1999 (1) TMI 33 - SC - Income Tax

Section 245D of the Income-tax Act, 1961, as it stood prior to 1991 and thereafter Held that - Having regard to the fact that the said sub-section (1A) was removed from the statute book subsequent to 1991, we see no reason why the Settlement Commission could not have entertained applications, the like of which had not been proceeded with theretofore only by reason of the objections of the Commissioner ; and no convincing argument has been advanced on behalf of the Union of India in this context except to submit that the Settlement Commission did not have the power of review and that the grounds in regard to review were not satisfied. This is not a case of review at all. It is a case of fresh applications made subsequent to the amendment of the concerned section in 1991 when the objection of the Commissioner was not to be called for or taken into account. The appeals are dismissed.

Summary

Issues:
Interpretation of section 245D of the Income-tax Act, 1961 prior to and after the 1991 amendment; Validity of applications under section 245C before the Settlement Commission; Effect of Commissioner's objection on application proceedings; Entertaining fresh applications post-1991 amendment omitting sub-section (1A) of section 245D.

Analysis:
The batch of cases dealt with the provisions of section 245D of the Income-tax Act, 1961, both before and after the 1991 amendment. Prior to the amendment, section 245D(1) and (1A) governed the Settlement Commission's decision-making process based on the Commissioner's report and objections. The amendment in 1991 omitted sub-section (1A) from section 245D, altering the procedure for application proceedings before the Settlement Commission.

The respondents had filed applications under section 245C, triggering the Settlement Commission to seek a report from the Commissioner. The Commissioner objected to the applications being proceeded with, leading to the rejection of the applications. Post the 1991 amendment omitting sub-section (1A), the respondents submitted fresh applications for the same years previously applied for, which the Settlement Commission entertained based on the revised statutory framework.

In a notable case, the Settlement Commission upheld the Commissioner's objection for certain years due to concealment of income particulars. However, for other years, the Commission decided not to proceed with the applications citing common issues and circumstances. The Union of India raised concerns regarding the rejection of applications solely based on the Commissioner's objection under sub-section (1A) and argued against the Settlement Commission's authority to entertain fresh applications post the 1991 amendment.

The Supreme Court dismissed the appeals, emphasizing that post the 1991 amendment, the Settlement Commission had the discretion to entertain applications previously rejected solely due to the Commissioner's objection under sub-section (1A). The Court clarified that this was not a case of review but rather the Commission's power to consider fresh applications under the revised statutory framework. The lack of convincing arguments against the Commission's actions led to the dismissal of the appeals without costs.

In conclusion, the judgment clarified the Settlement Commission's authority to reconsider applications post the 1991 amendment and upheld the Commission's discretion to entertain fresh applications previously rejected based on the Commissioner's objection under sub-section (1A) of section 245D.