TaxTMI 
TaxTMI 
2018 (9) TMI 1697
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.... this common judgment and order. 2. By way of these petitions under Article 226 of the Constitution of India, the common petitioner - Department i.e. the Commissioner of Income tax (Central) (Circle-II), Ahmedabad, has prayed for an appropriate writ, direction or order to quash and set aside the impugned order(s) dated 04.12.2007 and 27.12.2012 insofar as it does not allow the Settlement Application preferred by respondent No.2 to be proceeded with for all Assessment Years as stated in the settlement application and to direct respondent No.1 Settlement Commission to pass final orders under Section 245D(4) with regard to the said remaining Assessment Years. The petitioner has also prayed to quash and set aside the order dated 19.06.2013 rendered under Section 154 read with Section 245D(6B) of the Act and to direct the Settlement Commission to allow the same and to hear the settlement application on merits insofar as the remaining assessment years are concerned. 3. The facts leading to the present Special Civil Application in nutshell are as under: For the sake of convenience, the facts in Special Civil Application No.17177/2013 are narrated and the said Special Civil Application ....
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....und that the said order has been passed considering only some of the assessment years incorporated in each of the applications whereas, the remaining assessment years of the respective applications have not been considered and decided in the said order passed under Section 245D(4) dated 27.12.2012. The assessment years for which such orders were passed in respect of the applications are as below:- Sr. No . Name of the applicant A.Y.s for which application allowed to be proceeded and final orders were passed u/s.245D(4) Date of Order u/s.245D(2 A) and 2(C) 1 M/s.Jay Bee Distributors Pvt. Ltd. 2004-05 04.12.2007 2 M/s.Jay Bee Distributors Pvt. Ltd. 2005-06 04.12.2007 3 2003-04 04.12.2007 4 M/s.Tad Pharma Ltd. 2001-02 04.12.2007 5 Shri Jagjitsingh Channa 2003-04 & 2005- 06 04.12.2007 6 Mrs.Satvinder Paul Kaur Sethi 2003 -04 to 2004-05 04.12.2007 7 Shri Kuldeep Singh Mehta 1999-2000 to 2004-05 04.12.2007 8 Mrs.Paramjit Kaur Mehta 2004-05 & 2005- 06 04.12.2007 9 M/s.Comed Chemicals Ltd. 1999-2000 to 2000-01 & 200405 04.12.2007 10 M/s.Comed Chemicals Ltd. 2005-06 04.12.2007 11 M/s.Comed Laboratories Ltd. 2004-2005 04.12.2007 3.4 ....
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....ettlement Commission under Section 154 read with Section 245D(6) of the Act and requested to consider the settlement application(s) for the remaining years for which the order(s) are not passed under Section 245D(1) of the Act. That the learned Settlement Commission vide order dated 19.06.2013,has rejected the said applications holding that the order under Section 245D(6B) to rectify the order under Section 245D(4) dated 27.12.2012 would tantamount to review/ recall which is not permissible under the provisions of law. 3.8 Hence, the Revenue has preferred the present Special Civil Applications for the aforesaid reliefs. At this stage, it is required to be noted that the Department has also amended the petition making averments challenging the order passed under Section 245D(4) on merits. However, there is no prayer to quash and set aside the order(s) passed under section 245D(4) in respect of the years for which the orders under Section 245D(4) have been passed. 4. Shri M.R.Bhatt, learned Senior Advocate has appeared on behalf of the Revenue and Shri Mihir Joshi, learned Senior Advocate has appeared for Ms.Megha Jani, learned advocate appearing on behalf of the respondentassesse....
