TaxTMI 
TaxTMI 
2020 (5) TMI 656
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....isclosed by the 2nd respondent can be examined at a later stage. Accordingly, the petitioner was directed to submit a report under Rule 9 of the Income Tax Settlement Commission (Procedure) Rule for further action within 45 days from the receipt of the order. The Secretary, Income Tax Settlement was required to take necessary action in this regard. 4. The impugned order was received by the petitioner on 05.07.2012. It appears that the present Writ Petition was prepared as early as September 2012, as it evident from the date mentioned in the affidavit and in the index to typed set of papers. 5. However, the Writ Petition was filed on 18.12.2012 and an exparte interim order was obtained staying all further proceedings on 20.12.2012 before the 1st respondent Settlement Commission. 6. Though the order was obtained on 20.12.2012, it appears that the petitioner had failed to communicate the content of exparte stay order to the 1st respondent Settlement Commission and therefore, the case was taken up for hearing on 24.12.2012 by the 1st respondent Settlement Commission. According to the 2nd respondent, the 1st respondent Settlement Commission had also passed order on 24.12.201....
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.....R.C.Auto Centre (SI), Coimbatore - for the AY(s):08-09; 10/11; 11/12 & 12/13 - grant of Interim stay by the Hon'ble High Court of Madras --- reg. A copy of the order dtd: 20-12-2012 (under MP No: 1 of 2012 in W.P.No.34365 of 2012) by the Hon'ble High Court of Madras granting 'Interim stay' in the case of CIT-I, Coimbatore Vs. ITSC, Additional Bench, Chennai & M/s.R.C.Auto Centre (SI), Coimbatore, is enclosed. This office is given to understand that the Hon'ble Settlement Commission (ITSC) has passed the order on 24.12.2012, which is after the "interim stay". This is being intimated to you for taking action, as deemed fit. (D.B.Manival Raju), Commissioner of Income - tax, Coimbatore. Copy with the order of the Hon'ble High Court of Madras, to the: i. Secretary, Income Tax Settlement Commission, No:640, Anna Salai, Nandanam, Chennai - 600 028. ii. file - copy. 11. Thus, there are indications that the case was indeed settled by the 1st respondent Settlement Commission and the case was settled on 24.12.2012. However, there is no order of the 1st respondent Settlement Commission. Therefore, I shall examine....
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.... to the Commission only during the pendency of the proceedings before the Assessing Officer. It is further clarified that (a) since intimation u/s. 143(1) is not an assessment order there will be no bar in filing an application for settlement subsequent to receipt of an intimation u/s. 143(1). It is not material whether time-limit for issue of notice u/s. 143(2) has expired or not; (b) the assessment shall be deemed to have been completed only on the date of assessment order to the applicant. viii.The 1st respondent Settlement Commission considered decisions cited by the petitioner and ultimately concluded that when Returns of Income Tax were filed by the 2nd respondent (applicant) as accepted under Section 143(1) of the Act and no notice was issued under Section 143(2) of the Act, the 2nd respondent (applicant) could file Settlement Application even after the time limit for passing the regular assessment order under Section 143(3) of the Act as no assessment has been made in this case as per Clause (iv) of Section 245A of the Act. 13. While passing the impugned order, the 1st respondent Settlement Commission has also extracted a portion of report date....
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....Income Tax Authorities but however after 2007 the position was different. 20. Even though the impugned order was passed on 20.06.2012 and was received by the petitioner's office on 05.07.2012 the petitioner did not take any steps to challenge the same before this court till 18.12.2012. 21. The writ petition was filed on 18.12.2012 despite the fact that the petitioner was required to submit a report under Rule 9 of Income Tax Settlement Commission (Procedure) within a period of forty five days from date of receipt of the impugned order. 22.To this effect, there were inter-departmental deliberations and exchange of communications in the form of report of the Income Tax Officer on 27.07.2012; report of the Joint Commissioner of Income Tax on 7.08.2012 and a report of the petitioner under section 245D (2C) of the Income Tax Act, 1961. 23. Thus, having acquiesced to the impugned order, the petitioner has filed the present writ petition on 18.12.2012. Having acquiesced into the proceedings before the 1st respondent Settlement Commission, it was not open for the petitioner to challenge the impugned order. 24. It further appears that the writ petition appears to have been ma....
