1992 (3) TMI 45 - HC - Income Tax

Summary

Issues:
1. Review of order dated November 11, 1991.
2. Jurisdiction of the Settlement Commission under section 245C of the Income-tax Act.
3. Power of review by the High Court.
4. Extension of time for renewing bank guarantees.
5. Compliance with court orders regarding bank guarantees.

Review of Order dated November 11, 1991:
The petitioner sought a review of the order dated November 11, 1991, which directed the encashment of 50% of the bank guarantees. The petitioner argued that the order conflicted with the Settlement Commission's jurisdiction under section 245C of the Income-tax Act. However, the court found this argument unsubstantial as the Settlement Commission had not yet passed any order to proceed with the petitioner's settlement application. The court also highlighted that there was no provision to exclude the High Court's jurisdiction under Article 226 of the Constitution of India. The review petition was dismissed as no grave errors were found in the original order.

Jurisdiction of the Settlement Commission under Section 245C:
The court clarified that the Settlement Commission's jurisdiction to proceed with a settlement application only begins after the Commission passes an order under section 245C. It was emphasized that until such an order is passed, the Income-tax Officer can proceed with the assessment, as confirmed by a decision of the Delhi High Court. The court underscored that the Settlement Commission, once it decides to proceed with the settlement application, can provide reliefs to the petitioner.

Power of Review by the High Court:
The petitioner invoked the power of review by citing Supreme Court decisions. The court acknowledged that the High Court can exercise the power of review to prevent miscarriage of justice or correct grave errors. However, after assessing the petitioner's arguments, the court concluded that no substantial errors were present in the order under review, leading to the dismissal of the review petition.

Extension of Time for Renewing Bank Guarantees:
The petitioner requested an extension of time to renew the bank guarantees for the remaining 50% of the original amount. Despite opposition from the Department, the court granted the extension, directing the petitioner to renew the bank guarantees at least five days before the expiry of the original guarantees. Specific conditions were set for the renewal of guarantees, ensuring compliance with the court's directives.

Compliance with Court Orders Regarding Bank Guarantees:
Several interlocutory applications were filed regarding the encashment of bank guarantees and the subsequent actions taken by the bank. The court clarified that the issuance of a demand draft under the bank guarantee constituted payment, dismissing claims of contempt against the respondents. Applications related to alleged disobedience of court orders were also dismissed, affirming that no contempt was established. Both the main petition and the connected case were dismissed with no costs awarded.

This detailed analysis covers the various issues addressed in the legal judgment, providing a comprehensive overview of the court's decisions and reasoning.