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.... deeming provision, no adjudication was required on the part of the Settlement Commission to decide as to whether any application was required to be allowed to be proceeded further or to be rejected. At the cost of repetition, it is reiterated that once the three conditions enumerated in Section 245D(2A) stood fulfilled, the entire application with regard to all the years which is the subject matter of such application, is required to be treated as deemed to have been allowed to be proceeded further. 4.4 It is further submitted by Shri M.R.Bhatt, learned Senior Advocate appearing on behalf of the Revenue that the main contention of the respondent-assessee appears to be that in respect of the Assessment Years for which the application is not allowed to be proceeded further, there was no additional disclosure and, therefore, no tax and interest thereon was required to be paid or so paid before 31.07.2007. This contention is wholly misconceived. It is submitted that in a Settlement application, the assessee may as well not disclose any additional income which was hitherto not disclosed before the Assessing Officer but still requests for settlement of this case. In respect of the year....
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....re for various years. In support of his above submissions, Shri M.R.Bhatt, learned Senior Advocate appearing on behalf of the Revenue has heavily relied upon the decision in the case of Principal Commissioner of Income-tax (Central) v. Settlement Commission reported in 386 ITR 660 (Gujarat). 4.8 It is further submitted by Shri M.R.Bhatt, learned Senior Advocate appearing on behalf of the Revenue that in the instant case,there is no order under Section 245D(2C) of the Act communicated to the petitioner. It is submitted that therefore, as per the Scheme of the Act,it is only at the time of hearing i.e. 245D(4) that the grievance with regard to nonadmission of the settlement application for few years was raised (page 41) and the decision of the settlement application is at page 51. 4.9 It is further submitted by Shri M.R.Bhatt, learned Senior Advocate appearing on behalf of the Revenue that th communication of the same date, i.e. 04.12.2007 which is at Pages 26 to 36 was not received by the petitioner. It is submitted that on this aspect, in the rectification application, several averments were made to justify as to how said communication was not received by the petitioner. 4.10.....
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....e application for few years at the time of hearing under Section 245D(4). That thereafter, when the Department submitted the application under 154 read with Section 245D(6), the same ought to have been allowed by the Settlement Commission. 4.14 It is further submitted by Shri M.R.Bhatt, learned Senior Advocate appearing on behalf of the Revenue that even the orders passed by the Settlement Commission allowing certain claims of the assessee which are the subjectmatter of Special Civil Application Nos.17177/2013, 17181/2013 and 17185/2013, are erroneous. 4.15 It is further submitted by Shri M.R.Bhatt, learned Senior Advocate appearing on behalf of the Revenue that in the case of M/s.Comed Chemicals Limited - Special Civil Application No.17177/2013, the learned Settlement Commission allowed deduction under Section 80IA in respect of undisclosed income. It is submitted that while allowing the deduction under Section 80IA, there is no finding recorded by the Settlement Commission that the same is 'derived' from the industrial activity. It is submitted that for deduction under Section 80IA, the nexus is required to be established that the stated income is 'derived' from the industrial ....
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....d that however, the fact situation available in the said reported decision is entirely different inasmuch as in the reported decision, additional disclosure was very marginal. 4.19 It is submitted by Shri M.R.Bhatt, learned Senior Advocate appearing on behalf of the Revenue that therefore, even on merits also, the order passed under Section 245D(4) of the Act deserves to be quashed and set aside. Making above submissions, it is requested to allow the present petitions. 5. Shri Mihir Joshi, learned Senior Advocate appearing on behalf of the respondent-assessee has vehemently submitted that as such,the petitioner - Commissioner has no locus to make a grievance against an order of the Settlement Commission holding that the settlement application would not be proceeded with in respect of certain assessment years. It is submitted that the law provides for settlement only at the instance of an assessee and there is no question of the Department compelling a settlement on the assessee. It is further submitted that by an order of the Settlement Commission not allowing settlement application to be proceeded further, the Department suffers no prejudice since if the settlement application ....
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....pression cannot govern the substance which is as contemplated under the relevant provision. 5.3 It is further submitted by Shri Mihir Joshi, learned Senior Advocate appearing on behalf of the respondentassessee that it is obvious from the Scheme of the Act that out of the various eventualities contemplated for invalidation, if no additional income is disclosed for the year in question and no additional tax comes to be paid in respect of such year, the settlement application insofar as that year is concerned would be rendered invalid because the requirement of an application for settlement is for disclosure hitherto undisclosed income and payment of additional tax thereon. It is submitted that a conjoint reading of Section 245C(1) and Section 245C(1A) and Section 245(1D) of the Act makes it clear that the additional amount of income tax and consequentially the disclosure of undisclosed income is relatable to each of the years covered in the application. The contention of the petitioner that the application for settlement cannot be split in parts and be allowed to proceed further with respect to some of the assessment years and rejected for some has been specifically considered and ....