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....n to have the case settled and any such application shall be disposed of in the manner hereinafter provided: Provided that no such application shall be made unless,- (i) in a case where proceedings for assessment or reassessment for any of the assessment years referred to in clause (b) of sub-section (1) of section 153A or clause (b) of sub-section (1) of section 153B in case of a person referred to in section 153A or section 153C have been initiated, the additional amount of income-tax payable on the income disclosed in the application exceeds fifty lakh rupees, (ia) in a case where- (A) the applicant is related to the person referred to in clause (i) who has filed an application (hereafter in this sub-section referred to as "specified person"); and (B) the proceedings for assessment or re-assessment for any of the assessment years referred to in clause (b) of sub-section (1) of section 153A or clause (b) of sub-section (1) of section 153B in case of the applicant, being a person referred to in section 153A or section 153C have been initiated, the additional amount of income-tax payable on the income disclosed in the application exceeds....
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....of that person; (b) a person shall be deemed to have a substantial interest in a business or profession, if- (A) in a case where the business or profession is carried on by a company, such person is, on the date of search, the beneficial owner of shares (not being shares entitled to a fixed rate of dividend, whether with or without a right to participate in profits) carrying not less than twenty per cent of the voting power; and (B) in any other case, such person is, on the date of search, beneficially entitled to not less than twenty per cent of the profits of such business or profession. 31. The expression "case" is used in Seciton 245C of the Income Tax Act, 1961. This expression is defined in Section 245A(b). It read differently when the application was filed on 27.4.2012 by the 2nd respondent before the 1st Respondent. This definiton now reads differntly. Both the definitions are reproduced below:- Table :1 Section 245A(b) during 2012 As it reads now and at the time of the application (b) "case" means any proceeding for assessment under this Act, of any person in respect of any assessment year or assessment years which may be pen....
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....ch a notice under section 148 has not been issued, but such notice could have been issued on such date, if the return of income for the other assessment year or assessment years has been furnished under section 139 or in response to a notice under section 142; (ii) [***] (iii) a proceeding for making fresh assessment in pursuance of an order under section 254 or section 263 or section 264, setting aside or cancelling an assessment shall be deemed to have commenced from the date on which such order, setting aside or cancelling an assessment was passed; iiia) a proceeding for assessment or reassessment for any of the assessment years, referred to in clause (b) of sub-section (1) of section 153A in case of a person referred to in section 153A or section 153C, shall be deemed to have commenced on the date of issue of notice initiating such proceeding and concluded on the date on which the assessment is made; (iv) a proceeding for assessment for any assessment year, other than the proceedings of assessment or reassessment referred to in clause (i) or clause (iii) or clause (iiia), shall be deemed to have commenced from the date on which the return of income for that assessme....
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....ial whether in time limit for issue of notice under section 143(2) has expired or not; (b) the assessment shall be deemed to have been completed only on the date of service of assessment order to the applicant. "61.2 Under the existing provisions, an assessee may make an application to the Commission at any stage of the proceedings in his case pending before any Incometax Authorities. After 31st May, 2007, an assessee can make an application to the Commission only during the pendency of the proceedings before the Assessing Officer. It is further clarified that (a) since intimation under section 143(1) is not an assessment order, there will be no bar in filing an application for settlement subsequent to receipt of an intimation under section 143(1). It is not material whether time-limit for issue of notice under section 143(2) has expired or not; (b) the assessment shall be deemed to have been completed on the date on which the assessment order is passed." 36. As per Circular No.3 of 2008 dated 12.03.2008 assessment shall be deemed to have been completed on the date of service of assessment order to the applicant. 37. However, as per Circular No.16/2014 [F.No.142/14/2007....
