2013 (10) TMI 371 - HC - Income Tax

Allowability of recovery till the disposal of Miscellaneous application lying before the bench of Settlement Commission Held that - Assessing Officer should not recover the interest amount till the miscellaneous application is at least heard by the bench. It is pointed out that the Assessing Officer has already issued notice under Section 154 for recovery of interest. The Assessing Officer will not take coercive steps to recover interest amount for a period of one month or till the miscellaneous application is listed before the bench, whichever is earlier Decided in favor of Assessee.

Summary

Issues:
1. Challenge to order passed by the Income Tax Settlement Commission under Section 245D (6B) of the Income Tax Act, 1961.
2. Proper procedure for handling a miscellaneous application not entertained by a bench.
3. Determination of which bench should hear and decide on the miscellaneous application.
4. Request to halt recovery of interest by the Assessing Officer pending the hearing of the miscellaneous application.

Analysis:
1. The writ petition was filed to challenge the order passed by the Income Tax Settlement Commission, which did not decide on the merits of the application filed under Section 245D (6B) of the Income Tax Act, 1961. The bench, comprising three members, declined to hear the application, citing reasons related to judicial decorum, discipline, and fairness.

2. The bench recorded conflicting findings, stating that the miscellaneous application was both infructuous and not entertained. The judgment highlighted the importance of following proper procedures when a bench determines it cannot hear a matter, emphasizing the need to refer such applications to the appropriate bench or the Chairman for further action.

3. The judgment emphasized the necessity of placing the miscellaneous application before the Chairman of the Settlement Commission to decide on the constitution of the bench that should hear the application. It was deemed essential to adhere to rules, regulations, and circulars governing the listing of matters before a bench, especially considering the previous disposal of the settlement application under Section 245D (4).

4. Additionally, the judgment addressed the issue of recovery of interest by the Assessing Officer, noting that coercive steps should not be taken until the miscellaneous application is heard by the bench. The Assessing Officer was directed to refrain from recovering interest for a specified period, allowing the bench to make an appropriate decision. The Chairman of the Settlement Commission was urged to promptly examine the directions and constitute a bench within a specific timeframe following the receipt of the order copy.

In conclusion, the High Court set aside the impugned order and remanded the case for further proceedings in accordance with the directions provided. The judgment clarified that no opinion was expressed on the maintainability of the miscellaneous application, its merits, or the composition of the bench to hear the application. The writ petition was disposed of, with specific instructions for the handling of the miscellaneous application and the recovery of interest by the Assessing Officer.