TaxTMI 
TaxTMI 
2018 (12) TMI 309
X X X X Extracts X X X X
X X X X Extracts X X X X
.... has erred in allowing the appeal of the assessee by annulling the assessment order passed by the Assessing Officer whereas the order under section 245HA(1) r.w.s 245D(2) of the Income Tax Act, 1961 was received I the office of the Pr. CIT, Patiala on 02/05/2016 and the assessment orders were passed by the Assessing Officer within 60 days of the receipt of the same from the office of the Pr. CIT, Patiala i.e. on 22/06/2016. 2. It is prayed that the order of Ld. CIT(A) be set aside and that of the Assessing Officer restored. 2.1 Only one effective ground taken by the Assessee in C.O. No. 66/CHD/2017 reads as under: 1. That the first appellate authority has failed to appreciate that no notice under section 143(2) of the Act was neither issued nor served on the assessee within statutory time. Hence, the assessment framed under section 143(3) of the Act is not maintainable as per decision of Punjab & Haryana High Court in case of CIT v. Cebone India Ltd. (2010) 229 CTR 188 (P&H). 3. The brief facts of the case as taken from the order of the Ld. CIT(A) are that, after filing return of income on 27/03/1996, the assessee filed an application before the Hon'ble Settle....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Punjab and Haryana High Court challenging the validity of the provisions of the section 245D(2D) and 245HA vide writ petition No. 96(as applicable) of 2008 dt. 06/01/2008. 4.3 On 21.09.2012, the Hon'ble Punjab and Haryana High Court disposed of the bunch of writ petitions by following the ratio in the case of Star Television News Ltd. v. Union of India [2009] 317 ITR 66 (Bom.) as decided by the Hon'ble Bombay High Court. Later, the Hon'ble Settlement Commission passed an ex-parte order u/s 245D(4) on 28.02.2014 as the assessee did not represent before them. The assessee, being aggrieved by the ex-parte order passed by the Hon'ble Settlement Commission u/s 245D (4), filed a writ petition before the Hon'ble Punjab and Haryana High Court on 02/09/2014 which was disposed of on 24.04.2015 by the Hon'ble Court with a direction to the Settlement Commission to pass a fresh order after affording reasonable opportunity of being heard to the assessee, as the earlier order dt. 28/02/2014 was an ex-parte order passed without affording any opportunity to the assessee. 4.4 Thereafter, the Hon'ble Settlement Commission passed an order on 25.04.2016 under section ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessee. 5. That the Assessee being aggrieved by the order passed by the ITSC under section 245D(4), filed a writ petition before the Hon'ble High Court of Punjab and Haryana on the ground that No opportunity of being heard was given to the Assessee before passing the said order. 6. That AO submitted the reply affidavit to the Civil writ petition No. 17951 of 2014 and took the objection that the civil writ petition filed by the Assessee should be dismissed as the Assessee has not even made payment on the additional income declared before the settlement commission. 7. That the Hon'ble High Court of Punjab and Haryana vide order dated 24.04.2015 decided the writ petition directing to the ITSC to pass a fresh order after affording the reasonable opportunity of being heard to the Assessee. 8. That during the second round of hearing before the ITSC at Kolkotta, AO once again took the objection that application of the assessee filed by the Assessee should be dismissed as the Assessee has not even made payment of the additional income declared before the settlement commission. The ITSC issued intimation letter dated 25.04.2016 U/s 245HA(1) read ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lanation (b) appended to this section. It reads as under: "245HA. Abatement of proceeding before Settlement Commission. "(1) Where- (i) ......... ;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) ......... ; or (iv) ............ , the proceedings before the Settlement Commission shall abate on the specified date." "Explanation - For the purposes of this sub-section, "specified date" means - (a).......... (b) in respect of an application referred to in clause (ii), the 31st day of July, 2007; (c)..............; (d) .............. " 15. Section 245(HA)(4) r.w.s. 2nd proviso to section 153(4) provides the time limit to pass assessment order, on abatement of Settlement proceedings. Section 245(HA)(4) reads as under: "(4) For the purposes of the time-limit under sections 149, 153, 153B, 154, 155, 158BE and 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 assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on 31.07.2007, then there is no occasion for the ITSC to pass an order u/s 245D(4). This view gets further fortified on perusal of the intimation letter of the TTSC dated 25.04.2016 issued u/s 245HA(1) r. w.s. 245D(2D). 20. The case of the AO as discussed at paragraph 6.1 is that the order abating the proceedings was passed by the TTSC on 25.04.2016 and the same was received in the office of the Pr. CU, Patiala on 02.05.2016. Therefore, as per the provisions of section 153(4) read with proviso the assessment is to be completed within 60 days from receipt of order u/s 245C by the CTT. As stated above, the assessee in the present case is covered u/s 245HA(l)(ii) and therefore, the proceedings before the ITSC shall abate on the specified date as referred to in Explanation (b) i.e. 31st day of July, 2007. Once the proceedings before the TTSC are abated on 31st July, 2007, then, there cannot be any occasion for the TTSC to pass any order u/s 245D(4). Also the proceedings which have been abated once, i.e. on 31st day of July, 2007 cannot again abate on a later date i.e. on 25.04.2016 which is the case of AO. 21. Reliance is placed on the following decisions: a.