Retrospective abolition of settlement forum cannot defeat interregnum settlement applications; related assessment notices stayed pending Interim Board review.

A retrospective amendment abolishing the Settlement Commission did not, by itself, extinguish settlement applications filed under section 245C during the interregnum between 01.02.2021 and 31.03.2021. The Delhi HC treated such applications as valid and pending before the Interim Board, holding that completed acts of filing could not be nullified absent express words or necessary implication, and that the CBDT order could not impose a narrower eligibility cut-off than the Act. As the applications remained pending, consequential notices under sections 143(2), 142(1), 153A and 153C were kept in abeyance until the Interim Board decided the settlement applications.

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Issues: (i) Whether settlement applications filed under section 245C between 01.02.2021 and 31.03.2021 could be treated as valid and pending applications for consideration by the Interim Board notwithstanding the retrospective amendment made by the Finance Act, 2021. (ii) Whether the consequential notices issued under sections 143(2), 142(1), 153A and 153C were liable to be interfered with.

Issue (i): Whether settlement applications filed under section 245C between 01.02.2021 and 31.03.2021 could be treated as valid and pending applications for consideration by the Interim Board notwithstanding the retrospective amendment made by the Finance Act, 2021.

Analysis: The settlement mechanism under Chapter XIX-A conferred a statutory entitlement to apply where a pending case existed. The 2021 amendments abolished the Settlement Commission with effect from 01.02.2021, but the amendments did not expressly or by necessary implication extinguish applications filed in the interregnum before 01.04.2021. The Court followed the reasoning of other High Courts that the retrospective operation could not invalidate completed acts of filing, and that the eligibility condition for making an application could not be truncated by a cut-off date not found in the statute. The CBDT order dated 28.09.2021, to the extent it confined relief to assessees eligible as on 31.01.2021, was held to be too restrictive and was read down to 31.03.2021.

Conclusion: The settlement applications filed on 22.03.2021 were validly filed and are to be treated as pending applications to be considered by the Interim Board.

Issue (ii): Whether the consequential notices issued under sections 143(2), 142(1), 153A and 153C were liable to be interfered with.

Analysis: Once the settlement applications were held to be pending and liable to be considered by the Interim Board, the further assessment notices could not proceed independently until those applications were decided. The impugned notices were therefore required to be kept in abeyance as a necessary consequence of the main relief granted on maintainability of the settlement applications.

Conclusion: The notices were stayed till the settlement applications are decided by the Interim Board.

Final Conclusion: The writ petitions succeeded, the interregnum settlement applications were protected as pending applications, and the assessment notices were not permitted to advance pending decision by the Interim Board.

Ratio Decidendi: A retrospective amendment abolishing a statutory settlement forum cannot, absent express words or necessary implication, extinguish the vested right to file a settlement application during the period when the forum was still legally and factually available; a CBDT relaxation under section 119(2)(b) cannot impose a narrower eligibility cut-off than the Act itself.

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