Court reinstates petitioner's settlement application, rejecting Income Tax Commission's order. CBDT Circulars don't override judicial decisions.

The court quashed the Income Tax Settlement Commission's order dismissing the petitioner's settlement application, reinstating the application for Assessment Years 1989-99 to 2014-15. It held that an assessment is pending until served on the assessee, rejecting the Commission's rejection based on the issuance date. The court found the Commission bound by its website representation and emphasized that CBDT Circulars do not override judicial decisions. The petitioner's rights were upheld, and the matter was remanded to the Commission for further proceedings under Section 245D(1) of the Income Tax Act.

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Issues Involved:
1. Jurisdiction of the Income Tax Settlement Commission to entertain a settlement application.
2. Interpretation of the term "pending assessment" under Section 245A(b) of the Income Tax Act, 1961.
3. Validity of the Commission's rejection of the settlement application based on the timing of assessment order issuance versus service.
4. Binding nature of the Commission's representations on its website.
5. Impact of CBDT Circulars on the interpretation of statutory provisions.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Income Tax Settlement Commission to entertain a settlement application:
The petition challenges the order dated 12th April 2016, passed by the Income Tax Settlement Commission (the Commission) under Section 245D(1) of the Income Tax Act, 1961 (the Act). The Commission dismissed the petitioner's application for settlement for Assessment Years 1989-99 to 2014-15. The core dispute is whether the assessment was pending when the application for settlement was filed, which affects the Commission's jurisdiction to entertain the application.

2. Interpretation of the term "pending assessment" under Section 245A(b) of the Income Tax Act, 1961:
The critical question is when an assessment can be considered "pending" for the purposes of Chapter XIX A of the Act. The petitioner argues that an assessment remains pending until the assessment order is served on the assessee, as supported by the decision in Commissioner of Income Tax Vs. Income Tax Settlement Commission & Anr. 375 ITR 483 (ITSC). The Revenue, however, contends that an assessment is concluded when the assessment order is made, irrespective of its service.

3. Validity of the Commission's rejection of the settlement application based on the timing of assessment order issuance versus service:
The petitioner filed the application for settlement on 30th March 2016, arguing that the assessments were pending as the orders were not served until 31st March 2016. The Commission rejected the application, stating that the assessments were not pending as the orders were made on 30th March 2016. The court found that the principle laid down in ITSC (supra) is binding, which states that an assessment order is made when it is served. Therefore, the Commission erred in rejecting the application based on the issuance date rather than the service date.

4. Binding nature of the Commission's representations on its website:
The petitioner relied on the Commission's website, which stated that an assessment is pending until the order is served. The court held that the petitioner was entitled to rely on this representation, and the Commission is bound by it. The Commission's subsequent withdrawal of this representation does not affect the petitioner's rights based on the earlier representation.

5. Impact of CBDT Circulars on the interpretation of statutory provisions:
The Revenue cited CBDT Circular No. 16 of 2014, which states that an assessment is completed when the order is passed, not when it is served. The court held that a CBDT Circular cannot override a judicial decision. The Circular was available when the ITSC decision was made, and it does not seem to have influenced the court's decision. The court reiterated that a Circular is binding on Revenue officers only when it is beneficial to the assessee.

Conclusion:
The court quashed and set aside the Commission's order dated 12th April 2016, restoring the petitioner's application for settlement to the stage of Section 245D(1) of the Act. The period of 14 days provided in Section 245D(1) will run from the date this order is first communicated to the Commission. The petition was disposed of with no order as to costs.

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