TaxTMI 
TaxTMI 
2024 (7) TMI 507
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..... KARIA) 1. Heard learned advocate Mr. Dhinal Shah, learned advocate Ms. Vaibhavi K. Parikh, learned advocate Mr. Jimi Patel for learned advocate Mr. Darshan Gandhi for the petitioners and learned Senior Standing Counsels Mr. Varun K.Patel and Mr. Karan Sanghani for the respondents. 2. Rule returnable forthwith. Learned advocates for the respective parties waive service of notice of rule for the respective respondents. 3. Having regard to the controversy in narrow compass, with the consent of learned advocates for the respective parties, these petitions are taken up for hearing. 4. As the issue arising in these petitions is similar, the same were heard analogously and are being disposed of by this common Judgment. 5. In all these petitions the petitioners have prayed for quashing and setting aside notice under Section 148 of the Income Tax Act, 1961 (for short 'the Act') and the order under Section 245D (4) of the Act passed by the Interim Board of Settlement. 6. The brief facts of the each petitions are as under: SCA No. A.Y. Date of Notice u/s 148/153A Date of Order u/s 245D (4) Date of filing of application for settlement 21052/2023 2016-17....
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....b-section (5) of section 245C of the Act for filing such application, and before 30.09.2021 and treat such applications as valid and process them as "pending applications" as defined in clause (eb) of section 245A of the Act. 4. The above relaxation is available to the applications filed:- (i) by the assesses who were eligible to file application for settlement on 31.01.2021 for the assessment years for which the application is sought to be filed (relevant assessment years); and (ii) where the relevant assessment proceedings of the assessee are pending as on the date of filing the application for settlement..." 10. It was submitted that the respondents have misinterpreted above Notification to hold that the petitioner must be eligible to file application for settlement on 31.01.2021 for the relevant Assessment Years as per Section 245A (b) read with Section 245C (1) of the Act which reads as under: "Section 245A (b) of the Income Tax Act contains the definition of case to mean any proceedings for assessment under this Act, of any person in respect of any assessment year or assessment years which may be pending before the Assessing Officer on t....
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.... in clause (b) of sub- section (1) of section 153A or clause (b) of sub-section (1) of section 1538 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 ten lakh rupees,] (ii) in any other case, the additional amount of income-tax payable on the income disclosed In the application exceeds ten lakh rupees, and such tax and the interest thereon, which would have been paid under the provisions of this Act had the income disclosed in the application been declared in the return of income before the Assessing Officer on the date of application, has been paid on or before the date of making the application and the proof of such payment is attached with the application." 11. Referring to the above provisions it was submitted that the respondent Board could not have passed the following order challenged in case of Special Civil Application No. 21052 of 2023 and similar reasoning is adopted in all the matters: "Thus, it is apparent from the reading of the relevant sections as per the Income Tax Act, that for the applicant t....
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....ion by the Interim Board, if otherwise in order eligible to be dealt with and in accordance with law on merits and in accordance with the scheme that may be framed by the Central Government as in respect of other cases which arose prior to 31.01.2021. 13. On the other hand, learned advocates for the respondent submitted that the orders passed by the Hon'ble Madras High Court in case of Jain Metal Rolling Mills (Supra) is challenged by the respondents before the Hon'ble Supreme Court and the matter is pending. 14. Learned advocates for the respondents referred to and relied upon the decision of the Hon'ble Bombay High Court in case of EBR Enterprises and Another Vs. Union of India reported in (2019) 107 taxmann.com 220 (Bombay) to submit that in the facts of the said case arising under Section 80-(IB)(10) of the Act, the legislature granted deduction in relation to income arising out of the development of housing projects to the assessee, fulfilling the conditions contained therein as inserted by Finance(No. 2) Act, 2009 with retrospective effect from 01.04.2003, Section 80A of the Act which was also contained in Chapter VI A of the Act pertains to the deduction to be made in ....
