TaxTMI 
TaxTMI 
2009 (8) TMI 767
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....fresh in accordance with law or to the assessing authority in view of the proceedings initiated under Chapter XIX-A on being held to be abated in terms of section 245HA of the Act ? 3. Except on few aspects, as regards the orders of the Settlement Com- mission under section 245D(4) of the Act to be referred in later part, asses- sees-writ petitioners and the respondent-Revenue in cross-petitions, both are joint on the issue that the procedure adopted by the Settlement Commission while passing orders impugned is in violation of section 245D(4) of the Act and without following the mandate of statute ; however, counsel for the assessees have tried to convince that once orders of the Settlement Commission are in violation of the principles of natural justice as having been passed without due application of mind and appreciation of material on record, matters must be remitted back to the Settlement Com- mission to decide afresh according to law. 4. However, though supported the submissions but counsel for the Revenue has also tried to convince that once orders of the Settlement Commission are not legally sustainable as per amendment made under the Finance Act, 2007, being e....
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.... proceedings pending before it shall stand abated as provided under section 245HA(1) ; in that eventuality, it would be remitted to the Assessing Officer or the income-tax authority before whom proceedings at the time of making application was pending and for being disposed of in accordance with the statute as if no application under section 245C having been made. 8. Due to a sword over the assessees, who had already made full and true disclosure before the Settlement Commission about their income having not been disclosed before the assessing authority, the tax was also paid at the time of admission of their applications where the Settlement Com- mission prima facie examined the records taking note of report under rule 9 of the Rules, 1997 submitted by the Commissioner (IT) ; and if the Settlement Commission failed to decide pending application and proceed- ings were since going to be abated by March 31, 2008, the assessees preferred CWP No. 2982 of 2008 wherein this court issued a mandamus directing the Settlement Commission to decide their applications on or before March 31, 2008 since they had a fear and rightly so, because of their applications having remained penden....
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.... No. 11515 of 2008 (CIT, Central v.RaviPrakash Modi) 11. The facts are almost the self-same in writ petitions filed by the Revenue wherein the assessees are respondents. In CWP No. 11515 of 2008, it appears that some where in the year 2002, applications were filed by the assessees and after pleadings were complete and when the case was not finally heard by the Settlement Commission, they also approached this court and got directions issued-in pursuance whereof, the Settlement Commission decided their applications by common order dated March 29, 2008, in which also, paragraphs are almost the self-same as in the order dated March 31, 2008 impugned in bunch of petitions of the assessees (quoted supra) but it is pertinent to extract relevant paragraphs only to show that in paragraph 5 of the order impugned, the Settlement Com- mission recorded at its own that it would be impracticable to examine the records and to afford adequate opportunity to the assessees and the Revenue as provided under the statute ; but at the same time, the Commission still settled undisclosed income ad infra : "3. In all the Principal Bench of the Commission has tillMarch 26, 2008received mo....
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.... section 245D(4) within thirty-five days of receipt of certified copy thereof, he is liable to pay simple interest at 15 per cent. p.a. Re. CWP No. 12911 of 2008 CIT Central v. M/s. Anil Hastkala (P) Ltd. 13. In CWP No. 12911 of 2008, after the order was passed under section 245D(4) on March 29, 2008 (annexure 2), miscellaneous application was filed by the assessee (respondent) on April 23, 2008 under section 245F(i) seeking certain rectification of mistakes in the order passed under section 245D(4) in regard to the assessment made by the Settlement Commission and year-wise break up of the amount settled ; and after copy of the miscellaneous application being served upon the Revenue, it was allowed, vide order dated June 4, 2008, which was obviously after cut-off date (March 31, 2008), and after which according to the Revenue, the Settlement Commission has since become functus officio, proceedings stood abated for all practical purposes. 14. Counsel for the assessees submits that as required under section 245D(4) of the Act, the Settlement Commission is under legal obligation to examine the records and report of the Commissioner (IT), if any, submitted....
