TaxTMI 
TaxTMI 
2026 (9) TMI 1556
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....hodiwal, Adv. Mr. Yug Singh, Adv. Mr. Utsav Verma, Adv. For the Respondent : Mr. Bharat Vyas, Senior Advocate, ASG Mr. Siddharth Bapna, Adv. Mr. Devesh Yadav, Adv. ORDER PER : ARUN MONGA, J.: 1. This batch of writ petitions raises a common question of law on a common set of facts. All the petitioners were covered by a single search under Section 132 of the Income Tax Act, 1961 ("the Act"). All of them filed settlement applications before the Interim Board for Settlement on 28.09.2021. All of those applications were rejected by a common order dated 31.08.2023. The petitions were therefore heard together and are being disposed of by this common order. 2. The reliefs claimed in each petition are substantially identical. Stripped of repetition, the petitioners seek three things. First, quashing of the order dated 31.08.2023 by which the Interim Board for Settlement rejected their settlement applications. Second, quashing of the eligibility condition contained in the Press Release dated 07.09.2021 and in paragraph 4(i) of the Order dated 28.09.2021, and of Section 245C(5) of the Act as ultra vires. Third, quashing of the consequential notices dated 12.09.2024 issued under....
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....t received the assent of the President on 28.03.2021 and was notified with effect from 01.04.2021. The proviso inserted in Section 245B provided that the Settlement Commission shall cease to operate on or after 01.02.2021. Sub-section (5) inserted in Section 245C provided that no application shall be made under that section on or after 01.02.2021. Both provisions therefore operated from a date roughly two months before the statute itself came into existence. 4.3 By Notification dated 10.08.2021, the Central Government constituted the Interim Board for Settlement under Section 245A of the Act. Thereafter the Central Board of Direct Taxes issued a Press Release dated 07.09.2021 and an Order dated 28.09.2021 bearing F. No. 299/22/2021-Dir(Inv.III)/174. By that Order, made in exercise of power under Section 119(2)(b) of the Act, the last date for filing a settlement application before the Interim Board was extended to 30.09.2021. Paragraph 4(i) of the Order, however, confined the benefit of that extension to assessees who were eligible to file a settlement application as on 31.01.2021. 4.4 Acting on that extension, the petitioners filed their settlement applications before the In....
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....introduces a requirement that is unknown to the Act. 5.3 It is further contended that the statutory requirement under Section 245C is only that assessment proceedings should be pending on the date of filing the settlement application. The impugned Press Release introduces an additional condition requiring eligibility as on 31.01.2021, which is neither contemplated by nor traceable to the provisions of the Act. 5.4 Learned counsel further submits that the Interim Board for settlement has been constituted only to discharge the functions earlier exercised by the Settlement Commission. Therefore, the Central Government could not have artificially restricted the jurisdiction of the Interim Board by executive instructions contrary to Section 245C of the Act. 5.5 It was further submitted that an order under Section 119(2)(b) is an instrument of relief. It may soften the rigour of a provision. It cannot create a fresh disqualification. Reliance was placed on UCO Bank v. Commissioner of Income Tax [(1999) 237 ITR 889 (SC)] Bengal Iron Corporation v. Commercial Tax Officer [1994 Supp (1) SCC 310], Padinjarekara Agencies Ltd. v. State of Kerala [(2008) 3 SCC 59] and Commissioner of C....
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....sh [(2013) 8 SCC 368]. 6.1 On merits, it was submitted that the right to approach the Settlement Commission is not a vested right but a concession, that a concession may be withdrawn in public interest, and that the right to apply arose only if a proceeding was pending as on the cut off date. The extension of the last date to 30.09.2021 was itself a further concession, and the Central Board of Direct Taxes was entitled to attach to it the condition that the applicant's right must already have crystallised. 6.2 It was submitted that mere hardship is not a ground to strike down a valid provision, for which reliance was placed on Prashanti Medical Services and Research Foundation v. Union of India [(2020) 14 SCC 785] It was further submitted that the Court cannot direct the legislature or the executive to amend the Press Release or the Order, for which reliance was placed on State of Himachal Pradesh v. Satpal Saini [(2017) 11 SCC 42] 6.3 It was also submitted that the challenge to the notices dated 12.09.2024 is premature, since a notice under Section 142(1) is only a step towards assessment and the Act contains a complete machinery of appeal against any determination th....