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....ns Vs. Income Tax Settlement Commission reported in [1993] 202 ITR 81 (Madras), wherein it is held that amendment of Section 245C by the Amendment Act with effect from 01.10.1984 was purely procedural and would govern the application filed on 09.08.1989 and the application was rejected on the ground that it did not contain the particulars required by the Section 245C of the Act and was not entertained. It was therefore submitted that, if the application is filed without taking the procedural changes in the provisions of the Section 245C of the Act, which is held to be purely a machinery Section without providing certain particulars as prescribed in Form 34B, application was not entertained by the Settlement Commission. 18. Reliance was also placed on the decision of the Madras High Court in case of Pitchai Rajagopal Shiva Kumar Vs. Union of India reported in [2022] 442 ITR 33 (Madras), wherein the petitioner gave up the challenge to the Constitutional validity in view of the directions to the respondents to send applications to the constitution consideration by the Interim Board, if submitted before 30.09.2021 and consideration of the application by the Interim Board would be ta....
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....e and such application to be disposed of by the Settlement Commission in accordance with provisions of the Act. 21. Section 245A (b) of the Act defines the word 'case' to mean any proceedings for the assessment under the Act of the any person in respect of any Assessment Year or Assessment Years, which may be pending before the Assessing Officer on the date on which application is made under Section 245C (1) of the Act. The proceedings of assessment or reassessment of any Assessment Year therefore would commence from the date of issuance of the notice initiating such proceedings and concluded on the date on which the assessment is made. Therefore in the facts of the petitioners, proceedings for relevant Assessment Years would fall within meaning of the 'case' when the notice under Section 148 or 153 is issued and as the petitioner has made an application as per Section 245C (1) of the Act on issuance of the notice, prior to 31.03.2021, there was no prohibition on the petitioner to make such application as the Finance Bill, 2021 did not have the force of law and was merely a bill which may or may not be enacted or which may be enacted in different form and till the Finance Bill b....
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....aid Order reads thus:- "4. The above relaxation is available to the applications filed:- (i) by the assessees who were eligible to file application for settlement on 31.01.2021 for the assessment years for which the application is sought to be filed (relevant assessment years); and (ii) where the relevant assessment proceedings of the assessee are pending as on the date of filing of the application for settlement." 7. As a matter of fact, immediately after the introduction of the Bill before the Parliament, fresh applications were not accepted before the ITSC as such, several petitioners had approached the Courts of law and upon directions of Court their applications were received and are pending. After the extension of time upto 30.09.2021, in some cases, the applications were rejected on the ground that the Orders/Notices of re-opening etc., were issued on or after 01.02.2021, by considering the eligibility clause as contained in the circular dated 28.09.2021. Hence, the aggrieved petitioners are before this Court, broadly with the above prayers challenging the Constitutional Validity of the provisions of the Finance Act, 2021, as also challeng....
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....e any new burden on him. 36. In that conspectus, with the Finance Act, 2021, in the background as such, it can be seen that by virtue of proviso to Section 245B, the ITSC is made inoperative with effect from 01.02.2021. Similarly, the Section 245C (5) also plays an embargo that no application shall be made under the section on or after 01.02.2021. The proviso to Section 245D (2C) deems that if no order is passed as on 31.01.2021 under the section, the application is deemed to be valid. The powers of the ITSC under Sections 245DD, 245F, 245G, 245H are all specifically entrusted to be exercised by the Interim Board with effect from 01.02.2021. Further, Sections 245D(9), stipulates that from 01.02.2021, the provisions of Sub-Sections (1)(2)(2B), (2C), (3), (4), (4A), (5), (6) and (6B) shall apply to pending applications allotted to Interim Board with the modifications mentioned therein. In this background, the circular can only grant administrative relief to the assessees. Therefore, considering the fact that the Finance Act, 2021 was retrospective in nature. Those who have had a right to approach ITSC i.e., those who had a case pending against them would have missed the bus ....
