2016 (7) TMI 1219 - HC - Income Tax

Proceeding with the matter for settlement under section 245-D(2)(3) - Held that - We find that merely because the application filed under section 245-D(1) has been admitted and the Report of the Department under section 245-D(2) has not been considered, no case is made out for interference. The matter is still pending before the Settlement Commissioner, the petitioner can raise all the grounds before the Settlement Commissioner, including the objection as are raised in the writ petition, and it is for the Settlement Commissioner to look into this aspect of the matter and proceed in accordance with law. Accordingly, finding no ground to interfere in the matter, we dispose of the writ petitions with liberty to the petitioner/Revenue to raise the grounds before the Settlement Commissioner, who shall before deciding the matter consider and proceed in accordance with law.

Summary

Issues:
1. Procedure followed by the Department in settlement under section 245-D(2)(3)
2. Unsustainability of the order passed under section 245-D(2C) without considering the Department's report
3. Interference at the current stage of proceedings before the Settlement Commissioner

Analysis:
1. The High Court heard three writ petitions filed by the Principal Commissioner of Income Tax regarding settlement issues. The Department proceeded for assessment after search and seizure operations at the respondent's establishment. The respondent preferred an application under section 245-C(1) of the Income Tax Act, 1961 before the Income Tax Settlement Commissioner. The Department submitted a report under section 245D(2B), but the order passed for proceeding with the settlement under section 245-D(2)(3) was challenged by the Department as unsustainable.

2. The Department raised various grounds in the writ petition, arguing that the procedure followed by the Department was unsustainable. Citing cases from the Bombay High Court and Delhi High Court, the Department contended that the order passed under section 245-D(2C) without considering the Department's report was unsustainable. The Department prayed for the matter to be remanded back and proceeded with in accordance with law.

3. The respondent's counsel referred to a Supreme Court order and a Division Bench Judgment of the High Court to argue against interference at the current stage of proceedings. The Court noted that since the matter was still pending before the Settlement Commissioner, the Department could raise all grounds before the Commissioner. The Court emphasized that the Settlement Commissioner should consider the objections raised by the Department and proceed in accordance with the law. The Court disposed of the writ petitions, granting liberty to the petitioner/Revenue to raise grounds before the Settlement Commissioner for further consideration and proceedings.