TaxTMI 
TaxTMI 
2026 (8) TMI 770
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....contrary to the express provisions of Section 254D(4) of the Act. As the issues involved in the connected writ petitions are intricately linked to the leading writ petition, the Court is conjointly dealing with all the three petitions in the present judgment. FACTS 2. The facts of the leading writ petition bearing Writ Tax No.77 of 2024 are delineated below:- a. A search and seizure was conducted on October 4, 2018 as per Section 132 at the premises of B.L. Agro Industries limited, a private limited company (hereinafter referred to as the 'petitioner') wherein some incriminating transactions were found between the petitioner and its three sister concern. b. Pursuant to the aforesaid search, a notice under Section 153A was issued for Assessment Year 2009-2010 to 2018-2019 and notice under Section 143(2) of the Act was issued for Assessment Year 2019-2020 being the search year. c. Petitioner sought to settle the above proceedings in accordance with the provisions of Chapter XIX-A of the Act but in the interregnum, the Income Tax Settlement Commission was abolished by Finance Act, 2021 with restrospective effect from February 1, 2021. Therefore, the st....
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....2 and June 15, 2022, respondent No. 3 sought extension of time for submission of the Rule 9 Report. j. The CBDT administratively transferred the petitioner's pending application vide order dated June 13, 2022 from IBS-III, Delhi to IBS-VII, Chennai. k. Thereafter, IBS-VII, Chennai proceeded with the hearing and passed the impugned order dated October 30, 2023 under Section 245D(4) rejecting the petitioner's settlement application. l. Aggrieved by the impugned order dated October 30, 2023, the petitioner preferred rectification applications dated November 16, 2023, December 4, 2023 and December 6, 2023 under Section 245D(6B), specifically raising the jurisdictional objection that the mandatory period prescribed under Section 245D(4A) had expired and that the impugned order was consequently barred by limitation, without jurisdiction and non est in law. m. IBS-VII, Chennai vide order dated December 15, 2023, dismissed the petitioner's rectification applications without adjudicating the jurisdictional objection founded upon the statutory bar of limitation, which is the subject matter of challenge in the present writ petition. CONTENTIO....
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....lication had already stood allotted to the Interim Board, had crossed the statutory stages contemplated under Sections 245D(1), 245D(2C) and 245D(2D), and had become ripe for further enquiry. Consequently, the proceedings before IBS-III, Delhi could not have attained the stage contemplated under Section 245D(3) unless the petitioner's pending application had already come within its exclusive jurisdiction. f. The invocation of Section 245D(3), therefore, necessarily postulates that the Interim Board had already assumed jurisdiction over the petitioner's pending application and was seized of the proceedings for its adjudication. The order to furnish the Rule 9 Report, is thus not the source of jurisdiction; rather, it constitutes that the petitioner's application had already stood allotted to IBS-Delhi and that the Board had assumed exclusive jurisdiction over the pending application. g. The proviso to Section 245D(1) of the Act engrafts a statutory fiction by providing that where no order is passed within the prescribed period, the application shall be deemed to have been allowed to be proceeded with. It is an admitted position that no order rejecting t....
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....ent transfer envisaged under section 245M(3) cannot be applied to dilute the same. m. Clause (iiia) of Section 245HA(1) is attracted only where a valid order under Section 245D(4) is passed within the period statutorily prescribed by Section 245D(4A). An order rendered beyond the mandatory period of limitation is without jurisdiction and non est in the eyes of law; such an order cannot constitute the foundation for attracting the consequences contemplated under Section 245HA(1)(iiia). n. It is a settled principle that there can be no estoppel against statute, nor can consent, acquiescence or participation confer jurisdiction where none exists. The issue raised by the petitioner pertains to the statutory bar of limitation and goes to the very root of the jurisdiction of the Interim Board. Such a pure question of law can neither be waived nor defeated on the principles of approbation and reprobation. The petitioner's bona fide participation in the settlement proceedings, with a view to resolving the dispute, cannot validate an order which is otherwise ex facie barred by limitation. o. To buttress the aforesaid arguments counsel has placed reliance on th....
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....assed by the Ld. IBS VII, Chennai on October 30, 2023, which is well within the due date as prescribed in section 245D(4A)(iii) of the Act. Hence, the contention of the petitioner that the order dated October 30, 23 is barred by limitation is misconceived. c. A perusal of Section 245HA makes it apparent that the case of the petitioner falls under the clause(iiia) of section 245HA(1) of the Act since the application of the petitioner has been rejected under section 245D(4) of the Act for not providing the terms of settlement. Thus, the plea of the petitioner that the settlement proceedings before the IBS became time barred under section 245D(4A)(iii) and (9)(iii) as well as Section 245M(2) of the Act and accordingly, the said proceedings also did not abate u/s 245HA of the Act has no significance and is completely baseless. d. The petitioner cannot be allowed to approbate and reprobate at the same time. On the one hand the petitioner itself has taken time for filing replies and willingly participated in the proceedings before the IBS and no objection regarding limitation was raised and once the decision of the IBS did not favour the petitioner it started raising th....
