Tribunal Upholds Assessment Order Timing, Settlement Commission Proceedings

The Tribunal held that the assessment order was not time-barred as the proceedings before the Settlement Commission were pending due to legal challenges. The Tribunal concluded that the assessment order passed by the Assessing Officer was within the time allowed by the Act. Additionally, the Tribunal dismissed the assessee's argument that the notice under section 143(2) was not issued within the statutory time, as the application was accepted by the Settlement Commission, indicating pending assessment proceedings. The Revenue's appeal was allowed, and the assessee's cross objection was dismissed.

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Issues Involved:
1. Whether the assessment order passed by the Assessing Officer was time-barred.
2. Whether the notice under section 143(2) was issued within the statutory time.

Detailed Analysis:

Issue 1: Whether the assessment order passed by the Assessing Officer was time-barred.

The Revenue filed appeals and the assessees filed cross objections involving identical issues, leading to a consolidated order for convenience. The primary case examined was Appeal No. 1271/CHD/2017 for A.Y. 1994-95 and Cross Objection No. 66/CHD/2017 for A.Y. 1994-95.

The Revenue's grounds of appeal contended that the CIT(A) erred in annulling the assessment order, arguing that the order under section 245HA(1) r.w.s 245D(2) was received on 02/05/2016 and the assessment was completed within 60 days.

The assessee's cross objection claimed that no notice under section 143(2) was issued or served within the statutory time, rendering the assessment under section 143(3) invalid.

The assessee filed a return on 27/03/1996 and subsequently applied to the Settlement Commission under section 245C(1) on 30/08/1996. The Commission allowed the application to proceed under section 245D(1), requiring the assessee to pay the admitted tax and interest within 35 days, which was not paid.

Amendments by the Finance Act, 2007, effective from 01.06.2007, introduced sections 245D(2D) and 245HA, stipulating that if the admitted tax and interest were not paid by 31.07.2007, the application would abate.

The assessee challenged the validity of these provisions before the Punjab and Haryana High Court, which disposed of the writ petitions on 21.09.2012, following the Bombay High Court's decision in Star Television News Ltd. v. Union of India.

The Settlement Commission passed an ex-parte order under section 245D(4) on 28.02.2014, which the assessee challenged, leading to a High Court order on 24.04.2015 directing the Commission to pass a fresh order after hearing the assessee.

The Settlement Commission later passed an order on 25.04.2016 under section 245HA(1) r.w.s 245D(2D), stating that the proceedings had abated due to non-payment of admitted tax and interest. The Principal Commissioner received this intimation on 02.05.2016. The Assessing Officer then issued a notice under section 142(1), to which the assessee responded, claiming the proceedings were time-barred. The Assessing Officer completed the assessment under section 143(3).

The CIT(A) held that the assessment order was time-barred as per sections 245D(2D), 245HA(1)(ii) & Explanation (b), and 245HA(4) r.w.s 2nd proviso to section 153(4).

The Revenue argued that the assessment was completed within the due time, as the Settlement Commission's order was received on 02/05/2016, and the assessment was completed on 22/06/2016.

The assessee contended that the proceedings abated on 31.07.2007, and the assessment should have been completed by 31.07.2008. Since the assessment was completed on 22.06.2016, it was time-barred.

The Tribunal examined the provisions and concluded that the assessment order was not time-barred, as the proceedings before the Settlement Commission were pending due to the legal challenge and subsequent High Court orders. The Tribunal held that the assessment order passed by the Assessing Officer was within the time allowed by the Act.

Issue 2: Whether the notice under section 143(2) was issued within the statutory time.

The assessee argued that no notice under section 143(2) was issued or served within the statutory time, rendering the assessment invalid.

The Tribunal noted that as per section 245A, the 'case' is admitted to the Settlement Commission when proceedings are pending before the Assessing Officer, initiated by issuing a notice under section 143(2). Revisiting the issue of notice issuance after 12 years would be infructuous, as the application was accepted by the Settlement Commission, indicating pending assessment proceedings.

Since the assessment order was a consequence of the Settlement Commission's order under section 245HA(2), the Tribunal dismissed the assessee's cross objection regarding the notice under section 143(2).

Conclusion:

The Tribunal allowed the Revenue's appeal, holding that the assessment order was not time-barred, and dismissed the assessee's cross objection regarding the notice under section 143(2).

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