Settlement Commission instructed to review facts under Income Tax Act

The court directed the Settlement Commission to review the facts presented by the petitioners and issue formal orders under section 245D(4) of the Income Tax Act, 1961 by a specified date. If the facts were accurate, the Commission was instructed to pass the orders; if not, the Commission had discretion to proceed accordingly. The court allowed direct service of the order, emphasizing the procedural nature of the formal order issuance and the need for timely resolution.

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Issues:
Petition under Article 226 for mandamus to pass order under section 245D(4) of the Income Tax Act, 1961.

Analysis:
The petitioners sought a writ of mandamus commanding the respondent No.1, the Settlement Commission, to issue an order under section 245D(4) of the Income Tax Act, 1961. The petitioners argued that after filing the settlement application and completion of proceedings and arguments, the Settlement Commission had formally pronounced the case as settled and noted the terms of settlement. However, the formal order under section 245D(4) was still pending as of the date of the petition. The petitioners emphasized that the issuance of the formal order was a procedural requirement, not substantive adjudication, and should not be stalled by subsequent amendments. Therefore, they requested the court to direct the Settlement Commission to issue the formal orders.

On the other hand, the respondent No.2, the Assistant Commissioner of Income Tax, contended that the verification of the facts stated by the petitioners should be left to the discretion of the Settlement Commission. The respondent referred to the Finance Bill 2020-21 and its provisions, highlighting that as the bill had not been enacted yet, the current position should be considered in the absence of its contents.

Upon considering the arguments presented, the court disposed of the petition by directing the Settlement Commission to review the facts as stated by the petitioners and recorded in the order. If the facts were found to be correct, the Commission was instructed to pass or issue appropriate formal orders by a specified date. However, if the facts were deemed incorrect, the Commission had the freedom to proceed in accordance with the law at its discretion. The court permitted direct service of the order.

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