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2020 (5) TMI 656 - HC - Income TaxApplication for settlement of cases u/s 245C - whether the 1st respondent Settlement Commission was justified in admitting the case of the 2nd respondent for settlement? - whether the 2nd respondent was entitled to file an application for settlement of cases u/s 245C as amended with effect from 01.06.2007, for the Assessment Years 2008-09, 2010-11, 2011-12 and 2012-13? - HELD THAT - In the present case, when the application was filed on 27.4.2012 to settle the case under chapter XIX A of the Income Tax Act, 1961, case was pending. Since the time for completion of assessment under section 153 of the Income Tax Act, 1961 had not expired as far as assessment years 2010-11, 2011-12 and 2012-13 when the application was filed Commission, it would be safe to hold that the case was pending before the Assessing Officer and therefore, the application was maintained under Chapter XIX-A of the Income Tax Act, 1961. Therefore of the view that there is no merits in the contention of the petitioner that the application filed for settling the case was without jurisdiction under the aforesaid Chapter of the Income Tax Act, 1951 as far as these three AYs. As far as AY 2008-09 is concerned, the last date for completing the assessment in terms of section 153 expired on 31.12.2010. However, for this Assessment Year also no assessment order was passed by AO. If Circular No.3 of 2008 dated 12.03.2008 is applied, assessment is deemed to have been completed on the date of service of assessment on the 2nd respondent applicant. If Circular No.16/2014 F.No.142/14/2007- TPL(PART) dated 17.11.2014 is applied, assessment shall be deemed to have been completed on the date on which the assessment order is passed. Only after the statutory amendment in 2015, restriction have been imposed. However, such restriction cannot be retrospectively made applicable to the application filed in 2012. The fate of the application is to be decided in the light of the provision as it stood in 2012. Subsequently, though the Explanation to Section 245A of the Act was amended, it cannot be made applicable retrospectively. 1st respondent Settlement Commission has therefore correctly entertained the application of the 2nd respondent. If the application was disposed then and there, there was no scope for confusion based on the plain reading of the provision. Find no merits in the challenge to the impugned order. - Therefore dispose the present writ petition and direct the 1st respondent Settlement Commission to pass appropriate order on merits and bring a closure to the application filed by the 2nd respondent under Chapter XIX-A of the Income Tax Act, 1961, within a period of six months from the date of receipt of a copy of this order.
Issues Involved:
1. Validity of the Settlement Application filed by the 2nd respondent. 2. Jurisdiction of the Income Tax Settlement Commission to entertain the application. 3. Timeliness and procedural compliance by the petitioner in challenging the Settlement Commission's order. 4. Interpretation of statutory provisions and circulars related to the pendency of assessment proceedings. Issue-wise Detailed Analysis: 1. Validity of the Settlement Application Filed by the 2nd Respondent: The petitioner Commissioner of Income Tax challenged the validity of the Settlement Application filed by the 2nd respondent for the Assessment Years 2008-09, 2010-11, 2011-12, and 2012-13. The Settlement Commission had initially held that there were no materials to invalidate the application and directed the petitioner to submit a report under Rule 9 of the Income Tax Settlement Commission (Procedure) Rules within 45 days. 2. Jurisdiction of the Income Tax Settlement Commission to Entertain the Application: The court examined whether the 1st respondent Settlement Commission was justified in admitting the case for settlement under Section 245C of the Income Tax Act, 1961. The petitioner argued that the application was invalid, citing amendments to Chapter XIX-A of the Income Tax Act effective from 01.06.2007, which restrict the filing of settlement applications to the pendency of proceedings before the Assessing Officer. The court referred to various judicial precedents and circulars, including Circular No.3 of 2008 and Circular No.16/2014, to clarify the definition of "case" under Section 245A(b) and the circumstances under which an assessment is deemed to be pending. 3. Timeliness and Procedural Compliance by the Petitioner: The petitioner received the impugned order on 05.07.2012 but filed the writ petition only on 18.12.2012, despite the requirement to submit a report within 45 days. The court noted that the petitioner had acquiesced to the impugned order by engaging in inter-departmental deliberations and submitting reports under Section 245D(2C) of the Act. The delay in filing the writ petition and the failure to communicate the interim stay order to the Settlement Commission were highlighted as procedural lapses. 4. Interpretation of Statutory Provisions and Circulars: The court analyzed the statutory provisions and circulars related to the pendency of assessment proceedings. It referred to the definition of "case" under Section 245A(b) and the explanations provided in Circular No.3 of 2008 and Circular No.16/2014. The court also considered judicial interpretations from the Gujarat High Court, Delhi High Court, and Calcutta High Court, which clarified that assessment proceedings are deemed to be pending only if an assessment order is passed or if the statutory time limit for making an assessment has not expired. Conclusion: The court concluded that the Settlement Commission was justified in entertaining the application for the Assessment Years 2010-11, 2011-12, and 2012-13, as the assessment proceedings were pending when the application was filed. For the Assessment Year 2008-09, the court noted that the assessment was deemed to be completed based on Circular No.3 of 2008, which was applicable at the time of filing the application. The court dismissed the writ petition, directing the Settlement Commission to pass an appropriate order on merits within six months. Consequently, the connected Miscellaneous Petition was also closed.
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