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of <h1>Statutory amendments upheld, settlement proceedings abated for non-compliance, income tax authorities' rights affirmed.</h1> <h3>Vikas Shipping Corporation & 1 Versus Union of India & 3</h3> Vikas Shipping Corporation & 1 Versus Union of India & 3 - Tmi Issues Involved:1. Challenge to the order of the Settlement Commission dated 11.12.2007.2. Request to prevent the income tax authorities from using confidential information produced before the Settlement Commission.3. Applicability and constitutionality of amendments to Chapter XIXA of the Income Tax Act, particularly section 245HA.Issue-wise Detailed Analysis:1. Challenge to the Order of the Settlement Commission:The petitioner, a partnership firm, challenged the order dated 11.12.2007 passed by the Settlement Commission, which declared the proceedings abated due to non-compliance with section 245D(2D) of the Income Tax Act. The petitioner argued that the hearing was concluded on 08.11.2006, and the order should have been passed without the need for further compliance with the amended provisions introduced on 01.06.2007. However, the court noted that the amendments applied to all pending proceedings, regardless of their stage, and the petitioner was aware of the requirement to pay additional tax by 31.07.2007 but failed to do so. Therefore, the abatement of the proceedings was automatic and the Settlement Commission merely declared what had already occurred by operation of law.2. Request to Prevent Use of Confidential Information:The petitioner alternatively requested that the income tax authorities be prevented from using the confidential information and reports produced before the Settlement Commission. The court referred to subsection (3) of section 245HA, which explicitly allows the Assessing Officer or any other income tax authority to use all material and information produced before the Settlement Commission in subsequent proceedings. Since the petitioner did not challenge the vires of this provision, the court found no basis to grant the requested relief. The court emphasized that no taxpayer can claim immunity from the use of material disclosed before the Commission unless specifically provided by statute.3. Applicability and Constitutionality of Amendments:The court examined the amendments to Chapter XIXA of the Income Tax Act, particularly section 245HA, which introduced the requirement for the assessee to pay additional tax and interest on the disclosed income by 31.07.2007 to avoid abatement of the settlement proceedings. The court upheld the constitutionality of these amendments, noting that they were intended to ensure prompt and serious pursuit of settlement applications. The court observed that the legislative intent was to prevent the pendency of settlement proceedings from indefinitely delaying the normal assessment process. The court also clarified that the amendments did not take away any vested rights of the assessee, as the liability to pay additional tax on disclosed income existed even under the previous provisions, albeit without the consequence of abatement.In conclusion, the court dismissed the petition, affirming the validity and applicability of the statutory amendments and the automatic abatement of the settlement proceedings due to non-compliance by the petitioner. The court also upheld the right of the income tax authorities to use the material produced before the Settlement Commission in subsequent proceedings.
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