2021 (3) TMI 1253 - HC - Income Tax

Settlement commission abolishment - seeking relief for declaring that the proposed amendment in the Finance Bill 2021 regarding amendment in Section 245 of the Income Tax Act 1961 where under the Income Tax Settlement Commission is proposed to be abolished w.e.f. 01.02.2021 cannot be acted upon without being notified in the official gazette and without receiving the Presidential assent - HELD THAT - Writ petitions were preferred with an apprehension that applications of the petitioners would not be accepted by the Settlement Commission in view of the proposed amendment in Section 245 of the Income Tax Act 1961. However as per the statement made in the supplementary affidavit applications of the petitioners have been accepted and requisite fees has been deposited through challan copy of which are enclosed to the supplementary affidavit. In these circumstances petitioners grievance though raised prematurely before this Court appears to have been redressed. Chapter XIX-A of the Income Tax Act 1961 deals with powers and procedure of Settlement Commission. The Settlement Commission may consider it in accordance with law.

Summary

Issues:
1. Challenge to proposed amendment in Finance Bill 2021 regarding Section 245 of Income Tax Act, 1961.
2. Concerns about acceptance of settlement applications by the Settlement Commission.
3. Compliance with procedural requirements for settlement applications.
4. Apprehension regarding denial of lawful recourse to petitioners.

Analysis:
1. The petitioners challenged the proposed amendment in the Finance Bill 2021, specifically regarding the amendment in Section 245 of the Income Tax Act, 1961, seeking a declaration that the amendment cannot be acted upon without being officially notified in the gazette and without receiving Presidential assent. The petitioners feared that the proposed amendment abolishing the Income Tax Settlement Commission would hinder their ability to avail the remedy under Section 245C of the Income Tax Act.

2. The Court noted that the petitioners had initially expressed concerns about the acceptance of their settlement applications by the Settlement Commission due to the proposed amendment. However, subsequent to filing a supplementary affidavit, it was revealed that the petitioners had indeed submitted their applications under Section 245C(1) of the Act before the Settlement Commissioner, along with the required application fee. The Court acknowledged that the petitioners' grievance had been partially addressed as their applications had been formally received by the Settlement Commission.

3. The petitioners' compliance with procedural requirements for settlement applications was confirmed through the submission of the supplementary affidavit, which included details of the application submission and fee deposition. The Court emphasized the importance of adhering to the provisions of Chapter XIX-A of the Income Tax Act, 1961, which governs the powers and procedures of the Settlement Commission. The Court directed the Settlement Commission to proceed with the settlement applications in accordance with the law until the Finance Bill, 2021 is enacted.

4. While acknowledging that the petitioners' concerns had been partially alleviated by the acceptance of their applications, the Court clarified that it had not delved into the merits of the case or made any substantive observations. The Court disposed of the writ petitions without making any specific findings on the underlying issues, emphasizing that the Settlement Commission should consider the applications in accordance with the provisions of Chapter XIX-A of the Income Tax Act, 1961.