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssing Officer as per mandatory requirement u/s.24SHA(4) r.w.s 2nd proviso of Section 153(4) but the order is not passed on or before 31.7.2008. 31.7.2008 31.7.2008 31.7.2008 31.7.2008 8. Date of filing first Writ (CWP no 96, 98, 396 of 2008) challenging the amendments made to section 245 D(2D). 06.01.2008 06.01.2008 06.01.2008 06.01.2008 9. Date of order of the Hon'ble High Court in first writ. 21.09.2012 No stay was granted by the Hon'ble High Court from framing abated assessment order on or before 31.07.2008. 21.09.2012 No stay was granted by the Hon'ble High Court from framing abated assessment order on or before 31.07.2008. 21.09.2012 No stay was granted by the Hon'ble High Court from framing abated assessment order on or before 31.07.2008. 21.09.2012 No stay was granted by the Hon'ble High Court from framing abated assessment order on or before 31.07.2008. 10. Date of order of ITSC u/s 245D(4) during the first round of hearing 28.02.2014 28.02.2014 28.02.2014 28.02.2014 11. Date of filing second Writ (CWP No. 17937 of 2014) challenging the order of FTSC u/s 245D(4) dated 28.02.2014 befo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....9. The Ld. DR argued that that the Settlement Commission has passed the orders on 28/02/2014 duly following the order of the High Court dt. 21/09/2012 against the Writ Petition No. 96/2008 filed by the assessee on 06/01/2008. It was an ex-parte order passed by the ITSC. Being an ex-parte order the assessee filed W.P before the Hon'ble High Court on 02/09/2014 for which the Hon'ble High Court has passed the judgment on 24/04/2015. Further owing to the order of the Hon'ble High Court dt. 24/04/2015 the ITSC has rejected the application of the assessee by a speaking order and intimation was sent to the Assessing Officer under section on 25/04/2016 and the same was received by the PCIT on 02/05/2016 and since the assessment was completed on 22/06/2014, the order passed was well within the due time allowed by the Act. 9.1 The Ld. DR further argued that the proceedings before the Settlement Commission were concluded only on 25/04/2016 against the application filed by the assessee on 15/03/1999 / 14/02/2001 (the dates of filing of applications before the ITSC mildly vary from assessee to assessee). Since the proceedings concluded on 25/04/2016 abating the proceedings, the A....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... income tax payable on the income disclosed in the application and to furnish proof of such payment to the Commission and the A.O. having jurisdiction, within fifteen days of such payment. If an assessee is unable to pay the additional amount of Income-tax for good and sufficient reasons, he may apply to the Commission for allowing payment of such income-tax in instalments and the Commission may extend the time for payment or grant suitable instalments subject to the assessee furnishing adequate security. In any case, if payment of the additional tax is delayed beyond 35 days of the date of receipt by the applicant, a copy of the order of the Commission allowing the application to be proceeded with, the assessee shall be required to pay interest on such delayed payment as prescribed under section 245D(2C). In case of default on the part of the applicant, the assessing officer may be directed by the Commission to recover the remaining unpaid amount together with interest payable thereon under sub-section 2(C) of section 245D of Income-tax Act, 1961, and with any penalty imposed in accordance with the provisions of section 245D(2D) and under Chapter XVII of the Income-tax Act, 1961. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of the receipt of communication from the Settlement Commission. (2C) Where a report of the Commissioner called for under sub-section (2B) has been furnished within the period specified therein, the Settlement Commission may, on the basis of the report and within a period of fifteen days of the receipt of the report, by an order in writing, declare the application in question as invalid, and shall send the copy of such order to the applicant and the Commissioner: Provided that an application shall not be declared invalid unless an opportunity has been given to the applicant of being heard: Provided further that where the Commissioner has not furnished the report within the aforesaid period, the Settlement Commission shall proceed further in the matter without the report of the Commissioner. (2D) Where an application was made under sub-section (1) of section 245C before the 1st day of June, 2007 and an order under the provisions of sub-section (1) of this section, as they stood immediately before their amendment by the Finance Act, 2007, allowing the application to have been proceeded with, has been passed before the 1st day of June, 2007, but an....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... not covered by the application, but referred to in the report of the Commissioner. (4A) The Settlement Commission shall pass an order under sub-section (4),- (i) in respect of an application referred to in sub-section (2A) or sub-section (2D), on or before the 31st day of March, 2008; (ii) in respect of an application made on or after the 1st day of June, 2007, within twelve months from the end of the month in which the application was made."; (iv) in sub-section (6A), for the words "fifteen per cent per annum", the words "one and one-fourth per cent for every month or part of a month" shall be substituted with effect from the 1st day of April, 2008. 