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....e Settlement Commission after notice being served by the Revenue, at least the Revenue cannot file writ petitions after acceptance of the tax assessed by the Settlement Commission and are bound by the principles of promissory estoppel in assailing findings recorded under the orders impugned and cannot be permitted to approbate and reprobate at the same time. 18. Counsel for the assessee further submits that hearing as provided under section 245D(4) of the Act is to be considered in the context of statutory requirement in view of the amendment under the Finance Act, 2007, as per which applications pending on or before June 1, 2007 have to be decided by the Settlement Commission by March 31, 2008 and this hon'ble court has directed the Settlement Commission to decide applications by March 31, 2008 ; and as observed in the orders impugned, there being more than 1500 applications pending were to be decided by March 31, 2008 ; so if the Settlement Commission taking note of the prima facie material on record, made assessment that has to be considered in compliance with section 245D(4) of the Act. 19. It has further been urged that at least the Revenue has not been abl....
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....section 245HA(2) of the Act. 23. Counsel for the Revenue (respondents in bunch of petitions) has made one and the foremost contention that once orders passed by the Settlement Commission is in violation of section 245D(4), the same is a nullity in the eye of law as if no such order having been passed and in such situation, it would relate back to the date of passing of the order ; and proceedings having remained pendente before the Settlement Commission on March 31, 2008, certainly stood abated under section 245HA of the Act; and the Settlement Commission having become functus officio after March 31, 2008, and that being so, all matters are to be remitted back to the Assessing Officer in terms of section 245HA(2) of the Act so as to be governed by the Finance Act, 2007, on having become effective. Counsel relied upon in R.B. Shreeram Durga Prasad and Fetechand Nursing Das v. Settlement Com- mission (I.T. and W. T.) [1989] 176 ITR 169 (SC) ; [1989] 1 SCC 628. 24. Counsel further submits that once the Settlement Commission has become functus officio, no jurisdiction can now be conferred upon it to decide the applications and the matter cannot be remitted conferrin....
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....upon application being made by the assessee who can file at any stage of case pending relating to him in the manner as prescribed containing full and true disclosure of income which has not been disclosed before the assessing authority, the manner in which income has been derived, additional amount of income-tax payable thereon and all other particulars, before the Settlement Commission so as to have the case settled under section 245C of the Act. 29. After application under section 245C being filed by the assessee, section 245D provides the procedure to be followed. Sub-sections (1), (2A), (2B), (3) and (4) to section 245D being relevant for purposes read ad infra: "245D. Procedure on receipt of an application under section 245C. (applicable prior to the Finance Act, 2007, with effect from June 1, 2007).-(1) On receipt of an application under section 245C, the Settlement Commission shall call for a report from the Commissioner and on the basis of materials contained in such report and having regard to the nature and circumstances of the case or the complexity of investigation involved therein, the Settlement Commission, shall where it is possible, by order, reject the....
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....yable thereon under sub-section (2C), be recovered and any penalty for default in making payment of such additional amount may be imposed and recovered, in accordance with the provisions of Chapter XVII, by the Assessing Officer having jurisdiction over the assessee. (3) Where an application is allowed to be proceeded with under sub-section (1), the Settlement Commission may call for the relevant records from the Commissioner and after examination of such records, if the Settlement Commission is of the opinion that any further enquiry or investigation in the matter is necessary, it may direct the Commissioner to make or cause to be made such further enquiry or investigation and furnish a report on the matters covered by the application and any other matter relating to the case. (4) After examination of the records and the report of the Com- missioner, if any, received under sub-section (3), and after giving an opportunity to the applicant and to the Commissioner to be heard, either in person or through a representative duly authorised in this behalf and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission ....
