2017 (4) TMI 124 - HC - Income Tax

Application for settlement filed under Section 245C rejected - failure to disclose in its application additional tax payable for the years 2007-08, 2008-09, 2009-10, 2011-12 and 2012-13 - petitioner stated that for the present he does not press for interim reliefs but seeks liberty to file an appropriate Notice of Motion with affidavit in support explaining the petitioner s case for interim reliefs, if so advised - Held that - we are not called upon to decide today in view of the petitioner not pressing for interim relief. Therefore, at this stage, there is no stay of the impugned order dated 29th July, 2016 to the extent it relates to Assessment Years 2013-14 and 2014-15. However the petitioner is at liberty to file a notice of motion for interim stay of the impugned order to the extent it relates to Assessment Years 2013-14 and 2014-15, if so advised. The admission of this petition may affect assessment of petitioner for large number of years as they would kept in abeyance. It therefore become incumbent that this petition be heard along with Writ Petition No.2216 of 2016 and other connected petitions raising identical issues, which are kept for final hearing on 10th April, 2017 at 3.00 p.m. The respondent would file reply, if any, by 30th March, 2017.

Summary

Issues:
Challenge to order of Income Tax Settlement Commission under Section 245D(4) of the Income Tax Act for Assessment Years 2007-08 to 2014-15.

Analysis:
1. The petitioner's application for settlement under Section 245C of the Act was rejected for some assessment years due to failure to disclose additional tax payable. However, it was accepted for Assessment Year 2010-11. The Commission's view was that disclosure of additional tax for each assessment year is necessary. This contradicted the decision in Airtech Pvt. Ltd., where it was held that such disclosure is not mandatory.

2. A Special Bench was constituted to resolve this discrepancy. The seven-member Special Bench decision in Neptune Developers Pvt. Ltd. reiterated that additional taxable income need not be declared for each assessment year in an application for settlement. This decision favored the petitioner, indicating that the Commission erred in rejecting the applications for some assessment years.

3. The petitioner argued that the Commission must either entertain the entire application or reject it as a whole, not settle for some years and reject others. The Settlement Commission's decision to accept the settlement for Assessment Year 2010-11 was subject to the outcome of the petition.

4. The petitioner agreed not to contest if the assessment proceedings are handled by the Assessing Officer. An interim stay was granted to prevent the Assessing Officer from initiating proceedings for certain assessment years.

5. For Assessment Years 2013-14 and 2014-15, the Commission settled the disputes at higher figures than offered by the petitioner. This resulted in additional tax payable due to disallowed deductions claimed by the petitioner.

6. The parties discussed interim reliefs for Assessment Years 2013-14 and 2014-15. The petitioner decided not to press for interim relief immediately but agreed to deposit a specified amount by a certain date. The Revenue contested the amount payable, leading to a disagreement on the sum owed.

7. The Court deferred the decision on interim relief as the petitioner did not press for it at that moment. The impugned order related to Assessment Years 2013-14 and 2014-15 was not stayed, but the petitioner was allowed to file a notice of motion for interim stay if desired.

8. The petition's admission could impact the petitioner's assessments for multiple years. Therefore, it was scheduled to be heard alongside other connected petitions on a later date for final hearing. The respondent was given a deadline to file a reply before the final hearing date.