Settlement Commission Entitled to Review Pending Applications

The court concluded that the Settlement Commission was justified in entertaining the application for the Assessment Years 2010-11, 2011-12, and 2012-13 as the assessment proceedings were pending when the application was filed. However, for the Assessment Year 2008-09, the assessment was deemed completed based on Circular No.3 of 2008. The court dismissed the writ petition, directing the Settlement Commission to pass an appropriate order on merits within six months.

---

---

Issues Involved:
1. Validity of the Settlement Application filed by the 2nd respondent.
2. Jurisdiction of the Income Tax Settlement Commission to entertain the application.
3. Timeliness and procedural compliance by the petitioner in challenging the Settlement Commission's order.
4. Interpretation of statutory provisions and circulars related to the pendency of assessment proceedings.

Issue-wise Detailed Analysis:

1. Validity of the Settlement Application Filed by the 2nd Respondent:
The petitioner Commissioner of Income Tax challenged the validity of the Settlement Application filed by the 2nd respondent for the Assessment Years 2008-09, 2010-11, 2011-12, and 2012-13. The Settlement Commission had initially held that there were no materials to invalidate the application and directed the petitioner to submit a report under Rule 9 of the Income Tax Settlement Commission (Procedure) Rules within 45 days.

2. Jurisdiction of the Income Tax Settlement Commission to Entertain the Application:
The court examined whether the 1st respondent Settlement Commission was justified in admitting the case for settlement under Section 245C of the Income Tax Act, 1961. The petitioner argued that the application was invalid, citing amendments to Chapter XIX-A of the Income Tax Act effective from 01.06.2007, which restrict the filing of settlement applications to the pendency of proceedings before the Assessing Officer. The court referred to various judicial precedents and circulars, including Circular No.3 of 2008 and Circular No.16/2014, to clarify the definition of "case" under Section 245A(b) and the circumstances under which an assessment is deemed to be pending.

3. Timeliness and Procedural Compliance by the Petitioner:
The petitioner received the impugned order on 05.07.2012 but filed the writ petition only on 18.12.2012, despite the requirement to submit a report within 45 days. The court noted that the petitioner had acquiesced to the impugned order by engaging in inter-departmental deliberations and submitting reports under Section 245D(2C) of the Act. The delay in filing the writ petition and the failure to communicate the interim stay order to the Settlement Commission were highlighted as procedural lapses.

4. Interpretation of Statutory Provisions and Circulars:
The court analyzed the statutory provisions and circulars related to the pendency of assessment proceedings. It referred to the definition of "case" under Section 245A(b) and the explanations provided in Circular No.3 of 2008 and Circular No.16/2014. The court also considered judicial interpretations from the Gujarat High Court, Delhi High Court, and Calcutta High Court, which clarified that assessment proceedings are deemed to be pending only if an assessment order is passed or if the statutory time limit for making an assessment has not expired.

Conclusion:
The court concluded that the Settlement Commission was justified in entertaining the application for the Assessment Years 2010-11, 2011-12, and 2012-13, as the assessment proceedings were pending when the application was filed. For the Assessment Year 2008-09, the court noted that the assessment was deemed to be completed based on Circular No.3 of 2008, which was applicable at the time of filing the application. The court dismissed the writ petition, directing the Settlement Commission to pass an appropriate order on merits within six months. Consequently, the connected Miscellaneous Petition was also closed.

---