the Principal Commissioner of Income-tax, Chandigarh. On this basis, the learned CIT(A) concluded that the appeal was not required to be adjudicated and dismissed the same as infructuous. However, the specific case of the assessee before us is that no declaration under the Vivad se Vishwas Scheme, 2024 was filed by it. If that assertion is correct, the very foundation of the impugned order would not survive. The dismissal of the appeal on the premise that the assessee had opted for the VSVS, therefore, cannot be sustained without first verifying the factual position regarding the alleged declaration and the consequential proceedings under the scheme.

In our considered opinion, therefore, the learned CIT(A) proceeded on a factual premise which, according to the assessee, is erroneous. Since the appeal has not been adjudicated on merits and has been dismissed only on the aforesaid premise, we consider it appropriate, in the interest of substantial justice, to restore the matter to the file of the learned CIT(A) for fresh adjudication. Accordingly, the order of the learned CIT(A) is set aside and the matter is restored to his file with a direction to verify, in the first instance, whether the assessee had in fact filed any valid declaration under the Vivad se Vishwas Scheme, 2024 in respect of the disputed tax arrears and whether any consequential order/certificate was issued by the designated authority. Thereafter, the learned CIT(A) shall adjudicate the appeal afresh in accordance with law, after affording adequate and reasonable opportunity of being heard to the assessee. Needless to say, nothing stated herein shall be construed as an expression of opinion on the merits of the grounds raised by the assessee, and the learned CIT(A) shall decide the appeal afresh uninfluenced by any observation made in the present order.

In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced on 14th August,2026. (VIJAY VARMA) JUDICIAL MEMBER “Poonam”