Settlement Commission must issue written order under section 245D(4) after pronouncing settlement terms granting immunity

Gujarat HC directed the Interim Board of Settlement to pass an order under section 245D(4) of the Income Tax Act accepting the petitioners' application as settled. The Settlement Commission had pronounced settlement terms on 28.01.2021 granting immunity from interest and penalty, but failed to reduce the decision to writing. Despite respondent's denial based on case diary notings, the court relied on the Vice President and Member's affidavit confirming the settlement was pronounced and concluded. Following Supreme Court precedent in Vinod Kumar Singh case, the petition was allowed directing formal written order reflecting the pronounced settlement terms.

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Issues Involved:
1. Direction to pass an order u/s 245D(4) of the Income Tax Act, 1961.
2. Validity of the Settlement Commission's pronouncement of settlement.
3. Effect of the Finance Bill 2021 on the pending order.

Summary:

Issue 1: Direction to pass an order u/s 245D(4) of the Income Tax Act, 1961.
The petitioners filed applications for settlement u/s 245C(1) and the Settlement Commission accepted these applications, passing an order u/s 245D(1). Subsequently, the Principal Commissioner of Income Tax issued a letter u/s 245D(2B) calling for information, which was provided. The Settlement Commission passed an order u/s 245D(2C) to proceed with the case. The final hearings took place, and the petitioners claimed the Settlement Commission formally pronounced the case as settled, with only the text of the order u/s 245D(4) pending. However, the Finance Bill 2021 ceased the operation of the Settlement Commission from 01.02.2021, and no order was received by the petitioners until 31.01.2021. The petitioners requested the Settlement Commission to pass an order u/s 245D(4), but no reply was received, prompting them to file a Special Civil Application.

Issue 2: Validity of the Settlement Commission's pronouncement of settlement.
The Court directed the Settlement Commission to verify the facts and pass an appropriate order. The then Members of the Settlement Commission confirmed that the case was formally pronounced as settled on 27/28.01.2021, but the order could not be passed due to the tenure end of a member and COVID-19 protocols. The Interim Board for Settlement later intended to re-hear the case de novo, which the petitioners opposed, leading to further petitions.

Issue 3: Effect of the Finance Bill 2021 on the pending order.
The Finance Bill 2021 proposed the cessation of the Settlement Commission, impacting the pending order. The Court considered an affidavit by the Vice President and Member of the Settlement Commission, confirming the case was pronounced as settled. The Court referred to the Apex Court's decision in Vinod Kumar Singh vs. Banras Hindu University, emphasizing that once a judgment is pronounced, it should be acted upon unless exceptional circumstances exist.

Judgment:
The Court directed the Interim Board to pass an order u/s 245D(4) accepting the application as "settled" in terms of the pronouncement by the Settlement Commission on 28.01.2021, granting immunity from penalties and prosecutions under the Income Tax Act, 1961. The petitions were allowed to this extent with no order as to costs.

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