13. At the outset it is to be mentioned here that the Assessee, pending the disposal of the application by the ITSC has filed writ petition on 06/01/2008 challenging the validity of the amendments of section 245D(2D) made by the Finance Act, 2007 before the Hon'ble High Court of Punjab and Haryana. The ITSC has already passed an order under section 245D(1) on 14/10/1999 (and 05/10/2001 as applicable) by issuing a notice requiring to explain as to why the application made by him be allowed to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is as under: Settlement Applications not disposed of by 31.3.2008 for reasons not attributable to the applicant cannot be treated as having abated S. 254 D (4A) was amended by the Finance Act 2007 to provide that if in respect of an application filed before 1.6.2007, the Settlement Commission did not pass a final order before 31.3.2008, the proceedings would abate. S. 245 HA (3) provided that the consequence of such abatement was that the income-tax authorities could, in making the assessment, use all the confidential material furnished by the assessee before the Settlement Commission. The said provisions were challenged as being ultra vires Article 14 of the Constitution. HELD, upholding the challenge: (i) Though Article 14 does not prohibit classification, the same has to be reasonable and not arbitrary. The FA 2007 created two classes of applicants - those whose applications were pending as of 1.6.2007 and those who filed thereafter. While the classification was not unreasonable, the choice of 31.3.2008 as the cut-off date was arbitrary & irrational. The question whether an application could be disposed of by 31.3.2008 depended on the fortuitous circumstance of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt, Hon'ble Court has held that though Article 14 doesn't prohibit classification the same has to be reasonable and non arbitrary and held that the choice of cutoff date of 31/03/2008 was arbitrary and irrational. So as to say that the amendments have been liberated to the extent of allowing the assessee's application to be dealt in accordance with the provisions as if the amended provisions are not applicable to the assessee as there was no fault or reasons attributable to the assessee in the instant case too. 15.4 It is to be mentioned that while Hon'ble High Court has taken the facts from CWP No. 18244 of 2007 and the decision was put on hold and the case was adjourned sine-die. This sine-die adjournment was necessitated as the Hon'ble High Court has explicitly mentioned in the order that the orders of Hon'ble Supreme Court in CWP No. 113 of 2008 titled as Prabhu Dayal v. UOI was being abated. Keeping in view the proceedings before the respectable higher judiciary the ITSC has rightly kept the proceedings in abeyance as the moot issue revolves around the validity of the amendments brought by the Finance Act, 2007 which goes to the root of the issue bef....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cated based on the law of land as enunciated by the Hon'ble Courts which allowed the plea of the assessee along with others to avail the right of being processed by the ITSC irrespective of the fact that the amendment brought by the way of Finance Act, 2007. There was no situation of abating the abated proceedings as the earlier proceedings were never abated but being waited for the judgment of the Hon'ble Courts and finalization of the issue of constitutional validity of the amendment in view of the writs pending before the Hon'ble Supreme Court as well as High Court of Punjab & Haryana and Hon'ble Bombay High Court. 17. The assessee having obtained himself by the Settlement Commission an order on 28/02/2014 and also represent themselves before the ITSC again for processing and disposal of application for the proceedings concluded on 25/04/2016 is estopped from making assertions or from going back on his word. The assessee has no doubt represented himself before the Hon'ble High Court on constitutional validity of the amendment and further approached the High Court for giving him another opportunity of being heard after the ITSC has passed its order once on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....5HA(1) r.w.s 245D(2D) of Income Tax Act,1961. Hence, we hold that the order of the Ld. CIT(A) cannot be sustained neither on the factual grounds nor on the legal grounds. 19. In the Cross Objection the has taken a plea that the notice under section 143(2) of the Income Tax Act,1961 was not issued. The provisions of Section 143(2) are as under: 143(2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer shall,- (i) where he has reason to believe that any claim of loss, exemption, deduction, allowance or relief made in the return is inadmissible, serve on the assessee a notice specifying particulars of such claim of loss, exemption, deduction, allowance or relief and require him, on a date to be specified therein to produce, or cause to be produced, any evidence or particulars specified therein or on which the assessee may rely, in support of such claim: Provided that no notice under this clause shall be served on the assessee on or after the 1st day of June, 2003; (ii) notwithstanding anything contained in clause (i), if he considers it necessary or expedient....