2012 (3) TMI 434 - HC - Income Tax

Validity of Section 245HA read with Section 245HA(3) - petitioner s contention is that he submitted applications in time and in accordance with law and provided all materials to the authorities concerned - Held that - The writ petition of the writ petitioners are deserves to be allowed. The Settlement Commissioner may now proceed to decide the applications, following the principles laid down in the case of Star Television News Limited Vs. Union of India & Ors. 2009 (8) TMI 86 - BOMBAY HIGH COURT and while doing so examine whether there was fault of the petitioner and the petitioner is responsible for the delay in passing the order by the Income Tax authorities or not.

Summary

Issues:
Common question of law in a bunch of cases involving the validity of Section 245HA of the Income Tax Act, 1961 and Section 22HA of the Wealth Tax Act, 1957. Challenge to the abatement of Settlement Applications due to non-decision by authorities. Application of Division Bench judgment of Bombay High Court in the case of Star Television News Limited Vs. Union of India & Ors.

Analysis:

1. Validity of Section 245HA and 22HA:
The primary issue in the judgment revolves around the validity of Section 245HA of the Income Tax Act, 1961, and Section 22HA of the Wealth Tax Act, 1957. The Division Bench of the Bombay High Court had previously examined the constitutional validity of Section 245HA(3) of the Income Tax Act, noting that it severely prejudiced applicants who provided confidential information in good faith for settlement orders. The High Court concurred with the Bombay High Court's decision, declaring that the provisions were arbitrary, unreasonable, and violative of Article 14 of the Constitution of India. The judgment emphasized that if an applicant is not at fault for delays in decision-making, the application should not abate.

2. Abatement of Settlement Applications:
The petitioners sought a declaration that their Settlement Applications should not abate due to the non-decision by the authorities, without any fault on their part. The petitioners argued that they had submitted applications in time and provided all necessary materials, expecting timely decisions. The High Court, following the Bombay High Court's ruling, held that the Settlement Commissioner should proceed to decide the applications based on the principles established in the Star Television News Limited case. It was emphasized that the authorities should assess whether the delay was due to the petitioner's fault.

3. Application of Bombay High Court Judgment:
The judgment extensively referred to the Division Bench judgment of the Bombay High Court in the case of Star Television News Limited Vs. Union of India & Ors. The High Court highlighted that the decision of the Bombay High Court, which had not been challenged, was binding on the Income Tax Department. The High Court concluded that the writ petitions deserved to be allowed, enabling the Settlement Commissioner to proceed with the applications in line with the principles outlined in the Bombay High Court's judgment.

In conclusion, the High Court's judgment addressed the validity of Section 245HA and 22HA, the abatement of Settlement Applications, and the application of the Bombay High Court's ruling in the Star Television News Limited case. The decision provided clarity on the non-abatement of applications due to delays not caused by the applicants and directed the authorities to proceed with the applications while considering the petitioner's responsibility for any delays.