High Court reviews Income Tax settlement order under sec 245-D, emphasizes addressing Department's objections

The High Court considered three writ petitions filed by the Principal Commissioner of Income Tax challenging the settlement order under section 245-D(2)(3). The Department argued that the order passed without considering their report was unsustainable, citing precedents from Bombay and Delhi High Courts. The respondent's counsel opposed interference at the current stage, referring to relevant case law. The Court emphasized that the Settlement Commissioner should address the Department's objections and proceed lawfully. The Court disposed of the writ petitions, allowing the Revenue to raise grounds before the Settlement Commissioner for further consideration.

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Issues:
1. Procedure followed by the Department in settlement under section 245-D(2)(3)
2. Unsustainability of the order passed under section 245-D(2C) without considering the Department's report
3. Interference at the current stage of proceedings before the Settlement Commissioner

Analysis:
1. The High Court heard three writ petitions filed by the Principal Commissioner of Income Tax regarding settlement issues. The Department proceeded for assessment after search and seizure operations at the respondent's establishment. The respondent preferred an application under section 245-C(1) of the Income Tax Act, 1961 before the Income Tax Settlement Commissioner. The Department submitted a report under section 245D(2B), but the order passed for proceeding with the settlement under section 245-D(2)(3) was challenged by the Department as unsustainable.

2. The Department raised various grounds in the writ petition, arguing that the procedure followed by the Department was unsustainable. Citing cases from the Bombay High Court and Delhi High Court, the Department contended that the order passed under section 245-D(2C) without considering the Department's report was unsustainable. The Department prayed for the matter to be remanded back and proceeded with in accordance with law.

3. The respondent's counsel referred to a Supreme Court order and a Division Bench Judgment of the High Court to argue against interference at the current stage of proceedings. The Court noted that since the matter was still pending before the Settlement Commissioner, the Department could raise all grounds before the Commissioner. The Court emphasized that the Settlement Commissioner should consider the objections raised by the Department and proceed in accordance with the law. The Court disposed of the writ petitions, granting liberty to the petitioner/Revenue to raise grounds before the Settlement Commissioner for further consideration and proceedings.

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