Settlement Commission's Exclusive Jurisdiction Upheld in Income Tax Matter

The Court held that the Assessing Officer lacked jurisdiction to issue a show cause notice during Settlement Commission proceedings under Section 245C of the Income Tax Act. The Court emphasized the exclusive jurisdiction of the Settlement Commission once an application under Section 245C is allowed to proceed. As the notice was issued improperly, the Court allowed the writ application, quashed the notice, and directed the Assessing Officer to proceed in accordance with the law after the Settlement Commission proceedings concluded. The judgment underscored the importance of adhering to statutory provisions governing the jurisdiction of the Settlement Commission and Assessing Officers in income tax matters.

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Issues:
Jurisdiction of Assessing Officer to issue show cause notice during Settlement Commission proceedings.

Analysis:
1. The writ applicant sought various reliefs through a writ application under Article 226 of the Constitution of India, challenging the impugned show cause notice dated 15.09.2021 issued by the Assessing Officer under Section 153A / 143(3) of the Income Tax Act for the assessing year 2019-20.

2. The core issue revolved around whether the show cause notice could be validly issued while the applicant was before the Settlement Commission under Section 245C of the Income Tax Act, 1961. The Revenue's reply highlighted that the notice was issued due to the applicant's failure to submit proof of application before the Settlement Commission, which was later rectified by the applicant.

3. The Court examined Section 245F of the Act, which delineates the powers and procedures of the Settlement Commission. It was noted that the Settlement Commission has exclusive jurisdiction once an application under Section 245C is allowed to proceed, as per the provisions of the Act.

4. The Court emphasized that the proviso to Sub-section (2) of Section 245F clarified that if an application was made after June 2007, the Settlement Commission holds exclusive jurisdiction from the date of application. Consequently, the issuance of the impugned show cause notice during Settlement Commission proceedings was deemed to be without jurisdiction.

5. Based on the above legal analysis, the Court allowed the writ application, quashed the impugned notice, and directed the Assessing Officer to proceed in accordance with the law once the Settlement Commission proceedings concluded. The judgment highlighted the importance of adhering to the statutory provisions governing the jurisdiction of the Settlement Commission and Assessing Officers in income tax matters.

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