2017 (3) TMI 903 - HC - Income Tax

Application for settlement - application rejected on the ground that the petitioner had not declared additional income for those assessment years in its settlement application - Held that - Either all the Assessment Years mentioned in the application are to be settled or none at all. It cannot be split so as to settle the dispute for one of the Assessment Years and reject the others. In view of the above, the impugned order of the Commission to the extent it has rejected / not entertained, the petitioner s application for settlement for the Assessment Years 2011-12 to 2014-15 for not disclosing additional income in its application, prima facie appears to be incorrect. In the above view, the Assessing Officer is restrained from issuing notices and initiating proceedings under the normal provisions of the Act for Assessment Years 2011-12 to 2014-15. See Airtech Pvt. Ltd. and others Versus Income-tax Settlement Commission 1994 (6) TMI 192 - INCOME TAX SETTLEMENT COMMISSION

Summary

Issues:
Challenge to order of Income Tax Settlement Commission under Section 254D(4) for settlement application covering Assessment Years 2011-12 to 2014-15. Interpretation of statutory provisions regarding jurisdiction of Commission for settlement applications. Prima facie judicial indiscipline by Commission. Requirement of disclosing additional income for each assessment year in settlement application. Impact of decision in Airtech Pvt. Ltd. case on settlement applications.

Analysis:
The petition challenges the order of the Income Tax Settlement Commission regarding the settlement application covering Assessment Years 2011-12 to 2014-15. The impugned order settled the application for the year 2014-15 but rejected it for the years 2011-12 to 2013-14 due to the petitioner not declaring additional income for those years. The basis of rejection was contrary to the decision of a five-member Special Bench in Airtech Pvt. Ltd. case, leading to allegations of judicial indiscipline. The petitioner argued that the Commission should have followed the decision in Airtech Pvt. Ltd. case, which was binding on them. The Chairperson referred a question to a seven-member Special Bench regarding the disclosure of additional income in settlement applications for multiple assessment years. The seven-member bench reaffirmed the law from the Airtech Pvt. Ltd. case, stating no requirement for disclosing additional income for each year in such applications.

The petitioner contended that an application for settlement covering multiple assessment years should be treated as one, as held in Airtech Pvt. Ltd. case. Therefore, either all years in the application should be settled or none at all, rejecting the idea of splitting the application. The impugned order was deemed incorrect for rejecting the application based on non-disclosure of additional income. The petitioner agreed to cooperate with the Revenue if the entire application is either accepted or rejected as a whole. The Court granted interim relief restraining the Assessing Officer from initiating proceedings for the years 2011-12 to 2014-15.

The petition's admission could impact the petitioner's assessments for multiple years, necessitating an expedited decision. The matter, along with connected petitions, was scheduled for final hearing to ensure a prompt resolution. The respondent was directed to file a reply by a specified date, and the case was adjourned for further proceedings.