Court directs Interim Board to review settlement applications under Income Tax Act amendment

The court disposed of the writ petitions challenging the constitutional validity of the amendment to the Income Tax Act, 1961. It directed the Interim Board for Settlement to consider applications submitted before September 30, 2021, based on the pendency of proceedings as of January 31, 2021, in accordance with the Act of 1961 and CBDT's order. This decision aimed to ensure a fair and consistent approach in processing settlement applications.

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Issues:
Challenge to the constitutional validity of the amendment to the Income Tax Act, 1961.
Clarification on the pendency of proceedings as of January 31, 2021.

Analysis:
The batch of writ petitions was filed to challenge the constitutional validity of the amendment to the Income Tax Act, 1961, specifically in Section 245A and related sections by the Finance Act, 2021. The challenge was based on the grounds of arbitrariness, illegality, and violation of fundamental rights under the Constitution of India. The petitioners sought a declaration that the amendment was unenforceable and unconstitutional.

During the pendency of the writ petitions, the Central Board of Direct Taxes (CBDT) issued a press release and an order allowing eligible assesses to file settlement applications until September 30, 2021. An Interim Board for Settlement was constituted by the Central Government to process these applications. The respondents argued that applications submitted before the deadline could be considered by the Interim Board for Settlement.

The petitioners did not contest the disposal of their writ petitions if applications were submitted before September 30, 2021. However, they sought clarification on considering the applications based on the pendency of proceedings as of January 31, 2021. The Income Tax Department objected to this, citing specific provisions from the Act of 1961 regarding the commencement of proceedings.

After hearing arguments from both sides, the court decided to dispose of the writ petitions with a direction to consider applications submitted before September 30, 2021, by the Interim Board for Settlement. The consideration of applications would be based on the pendency of proceedings as of January 31, 2021, as per the provisions of the Act of 1961. The Interim Board was instructed to follow the jurisdiction conferred by the CBDT's order dated September 28, 2021.

In conclusion, the court's decision provided clarity on the processing of settlement applications in light of the constitutional validity challenge and the specific provisions of the Income Tax Act, 1961. The judgment aimed to ensure a fair and consistent approach in dealing with the applications before the Interim Board for Settlement.

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