TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Join Channel
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether paragraph 4(i) of the Circular dated 28.09.2021 is bad in law as it imposes a condition of eligibility to file application for settlement as on 31.01.2021; (ii) Whether the Finance Act, 2021 is unconstitutional because it is retrospective with effect from 01.02.2021; (iii) What reliefs the petitioners are entitled to.
Issue (i): Whether paragraph 4(i) of the Circular, dated 28.09.2021, unlawfully introduces an additional eligibility condition requiring eligibility as on 31.01.2021.
Analysis: The Circular was issued under Section 119(2) of the Income-tax Act to provide administrative relief and is binding on departmental authorities but cannot impose conditions contrary to the statute. The Finance Act, 2021 made the Income-tax Settlement Commission (ITSC) inoperative by operation of statutory provisions (including proviso to Section 245B and Section 245C(5)) with effect from 01.02.2021, and provided for transfer of pending applications to an Interim Board. The Circulars paragraph 4(i) conditions the extension of the filing date on assessees being eligible to file as on 31.01.2021; in context this limitation preserves the operative effect of the retrospective amendments and confines the administrative relief to those whose statutory right to approach ITSC had crystallised by the cut-off date in the statute.
Conclusion: Clause 4(i) does not impose an unlawful extra-statutory eligibility condition and is not contrary to the Act. The conclusion is against the assessee on this issue.
Issue (ii): Whether the Finance Act, 2021 is unconstitutional because of its retrospective operation from 01.02.2021 which, it is alleged, takes away vested rights.
Analysis: The right to approach ITSC under Chapter XIX-A is a statutory right to file an application where a "case" is pending. Parliament may amend or abolish statutory remedies, including with retrospective effect, provided the repeal or amendment expressly or by necessary intendment takes away accrued or vested rights. The Amending Act made ITSC inoperative from 01.02.2021 and established an Interim Board to deal with pending applications; however, the legislation did not expressly address applications filed or proceedings initiated in the interregnum up to the date ITSC remained operational (31.03.2021). Principles limiting legal fictions and retrospective operation require that retrospective effect not be extended beyond the purpose for which it was created. Accordingly, read strictly, the legislative scheme ought not to render nugatory applications filed or proceedings pending in the interregnum (01.02.202131.03.2021) where rights to approach ITSC had already accrued or been exercised.
Conclusion: Partly in favour of the assessee Section 245C(5) must be read down so that the last date for making applications is 31.03.2021, thereby protecting vested/statutory rights accrued or exercised during the interregnum.
Issue (iii): Reliefs to which petitioners are entitled consequent to the above findings.
Analysis: Given issues (i) and (ii), applications filed or to be treated as filed in respect of cases arising between 01.02.2021 and 31.03.2021 fall within the class of pending applications to be transferred to and considered by the Interim Board. Orders rejecting applications solely on the ground of absence of eligibility as on 31.01.2021 must be set aside and such applications shall be deemed pending and dealt with on merits by the Interim Board in accordance with the scheme made by Central Government.
Conclusion: In favour of the assessee petitioners applications arising between 01.02.2021 and 31.03.2021 are to be treated as pending applications; rejections based solely on lack of eligibility as on 31.01.2021 are set aside.
Final Conclusion: The Finance Act, 2021 is read down to protect statutory rights that had accrued or were exercised in the interregnum up to 31.03.2021; administrative action under the impugned circular must be construed accordingly so that eligible applications are dealt with by the Interim Board on merits.
Ratio Decidendi: Where retrospective legislation abolishes a statutory remedy, accrued or vested rights to invoke that remedy which had crystallised or been exercised before the statutes operative cutoff must be preserved unless the amendatory enactment expressly or by necessary intendment takes them away; read-down relief is available to limit retrospectivity to its legitimate purpose and to protect pending statutory applications.
TaxTMI 