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....re the assessing officer in terms of clause (b) of section 245 A of the Act because such a case was not taken in scrutiny and was accepted under section 143 (1) of the Income Tax Act, 1961 without passing any order of assessment. 44. The Gujarat High Court further interpreted the decision of the Special Bench of the Settlement Commission in Rescuwear referred to supra . 45. The Gujarat High Court in Commissioner of Income Tax Vs. Income Tax Settlement Commission, [2013] 59 CTR 329 followed the reasoning of the single judge of the Calcutta High Court in the case of Director of IT (International Taxation) Vs. Income Tax Settlement Commissioner and others, [2012] 1 CAL LT 309 : 2011 SCC OnLine Cal 5547, passed on 1.8.2011 which in turn followed the decision of the Gujarat High Court in Ram Bhai Jethbhai Patel Vs. CIT, [1997] 108 ITR 771 Gujarat. 46. The Court in Ram Bhai Jethbhai Patel Vs. CIT, [1997] 108 ITR 771 Gujarat held that "It is difficult to accept the submission that Explanation (iv)Section 245 A (b) is to be construed to provide that for assessment could only conclude with the passing of an assessment order of assessment and no order of assessment was made, such pr....
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.... years and nine months from the end of the relevant assessment year, within which period an assessment could be made under section 147 after issuing a notice under section 148. 35. Construed literally, Explanation (iv) to section 245A(b) would give rise to absurdity, for proceedings would be deemed to continue eternally, if no order of assessment were made and no notice under section 148 were issued. The interpretation suggested by Dr. Pal that proceedings would be deemed to continue for a period of six years and nine months from the end of the relevant Assessment Year, within which period as assessment might be done under section 147, upon notice under section 148 would also involve some modification of the literal meaning of the Explanation iv to section 245A(b). 36. There can be no dispute with the proposition that where a strict and literal interpretation produces an absurd and unjust result, which could never have been the intention of the legislature, the Court might modify the language used by the legislature or do some violence to it so as to achieve the obvious intention of the legislature and produce a rational construction. 37. As held in K.P. ....
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....terpretation, thwart it, by holding that in case a notice is issued; the assessee had to file a return, which will be considered a fresh return, in which case a fresh period has to be reckoned". 51. The court held that "it is inconceivable as to how proceeding could have been deemed to continue indefinitely, in cases where no assessment order is made under section 143/144. 52. It further observed that Explanation (iv) to Section 245A(b) cannot be construed so literally so as to leave the "proceedings" in limbo for an eternity. The rule prescribed in s. 153(1) must be given effect to despite Explanation. (iv). 53. It is clarified that Explanation. (iv) merely casts the deeming provision in respect of assessments which can still be validly made. Where by application of Section 153, an assessment order can no longer be made, the proceeding, for purposes of Section 245A, would have to be construed as terminated. 54. The court also held that after the expiry of the period for completion of assessment under section 153 of the Income Tax Act, 1961 an assessment order can no longer be made. 55. The ratio of the Calcutta High Court in Director of IT (International Taxation) r....
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....the aforesaid section. 58. Thus, the ratio of the Calcutta High Court though correct, is not applicable to the fact of the present case. It was not applicable to the facts of the two cases of the Gujarat and Delhi High Court. 59. The Calcutta High Court was not concerned with the situation where the returns were filed but no assessment orders were passed like in the present case. The Calcutta High Court was concerned with situation where the assessee had not filed returns in time and therefore a notice under Section 148 of the Income Tax Act, 1961 was issued. 60. Therefore, the Court concluded that though proceeding commenced with the filing of return for the purpose of 147 of the Income Act1961, yet no case was pending for the purpose of Section 245A of the Income Tax Act, 1961. 61. The last date for completing the assessment for these 3 assessment years expired only on 31.12.2012; 31.12.2013 and on 31.12.2014 for Assessment Years 2010-11, 2011-12 and 2012-13 respectively. 62. In the present case, when the application was filed on 27.4.2012 to settle the case under chapter XIX A of the Income Tax Act, 1961, case was pending. 63. Since the time for completion of a....