2021 (3) TMI 1402 - HC - Income Tax

Settlement Commission to issue formal orders - only text of the order u/s 245D(4) of the Act 1961 was pending to be issued which has not been done till date - HELD THAT - The facts stated by the petitioners can only be verified by the Settlement Commission it may be left at the discretion of the Settlement Commission to take a decision whether such facts are correct or not and accordingly the Settlement Commission may proceed with the matter. We have also considered the contents of the Finance Bill 2020-21 and the relevant provisions therein but as the said Bill has still not been enacted the position which stands is to be taken as in the absence of the contents of the said Bill. Considering the above facts and circumstances we dispose of this petition with the direction to the respondent No.1- Settlement Commission to consider the facts as stated by the petitioner and as recorded in the above order and if they are found to be correct it may proceed to pass/issue appropriate formal orders on or before 31.03.2021 and if such facts are not found to be correct the Commission would be free to proceed in accordance with law in its own wisdom and discretion. Direct service is permitted.

Summary

Issues:
Petition for writ of mandamus under Article 226 to compel respondent No.1 to issue order under section 245D(4) of the Income Tax Act, 1961.

Analysis:
The petitioners filed an application for settlement under section 245D of the Income Tax Act, 1961. After the proceedings and arguments, the respondent No.1 Settlement Commission pronounced the case as settled and noted the terms of settlement. However, the formal order under section 245D(4) was pending. The petitioners argued that the issuance of the formal order was a procedural requirement and not substantive adjudication, which should not be stalled by subsequent amendments. The petition sought a mandamus to compel the respondent No.1 to issue formal orders.

The High Court noted that the facts stated by the petitioners needed verification by the Settlement Commission. The Court emphasized that it was within the Commission's discretion to determine the correctness of the facts presented. Additionally, the Court considered the Finance Bill 2020-21 and its provisions, highlighting that since the Bill had not been enacted, the current position should be based on existing laws. Consequently, the Court disposed of the petition by directing the Settlement Commission to review the facts presented by the petitioners. If found correct, the Commission was instructed to issue formal orders by a specified date; otherwise, the Commission could proceed as per the law and its discretion.

Overall, the judgment focused on upholding the procedural requirements under the Income Tax Act, emphasizing the importance of the Settlement Commission's verification of facts before issuing formal orders. The Court's decision aimed to ensure compliance with the law while allowing the Commission the necessary discretion in handling the matter based on verified facts.