2013 (10) TMI 217 - HC - Income Tax

High Court upholds Settlement Commission's decision on diamond trader's application for inquiry

The High Court declined to interfere with the Settlement Commission's order allowing an application for settlement to proceed in a case involving a ... Allowability of case to be proceeded before Settlement Commission – Held that:- On receipt of an application under section 245C, the Settlement Commission shall call for a report from the Commissioner and on the basis of the materials contained in such report and having regard to the nature and circumstances of the case or the complexity of the investigation involved therein, shall, where it is possible, by order, reject the application or allow the application to be proceeded with within a period of one year from the end of the month in which such application was made under section 245C - In the present case, the impugned order permitted the respondent-assessee to clear the stage of sub-section (1) of section 245C of the Act. It merely amounted not to terminate the assessee's application for settlement - Settlement Commission shall decide the application of assessee for settlement on the basis of material on record. Issues:Challenge to Settlement Commission's order allowing application for settlement to proceed with.Analysis:The High Court dealt with a petition challenging the order passed by the Income Tax Settlement Commission, which allowed an application for settlement to proceed. The respondent, engaged in the diamond processing and trading business, had faced search and seizure proceedings resulting in a block period assessment by the Assessing Officer. The respondent then applied for settlement, which was objected to by the department. Despite the objections, the Settlement Commission allowed the application to proceed further. The court noted the provisions of the Income-tax Act related to settlement applications, emphasizing the procedure to be followed by the Settlement Commission upon receiving such applications. The court highlighted the relevant sub-sections of section 245D, outlining the steps to be taken by the Commission, including calling for reports, payment of additional tax, examination of records, and passing final orders on the settlement application.Judgment:The Division Bench of the High Court, after considering the arguments, declined to interfere with the Settlement Commission's order. The court observed that the Commission had not made a final decision on the merits of the application but had merely allowed it to proceed with further inquiry. The court emphasized that all contentions of both parties would be examined by the Commission before a final order was passed. Therefore, the court dismissed the petition and discharged the rule. It directed the Settlement Commission to expedite the decision on the settlement application based on the material on record, considering the time elapsed during the proceedings.