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....t fromJune 1, 2007, being relevant reads ad infra : "245HA. Abatement of proceedings before the Settlement Commission.-(1) Where (i) an application made under section 245C on or after the 1st day of June, 2007, has been rejected under sub-section (1) of section 245D ; or (ii) an application made under section 245C has not been allowed to be proceeded with under sub-section (2A) or further proceeded with under sub-section (2D) of section 245D ; or (iii) an application made under section 245C has been declared as invalid under sub-section (2C) of section 245D ; or (iv) in respect of any other application under section 245C, an order under sub-section (4) of section 245D has not been passed within the time or period specified under sub-section (4A) of section 245D, the proceedings before the Settlement Commission shall abate on the specified date. Explanation.-For the purposes of this sub-section, 'specified date' means- (a) in respect of an application referred to in clause (i), the day on which the application was rejected ; (b) in respect of an application referred to in clause (ii), the 31st day of July, 2007 ; ....
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....eedings stood abated under section 245HA(1) because of pending applications having not been decided by the Settlement Commission on or before March 31, 2008 all such pending applications being abated were to be reverted back under section 245HA(2) to the Assessing Officer or to any other income-tax authority for being decided afresh in accordance with regular proceedings under the Act as if no such application under section 245C had been made ; and whatever record has been disclosed by the assessee before the Settlement Commission in application under section 245C (supra), it was pre-condition while submitting application for the assessee to come with true and full disclosure of his income having not been disclosed before the assessing authority and all such records which the assessee disclosed before the Settlement Commission in terms of section 245HA(3) of the Act can be used as material information by the Assessing Officer in the course of proceedings before him. 36. Thus, it clearly emerges from Chapter XIX-A that the object of the Legislature in introducing section 245C is to avoid protracted proceedings before the authority or in courts by resorting to settlement of....
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....ocedure having been adopted by the Settlement Commission in deciding applications under orders impugned as the Commission specifically observed that it is impracticable to examine the records and investi- gate the cases for proper settlement and even opportunity of hearing as contemplated under section 245D(4) is also not practicable ; but since this court directed the Commission to pass order before March 31, 2008, in paragraph 6, at its own assessed the undisclosed income of applicants for being taxed, as is almost self-same verbatim in all the orders impugned. 41. Question arises for consideration as to whether in the facts of the instant cases, there can be considered to be true compliance with the statutory mandate under section 245D(4) of the Act. There cannot be two opinions about it and the irresistible conclusion is that the Settlement Commission has failed to afford a reasonable opportunity of hearing nor examined the records as per the statutory requirement of law and has passed the orders impugned without due application of mind ; in such circumstances, the orders impugned in no manner are legally sustainable and are in violation of section 245D(4) of the Act.....
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....pretation only when the language is not clear and when two meanings are possible and not in a case like the present one, where plain language lead to only one conclusion that as per the provisions of section 245HA(1)(iv), application under section 245C once remained undecided for adjudication and remain pending in such cases, the proceedings can be considered to be abated. 46. It is also not the case of the respondents that the Settlement Commission constituted under section 245B(2) stands wound up, if ultimate fact remains that the Settlement Commission is allowed or continued to exist and entertain fresh application being filed on or after June 1, 2007, clearly suggests that it certainly got greater number of cases having been filed much before June 1, 2007 ; and applications remained pending on March 31, 2008, a Division Bench of the Delhi High Court in Vatika Farms (P) Ltd. v. Union of India [2008] 302 ITR 98, vide the interim order dated March 28, 2008, issued appropriate direction holding that such applications for settlement filed by the respective assessees under section 245C would not abate on March 31, 2008 and further directed to dispose of the pending applicat....
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....t merit. The Settlement Commission holds the authority under the Act and power is vested and only by amendment, vide the Finance Act, 2007 by putting rider of March 31, 2008, the Legislature only intended that if applications remained pending, it stands abated but it will not render the Settlement Commission functus officio to examine matter afresh after orders having been passed remitting back to the Settlement Commission. 50. Judgments on which the Revenue has placed reliance in the facts of the instant cases have no application rendering any assistance. 51. The submission made by counsel for the assessees (respondents in the writ petitions filed by the Revenue) while supporting the orders of the Settlement Commission impugned that looking to the availability of time as directed by this court in earlier petition, if the Settlement Commission has passed the orders impugned taking note of requirement under section 245D(4) of the Act, unless prejudice is shown by the Revenue, the orders impugned are not ordinarily required to be reviewed, has also no merit for the reason that if the statute casts an obligation upon the authority to act in accordance therewith, its non-c....