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....parties and perused the documents placed on record. 7. One may keep in mind the fact that the Income Tax Settlement Commission was constituted in 1976 by means of the Taxation Laws (Amendment) Act, 1975 (41 of 1975) with the aim and objective of settling the tax evasion issues by virtue of disclosure of undisclosed income by tax offender. The said amendment was brought as per the recommendation of the Direct Taxes Enquiry Committee popularly known as 'Wanchoo Committee'. The Settlement Commission was designed to be a robust settlement mechanism under Chapter XIX-A of the Act, which is titled as 'Settlement of Cases'. The Income Tax Settlement Commission was later on abolished by the Finance Act, 2021 and subsequently CBDT established the Interim Board for Settlement vide notification dated August 10, 2021 for deciding pending applications. 8. The learned counsel appearing on behalf of the petitioner vehemently contended that the order dated October 30, 2023 passed by IBS-VII, Chennai under Section 245D(4) and the consequential order thereto is passed beyond the statutory period of 18 months as prescribed under Section 245(D)(4A)(iii) of the Act. Hence, the order is barred by ....
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....missioner or Commissioner shall furnish the report within a period of ninety days of the receipt of communication from the Settlement Commission: Provided that where the Principal Commissioner or Commissioner does not furnish the report within the aforesaid period, the Settlement Commission may proceed to pass an order under sub-section (4) without such report. (4) After examination of the records and the report of the Principal Commissioner or Commissioner, if any, received under- (i) sub-section (2B) or sub-section (3), or (ii) the provisions of sub-section (1) as they stood immediately before their amendment by the Finance Act, 2007, and after giving an opportunity to the applicant and to the Principal Commissioner or 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 may, in accordance with the provisions of this Act, pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but re....
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.... 27- 5-2016 under section 245D(4) of the Act, determined the total income and computed the tax liability. Respondent No. 1 - assessee filed an application for rectification of the said order before the Settlement Commission which came to be rejected by order dated 11-8-2016. The respondent No. 1 - assessee challenged the aforesaid orders of Settlement Commission in RNS Infrastructure Ltd. (supra) which came to be allowed. Hence, this writ appeal by the Revenue. 5. Learned counsel Sri. K.V. Aravind appearing for the Revenue submitted that the writ Court committed an error in deciding the writ petition on merits sans issuing notice to the Settlement Commission, more particularly when statement of objections was filed by the appellants only to the interim prayer sought and the arguments were heard only on the interim prayer. The order of the learned Single Judge is in violation of principles of natural justice since no reasonable opportunity was provided to the appellants to address the arguments on the merits of the case. Inviting the attention of the Court to section 245D(4A) and 245HA(1)(iv) of the Act, it was submitted that limitation provided under section 245D(4) is dir....
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.... limitation period prescribed under Section 245D(4A) except when prevented due to reasons attributable to applicant otherwise the proceedings would be abated by operation of Section 245HA(1)(iv). Furthermore, it was observed that such limitation is mandatory not directory in nature. 14. The aforesaid judgment of the Division Bench went into appeal before the Supreme Court wherein the Supreme Court dismissed the S.L.P. 15. Learned counsel for the respondents have relied upon a judgment of Bombay High Court in Star Television News Ltd. (Supra) to buttress their arguments that 18 months period is not mandatory in nature and the same should be treated as directive only. 16. It is to be noted that the judgment of Bombay High Court as affirmed by the Supreme Court [2015] 57 taxmann.com 305 (SC): [2015] 231 Taxman 341 (SC): [2015] 373 ITR 528 (SC):[2015] 279 CTR 531 (SC) in the Star Television News Ltd. (Supra) was specifically with regard to the abatement of proceedings on account of reason attributable to the applicant and moreover this judgment was passed prior to the Finance Act, 2010, wherein there was no 18 months period prescribed in the Statute Books. Furthermore, the jud....
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.... to inform you that DG (Systems) has allocated the pending settlement applications to newly constituted Interim Boards for Settlement (IBsS) as per the e-Settlement Scheme,2021. As per allocation, the applications pending betore IBS as mentioned in column (2) of the table below have been allocated to IBS as mentioned in column (3) of the said table. Sr. No. (1) Transferor IBS (2) Transferee IBS (3) 1 ... ... 2 ... ... 3 IBS-III, Delhi IBS-VII Chennai I am further directed to state that procedure as mentioned in e-Settlement Scheme, 2021 may be followed." 20. Upon perusal of Section 245D(4A)(iii) of the Act and the e-Settlement Scheme, 2021, it is palpable that the Settlement Commission shall pass an order under sub-section (4A) of Section 245D in respect of the application made on or after 1st June 2010 within 18 months from the end of the month in which the application was made. The application was made on March 23, 2021 which was subsequently allotted to IBSIII, Delhi via e-Settlement scheme, 2021 on November 1, 2021, the respondent ought to have passed the order on or before May 30, 2023. Arguendo, even if the date of allotment is ....
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....39;ble High Court of Allahabad and allotted to the Hon'ble IBS, Delhi Bench vide Gazette Notification dated 01.11.2021 which was later on transferred and allotted to Learned IBS-VII Chennai vide CBDT letter dated 13.06.2022. Thus, considering the provisions of section 245D(9) (iii) and 245M(2) of the Act introduced w.e.f. 01.02.2021 it is evident that the proceedings carried out in the case of the petitioner are well within the time limit as prescribed in the Income Tax Act. Thus, neither settlement proceedings nor assessment proceedings were time barred in the case of the petitioner. Also, the petitioner has contended that the CBDT order dated 13.06.2022 speaks of only transfer of cases and not allotment to IBS as per Gazette notification dated 01.11.2021." (Emphasis added) 25. We agree with the argument of the petitioner that any interpretation suggesting that the petitioner's application was first received by an Interim Board, that is, only upon the administrative transfer dated June 13, 2022 would render the entire proceedings undertaken by the IBS-III, Delhi under Section 245D(3) wholly without jurisdiction and would render the time bound manner of settlement of case....