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....tutory right to approach the ITSC. Like any other appellate or revisional remedy which is a creature of statute, to right to seek resolution through ITSC was also conferred by the statute. Of course, it is well within the policy realm of the State to take away the remedy. It is not for this Court to substitute its opinion as to the abolition of the ITSC and taking away the procedure of resolution of the disputes through ITSC under Chapter XIX-A. The State had every right to abolish the ITSC. Therefore, the Parliament had every right to enact impugned enactment. While being so, in appropriate cases, the right to enact a law with retrospective operation is also well recognized. In the instant case, on a perusal of the impugned legislation, it was given retrospective effect with effect from 01.02.2021 on the premise that it is on the said date, that the Bill was introduced by the Parliament, by which, all the assessees and the general public concerned are made to know about the policy decision in the making by which the State proposed to make the ITSC inoperative. The period of retrospectivity is also only two months as it can be seen that the Act itself was notified on 01.04.2021. It....
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....nt of the relevant provision. 39. As a matter of fact, the applications are either made by the petitioners or on direction by the orders of the Court as the ITSC was in the statute book in the interregnum period before the retrospective legislation came into force. Therefore, the retrospectivity also makes these directions of Court and the consequential applications being filed before the ITSC nugatory. Therefore, the ratio in Tushar Ranjan Mohanty quoted supra applies in all force. 40. At the material time, i.e., during the interregnum period of 01.02.2021 upto 31.03.2021, the petitioners had a "case" within the definition of Section 245A (b). Their applications were very much pending applications as per the definition of 245A(eb). As a matter of fact, their applications were dealt with as per Section 245D and on a perusal of Section 245M, it can be seen that these applications were also to be transferred to the Interim Board to be dealt with in accordance with the procedure laid down to the board. But, however, without amending the definition of case pending applications etc., Section 245C (5) simply provides that no application shall be made under the Section o....
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....rative right from the date of the introduction of the Bill and to send all the pending applications to the Interim Board. Therefore, fixing the last date for filing the applications alone travels beyond the purpose and results in more retrospectivity than which is needed and thus, runs counter to the other parts of the Act. As a matter of fact, as per the principle of lex prospicit non respicit (law looks forward not back) it can be seen that the purport of the legislation is only to do away with the policy of resolution through ITSC. As a matter of fact, the Central Government has to make a Scheme for the purposes of Settlement in respect of pending applications by the Interim Board as per Section 245D (11) and such scheme had to be placed before the Parliament. Thus, neither there is any intent nor it is within the purpose to do away with the 'pending applications' in respect of matters in which the 'cases' arose from 01.02.2021 to 31.03.2021. Thus, we find that it is just and necessary to read down the last date mentioned for filing applications in Section 245C (5) as 31.03.2021 and consequently the last date mentioned in paragraph No. 4(i) of the Circular should also read as 31....
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....s High Court and more particularly when the petitioners have filed their applications before 31.03.12021, the date on which amendment Finance Act, 2021 did not come into effect and therefore the petitioners had vested right of preferring the application in absence of any statute prohibiting the same application. It is also pertinent to note that the CBDT has extended the last date from 01.02.2021 to 30.09.2021 for filing applications for settlement eligible on 31.01.2021 and the CBDT could not have prescribed the eligible date of filing of application up to 01.02.2021 for the assessee relying upon provisions of Section 245C (5) of the Act which was not in existence up to 31.03.2021 and therefore the application for settlement made by the petitioners are valid applications filed prior to 31.03.2021 in absence of provisions of Section 245C (5) of the Act. Therefore an application already filed after 01.02.2021 but before 31.03.2021 cannot be declared invalid and provision of section 245C (5) has rightly been read down that no application shall be made after 01.04.2021 once the provision of Section 245C (5) received the assent of the Hon'ble President of India on 01.04.2021, however b....