2016 (10) TMI 778 - HC - Income Tax

Petitions Dismissed, Assessment Orders Valid, Settlement Application Not Maintainable

The court dismissed the petitions, confirming that the assessment orders were validly passed and tendered for service on 15.3.2016. It ruled that the ... Application for settlement - settlement of cases - date on which the assessment is made - pendency of assessment proceedings - service and dispatch of assessment order - exclusive jurisdiction of the Settlement Commission - time-bar/limitation for assessment - deemed commencement and conclusion of proceedings under section 153AService and dispatch of assessment order - date on which the assessment is made - Factual question whether assessment orders were passed and tendered for service on 15.3.2016. - HELD THAT: - The Court examined contemporaneous departmental registers, approval and forwarding entries, affidavits of the Assessing Officer, the approving Joint Commissioner and the visiting inspector, and the inspector's report of attempted personal service. Although events were rapid, the registers recorded receipt, approval and forwarding on 15.3.2016 and supporting affidavits corroborated the departmental sequence. The Court found the petitioners' affidavits and denial insufficient to rebut the preponderant documentary and testimonial evidence. The fact that formal entry in a register recorded 21.3.2016 as date of actual delivery did not negate the earlier attempted tendering and the passing of the orders on 15.3.2016; prior failed attempts and speed-post return corroborated the department's position. The Court therefore accepted the departmental version that the orders were passed on 15.3.2016 and were tendered for service on that date, despite refusal by the partners to receive them. [Paras 20, 21, 22, 40]Assessment orders were passed on 15.3.2016 and were tendered for service on the same day.Application for settlement - pendency of assessment proceedings - deemed commencement and conclusion of proceedings under section 153A - exclusive jurisdiction of the Settlement Commission - time-bar/limitation for assessment - Whether an application for settlement under section 245C(1) is maintainable if the assessment order has been 'made' but not yet dispatched or served on the assessee. - HELD THAT: - The Court noted that 'case' for settlement is a proceeding 'pending before an Assessing Officer' and that Explanation (iii a) treats a proceeding under section 153A as concluded 'on the date on which assessment is made.' The Court examined precedents construing expressions like 'assessment made' and limitation provisions, observing consistent authority that the making/passing of an assessment (signing/approval) constitutes its completion for statutory purposes and does not require prior communication or service to be effective. The Court rejected the petitioners' contention that dispatch or service should determine pendency, reasoning that accepting dispatch/service as the decisive event would create conflicting parallel orders (Assessing Officer and Settlement Commission) for the same assessment period and undermine the statutory scheme vesting exclusive jurisdiction in the Settlement Commission upon a validly filed application. The Court therefore held that for maintainability of a settlement application the relevant date is the date the assessment is made (passed), not the date of dispatch or service. [Paras 24, 25, 31, 32, 40]An application under section 245C(1) is maintainable only if filed before the assessment is made; once the Assessing Officer has made (passed) the assessment, the case is not pending and a settlement application filed thereafter is not maintainable-dispatch or service is immaterial for this purpose.Final Conclusion: The High Court dismissed the petitions: it upheld the departmental finding that assessment orders for AYs 2010-2011 to 2014-2015 were passed and tendered for service on 15.3.2016, and held that a settlement application is maintainable only if filed before the date the assessment is made; since the assessments were made on 15.3.2016, the application filed on 16.3.2016 was not maintainable. Issues Involved:1. Whether the assessment orders were actually passed on 15.3.2016.2. Whether the assessment orders were served to the petitioner on 15.3.2016.3. Whether the application for settlement under section 245C of the Income Tax Act was maintainable after the assessment orders were passed but before they were served.Detailed Analysis:1. Whether the assessment orders were actually passed on 15.3.2016:The petitioner contended that the assessment orders were not passed on 15.3.2016, arguing that it was improbable for the assessment orders to be approved and finalized on the same day. However, the department provided substantial evidence, including affidavits from the Assessing Officer, the Inspector, and the Joint Commissioner, along with various registers documenting the sequence of events. These documents showed that the draft orders were sent to the Joint Commissioner, approved, and returned to the Assessing Officer on 15.3.2016, who then finalized the orders on the same day. The court found no evidence of pre-dating the orders and concluded that the assessment orders were indeed passed on 15.3.2016.2. Whether the assessment orders were served to the petitioner on 15.3.2016:The department asserted that the assessment orders were tendered for service on 15.3.2016, but the partners of the petitioner firm refused to accept them. The court reviewed the affidavits and the report from the visiting officers, which stated that the orders were tendered but refused by the petitioner. The petitioner’s argument that the orders were not served on 15.3.2016 was countered by the department’s consistent documentation and the logical sequence of events. The court concluded that the assessment orders were tendered for service on 15.3.2016, and the refusal to accept them constituted complete service.3. Whether the application for settlement under section 245C of the Income Tax Act was maintainable after the assessment orders were passed but before they were served:The petitioner argued that the application for settlement was maintainable as the assessment orders were not served before the application was filed. The court examined the legal provisions, particularly the explanation (iiia) to section 245A(b), which states that an assessment is deemed to conclude on the date the assessment is made. The court cited various precedents, including the Supreme Court's and High Courts' decisions, which consistently held that the date of making an order is the date it is passed, not the date of service. The court emphasized that the statutory framework intends to avoid conflicting situations where both the Assessing Officer and the Settlement Commission could have jurisdiction over the same assessment period. Thus, the court concluded that the application for settlement was not maintainable once the assessment orders were passed on 15.3.2016, regardless of the date of service.Conclusion:The court dismissed the petitions, holding that the assessment orders were validly passed and tendered for service on 15.3.2016. The application for settlement under section 245C was not maintainable as the assessment proceedings concluded on the date the orders were passed. The stay granted previously was extended until 15.12.2016.