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....r preclude the Revenue which is a party to the dispute, if aggrieved from assailing the same in remedial proceeding available under law, the principles of promissory estoppel or of "approbate and reprobate" have no application in the facts of the instant case. 55. Further submission made by counsel for the assessees (respondents) that settlement is not an adjudication but is a settlement of dispute as is evident from its very nomenclature under Chapter XIX-A, is also devoid of merit for the reason that proceedings undertaking by the Settlement Commission under Chapter XIX-A are deemed to be judicial proceedings as provided under section 245L of the Act and a mechanism has been provided under Chapter XIX-A in general and under sub-section (4) of section 245D in particular and the Settlement Commission has to pass an order after due compliance thereof which is a sort of adjudication of dispute having been raised by the assessee while submitting their application for settlement under section 245C of the Act and if the Settlement Commission having failed to comply with mandate of law, such orders impugned passed in violation of section 245D(4) cannot be said to be legally sus....
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....uenced by the observations, made supra, expeditiously keeping in view the fact of matters pendente for sufficient long time. Parties are directed to appear before concerned the Settlement Commission onSeptember 14, 2009. No costs. Schedule A Writ petitions filed by the Commissioner of Income-tax,Central Jaipur S. No Writ Petition No. Against/Name of assessees (1) (2) (3) 1. 12911 of 2008 CIT v. Anil Hastkala (P) Ltd. and another 2. 9893 of 2008 CIT v. Raj Kumar Sharma and another 3. 10979 of 2008 CIT v. Geetanjali International and another 4. 10980 of 2008 CIT v. Shree Krishna Builders and another 5. 10981 of 2008 CIT v. Shree Ganpati Builders and another 6. 10982 of 2008 CIT v. N.K. Gupta and another 7. 10983 of 2008 CIT v.MangalamTownshipand another 8. 10984 of 2008 CIT v. Shree Ganpati Builder and another 9. 10985 of 2008 CIT v. Goyal Brothers and another 10. 10986 of 2008 CIT v. Shree Trivedi Builders and another 11. 10987 of 2008 CIT v. Smt. Chandra Kanta Agrawal and another 12. 10988 of 2008 CIT v.TrivediBuildingsand another ....
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....s and another 49. 11167 of 2008 CIT v. Heera Chand Choudhary and another 50. 11168 of 2008 CIT v. Ratan Conductors and another 51. 11169 of 2008 CIT v. Smt. Tara Gupta and another 52. 11170 of 2008 CIT v. Mahendra Kr. Agrawal and another 53. 11171 of 2008 CIT v. EMGEE Cables and another 54. 11172 of 2008 CIT v. Ajay Gupta and another 55. 11173 of 200 CIT v. Megha Colonisers (P) Ltd. and another 56. 11174 of 2008 CIT v. Shri Krishna Builders and another 57. 11175 of 2008 CIT v. Shripal Choudhary and another 58. 11176 of 2008 CIT v. Prashant Raghav and another 59. 11177 of 2008 CIT v. Dau Lal Purohit and another 60. 11178 of 2008 CIT v. Dilip Shah and another 61. 11179 of 2008 CIT v. Jai Mala Agrawal and another 62. 11180 of 2008 CIT v. Mahipal Choudhary and another 63. 11182 of 2008 CIT v. Sanjay Gupta and another 64. 11183 of 2008 CIT v. Shanti Lal and another 65. 11184 of 2008 CIT v. J.K. Jewellers and another 66. 11185 of 200....