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....ommunication from the Settlement Commission of the same date i.e. 04.12.2007 under Section 245D(3) of the act calling for the report in respect of the subject application which clearly indicates in the subject that the application was in respect of 1999-2000, 2000-01, and 2004-05. This has been admitted to have been received by the petitioner. Moreover, the Settlement Commission has recorded the facts regarding the knowledge of the Department regarding the subject orders. It is therefore submitted that the petitioner had received a copy of the subject orders and in any case must be deemed to have knowledge of the same on account of the fact that the same were part of the record of the Settlement Commission that some orders in respect of the settlement applications which were of the Comed Group as a whole had been received by the Department, that the orders were part of the writ petition filed by the respondent and served on the Department and that the communication dated 04.12.2007 calling for the report specifically refers to the application being proceeded with only for some of the years. It is submitted that the fact of passing of the order of 04.12.2007 could in any case have b....
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.... of the Revenue that as such, the writ petition enumerates the specific ground relatable to the challenge. It is submitted that necessary documents/ facts are available on record. That the petitioner essentially challenges the decision making process on the part of the Settlement Commission. That in such a situation, even in absence of prayer, since all the facts are available and parties have also advanced arguments on merits of the same, this Court may entertain the said challenge. In support of his above submissions and request, Shri Bhatt, learned Senior Advocate appearing on behalf of the petitioner- Revenue has relied upon the decisions of Hon'ble Supreme Court in the case of Godrej Sara Lee Limited v. Assistant Commissioner (AA) And Another reported in (2009)14 SCC 338 (Paragraphs 9, 11, & 13) and Joshi Technologies International Inc. v. Union of India And Others reported in (2015)7 SCC 728 (Paragraphs 49 to 51). 7. Heard learned counsel appearing for respective parties at length. At the outset, it is required to be noted that the present petition is preferred by the Department/ Revenue challenging the order passed by the Settlement Commission in proceeding further with the....
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....on is allowed and the order is passed as per Section 245D(4) of the Act and the assessee makes payment of tax, penalty and interest as per the order passed by the Settlement Commission, in that case, the assessee may get the benefit of immunity from prosecution and penalty etc. as per Section 245H of the Act. Therefore, the object and purpose of the proceedings before the Settlement Commission is to put an end to the dispute at the instance of the assessee and the assessee may approach the Settlement Commission for settlement to avoid prosecution and penalty. On the other hand, if the settlement application is rejected and/or declared invalid, the necessary consequences of abatement of proceedings before the Settlement Commission as provided under Section 245HA shall follow. Section 245HA of the Act reads as under:- "Abatement of proceeding before Settlement Commission. 245HA. (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 subsection (2A) or further proceeded with under subsec....
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....nd 231 and for the purposes of payment of interest under section 243 or 244 or, as the case may be, section 244A, for making the assessment or reassessment under sub-section (2), the period commencing on and from the date of the application to the Settlement commission under section 245C and ending with "specified date" referred to in subsection (1) shall be excluded; and where the assessee is a firm, for the purposes of the time-limit for cancellation of registration of the firm under sub-section (1) of section 186, the period aforesaid shall, likewise, be excluded." Therefore, considering the Scheme of Section 245HA and the object and purpose of proceedings before the Settlement Commission under Section 245 of the Act, we are of the opinion that against the order passed by the Settlement Commission either rejecting and/or declaring the application invalid and/or considering the application for some of the years and not considering the application for all the years for which the application is submitted, only the assessee/ applicant can be said to be aggrieved. Therefore, the present petition at the instance of the Revenue challenging the order passed by the Settlement Commissio....