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....t, 2021, adds an outer limit to the date of application. It does not add a date of eligibility. 10. The date on which an assessee becomes eligible and the date on which he applies are two distinct things. The Act legislates on the second. It is silent on the first. That silence is not an accident to be filled in by executive instruction. 11. The Order dated 28.09.2021 was issued under Section 119(2)(b) of the Act. That power exists to avoid genuine hardship. It is a power to relax, not a power to legislate. The Central Board of Direct Taxes was undoubtedly competent to extend the last date for filing an application to 30.09.2021. It was not competent, in the same breath, to introduce a condition of prior eligibility as on 31.01.2021, because no such concept is found anywhere in Chapter XIX-A. 12. The vice is not merely one of excess of power. It is one of internal contradiction. The extension of time to 30.09.2021 was granted for the express purpose of relieving hardship caused by the retrospective bar. The class most obviously in need of that relief was the class of assessees whose statutory notices had not yet issued when the bar fell. Paragraph 4(i) withdraws the benefi....
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....The petitioners filed a single combined settlement application on 28.09.2021 covering all those years. The Interim Board settled some of those years and rejected others. 18. The only feature distinguishing the settled years from the rejected years is the date on which the Assessing Officer chose to issue notice. That is a circumstance internal to the Department. It has nothing to do with the assessee, with the nature of the disclosure, with the quantum of undisclosed income, or with the object of Chapter XIX-A. A classification founded upon the administrative convenience of one party, applied to the detriment of the other, has no intelligible differentia. It bears no rational nexus with the object of the Finance Act, 2021, which was to wind up pending settlement work through an Interim Board. Article 14 is not satisfied. 19. There is yet another aspect of the matter i.e. retrospective operation cannot undo what was validly done. The Finance Act, 2021 received assent on 28.03.2021 and was notified on 01.04.2021. Section 245C(5) purported to bar applications from 01.02.2021. For roughly two months, therefore, assessees acted under a law that permitted them to apply, and the bar....
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....ssioner of Income Tax - [(2024) 161 Taxmann.com 166 (Bombay)] held as follows in a writ petition that was filed challenging the provisions of the said CBDT order, to the extent it laid down an additional condition that the assessee should satisfy the eligibility requirements as on 31.01.2021, as ultra vires its power under Section 119(2)(b) of the I.T. Act; "24. As regards the notification dated 28thSeptember 2021 issued by the CBDT under Section 119(2)(b) of the Act, the date for making application has been extended by the said notification to 30thSeptember 2021, which is clearly within the scope of the powers of the CBDT under Section 119 of the Act. Section 119 of the Act provides that the Board may from time to time, issue such orders, instructions and directions to other Income Tax Authorities as it may be deemed fit for proper administration of this Act. The provisions of the section have been interpreted by the Hon'ble Apex Court in UCO Bank (supra) to mean that the Board is entitled to tone down the rigours of law by issuing circulars under Section 119 of the Act and such circulars would be binding on Income Tax Authorities. A circular, however, cannot impose o....
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....me limit for filing an application while, simultaneously, denying the benefit of such extension to a class of assessees. The said clause in the CBDT order has to be seen as invalid, and bad in law, as declared by the Bombay High Court in the decision referred above." 22. We are in respectful agreement with what has already been opined and held by both the High Courts, as above, Kerala as well as Bombay. The distinction is not academic. It is decisive on these facts. The notice for Assessment Year 2020-21 in the lead matter issued on 20.06.2021, which is after 31.03.2021. Reading the cut off down to 31.03.2021 and no further would not assist these petitioners at all. Relief in this batch is available only on the reasoning of the second strand, namely, that what matters is whether the assessee held a live and unadjudicated notice, and hence a pending case, on the date on which he applied. On 28.09.2021 each petitioner held such a notice. Each petitioner therefore had a pending case. Each application was accordingly required to be considered on merits. 23. The two strands are not in conflict. They rest on the same principle, namely, that the Act fixes a last date for applying an....