1995 (1) TMI 308 - Commission - Income Tax

Summary

Issues Involved:
1. Whether the proceedings for assessment of any person in respect of any year can be said to be 'pending' before the Commissioner of Income-tax (Appeals) after the Commissioner of Income-tax (Appeals) has passed the appellate order until the said order is 'served' on that person.

Issue-wise Detailed Analysis:

1. Definition of 'Pending' Proceedings:
The primary issue was whether the proceedings for assessment remain 'pending' before the Commissioner of Income-tax (Appeals) after the appellate order is passed but before it is served on the assessee. The Special Bench was constituted to reconsider this issue, which had previously been addressed in the case of Super Rubber Industries, New Delhi.

Arguments by Counsel for Applicants:
(a) The proceeding by way of appeal concludes only upon the communication of the appellate order to the assessee.
(b) Section 250(7) of the Income-tax Act, which mandates the communication of the appellate order, signifies the completion of the appeal proceeding.
(c) The right to make an application to the Settlement Commission under section 245C(1) remains until the appellate order is communicated.
(d) The appellate order is not effective until communicated, thereby preserving the applicant's right to approach the Settlement Commission.
(e) The communication of the appellate order is essential for determining the rights and duties of the assessee and the Department.
(f) Reliance was placed on the Calcutta High Court decision in CIT v. Mahabir Prasad Poddar, which held that an order is not effective until served on the affected party.

Arguments by Commissioner of Income-tax (Departmental Representative):
(a) The reliance on CIT v. Mahabir Prasad Poddar is inappropriate as it dealt with an administrative order, not a quasi-judicial order.
(b) The Supreme Court in State of Punjab v. Khemi Ram held that an order becomes effective once it is put in the course of transmission.
(c) The term 'pending' should be interpreted to mean that the proceeding remains pending until the appellate authority passes the order in writing under section 250(6).
(d) The communication of the order under section 250(7) is a subsequent stage and does not affect the conclusion of the proceeding.
(e) The right to approach the Settlement Commission ceases with the disposal of the appeal by an order in writing.

Special Bench's Conclusion:
The Special Bench concluded that the proceeding by way of appeal is concluded with the passing of an order in writing by the Commissioner of Income-tax (Appeals) under section 250(6). The subsequent communication of the order under section 250(7) does not extend the pendency of the appeal proceeding. The Bench overruled the decision in the case of Super Rubber Enterprises, New Delhi, and held that the proceeding cannot be said to be pending after the appellate authority has disposed of the appeal by an order in writing.

Outcome:
The applications in the cases of Chander Kant Jain and Suraj Mal Meena (Hindu undivided family) were sent back to the Principal Bench of the Settlement Commission, New Delhi, for appropriate orders under section 245D(1) of the Income-tax Act. The case of Guli Chand, Faridabad, was excluded from consideration as it involved a different issue.