2007 (3) TMI 236 - HC - Income Tax

Application for settlement rejected - One of the requirements for entertaining the application for settlement under Section 245-C is the pendency of the proceedings before the Tax authorities since no proceedings are pending before tax authorities, Settlement Commission has rightly rejected the application Commissioner is right in rejecting the petition to condonation of delay in filing the revision petition because there is no good reason for delay petition dismissed

Summary

Issues:
1. Application for settlement under Section 245(1) of the Income Tax Act, 1961.
2. Withdrawal of appeals and its impact on the maintainability of the settlement application.
3. Application under Section 264 of the Income Tax Act for condonation of delay.
4. Rejection of the petition for condonation of delay by the Commissioner of Income Tax-II, Coimbatore.

Analysis:

1. The petitioner filed a petition for settlement under Section 245(1) of the Income Tax Act, 1961, before the Settlement Commission. However, the appeals for the assessment years 1992-93, 1993-94, and 1996-97 were withdrawn by the petitioner's Chartered Accountant. The Settlement Commission noted that the withdrawal of appeals meant no pendency of proceedings before the Tax authorities, rendering the settlement application not maintainable. Consequently, the application for settlement was rejected for the mentioned assessment years. However, for the assessment year 1997-98, where proceedings were pending, the Settlement Commission considered the case. The court upheld the Settlement Commission's decision, emphasizing the necessity of proceedings before Tax authorities for the maintainability of the settlement application.

2. Subsequently, the petitioner sought to restore the withdrawn appeals by filing an application before the second respondent, citing a misunderstanding of the Act's provisions as the reason for withdrawal. The petitioner also filed a petition under Section 264 of the Income Tax Act seeking admission of revision and condonation of a 19-month delay, attributing the delay to the Chartered Accountant's unauthorized withdrawal of appeals and a major fire accident causing business damage. The Commissioner of Income Tax-II, Coimbatore, rejected the petition for condonation of delay, stating unsatisfactory explanations for the delay. The court upheld this decision, noting the lack of sufficient cause demonstrated for the delay and dismissing the petitioner's challenge to the Commissioner's order.

3. The court dismissed both writ petitions challenging the Settlement Commission's rejection of the settlement application and the Commissioner's dismissal of the condonation of delay petition. It affirmed the Settlement Commission's decision based on the legal requirement of proceedings before Tax authorities for settlement application maintainability. Similarly, it upheld the Commissioner's decision, finding the explanations for the delay in filing the application under Section 264 insufficient. The court concluded by dismissing both writ petitions without costs, affirming the respective decisions of the Settlement Commission and the Commissioner of Income Tax-II, Coimbatore.