2014 (12) TMI 1065 - HC - Income Tax

Court dismisses petitions challenging Income Tax Settlement Commission's order on 'case' definition under Section 245A(b) of Income Tax Act

Sahajanand Hi Tech Constructions Pvt. Ltd. Versus The Income Tax Settlement Commission and others

The Court dismissed the petitions challenging the order of the Income Tax Settlement Commission, which rejected settlement applications for certain ... Settlement order by Income Tax Settlement Commission u/s 245D(1) - Rejection of applications for settlement for some of the AYs on the ground that there were no pending proceeding for those AYs – Held that:- As held in M/s. Shriniwas Machine Craft PVT LTD vs. The Income Tax Settlement Commission [2014 (1) TMI 1090 - BOMBAY HIGH COURT] even if it is assumed that the submission is correct, the submissions cannot be accepted that it should be read with retrospective effect particularly when the amendments of 2014 is specifically made effective from 1 October 2014 - the order under challenge has to be examined in the light of the law in force at the time when the application was filed and the impugned order was passed – the order of is upheld – Decided against assessee. Issues:Challenge to order passed by Income Tax Settlement Commission under Section 245D(1) of the Income Tax Act, 1961 for various assessment years. Rejection of settlement applications based on the definition of 'case' under Section 245A(b) of the Act. Interpretation of the amended definition of 'case' and its retrospective application.Analysis:1) The petitions challenged a common order passed under Section 245D(1) of the Income Tax Act by the Income Tax Settlement Commission, which considered applications for settlement for multiple assessment years. The order admitted applications for settlement for some years but rejected them for others based on the definition of 'case' under Section 245A(b) of the Act.2) The rejection of settlement applications for certain assessment years was due to the absence of pending proceedings for those years, as required by the definition of 'case' under Section 245A(b) of the Act. The issue was whether the applications could be admitted for settlement when there were no pending proceedings for those specific assessment years.3) The parties acknowledged that a previous decision of the Court addressed a similar issue. However, a senior counsel pointed out an amendment to the definition of 'case' in Section 245A(b) by the Finance Act 2014. The counsel argued that the rejected settlement applications might now be admissible since the time for passing an assessment order had lapsed, potentially allowing the assessee to approach the Settlement Commission. The Court noted that the amendment was effective from 1 October 2014 and should not be applied retrospectively. The Court emphasized that the impugned order had to be evaluated based on the law in force when the application was filed and the order was issued.4) Consequently, the Court dismissed all the petitions, emphasizing that the law applicable at the time of the impugned order governed the case. The decision in a previous case was deemed applicable to the present situation, leading to the dismissal of the petitions without any costs being awarded.This detailed analysis covers the challenges to the order passed by the Income Tax Settlement Commission, the rejection of settlement applications, and the interpretation of the amended definition of 'case' under the Income Tax Act, 1961.