2021 (4) TMI 22 - HC - Income Tax

Application for settlement of cases under Section 245C rejected - abolishment of Settlement Commission as proposed in Union budget 21-22 - as submitted that till Finance Bill 2021 is placed before the Houses of Parliament and assented to by the President of India, it is only a proposal and not enforceable and in absence of any enforceable enactment the Income Tax Settlement Commission is under statutory obligation to function as per the prevailing law - HELD THAT - Considering the fact that Act has not been promulgated by the Parliament till date, prima-facie, we are of the view that Settlement Commission till date has not been abolished. In view of aforesaid, as an interim measure we provide liberty to the petitioner to file an application before the Income Tax Settlement Commissioner-respondent no. 4 by Monday i.e. 22.03.2021, as per procedure laid down under the Act and if such an application is filed the same shall be received by the Income Tax Settlement Commission- respondent no. 4.

Summary

Issues:
- Relief sought for direction to respondent nos. 1 and 4 to continue functioning as per prevailing statute for settlement of cases under Section 245C of the Income Tax Act, 1961.

Analysis:
The petitioner filed a writ petition seeking a direction for respondent nos. 1 and 4 to continue functioning as per the prevailing statute, including allowing the filing of applications for settlement of cases under Section 245C of the Income Tax Act, 1961, until the promulgation of Finance Act, 2021. The petitioner argued that until the Finance Bill 2021 becomes enforceable, the Income Tax Settlement Commission is obligated to operate under the existing law. The petitioner expressed readiness to submit an application for dispute settlement under Section 245C but faced rejection due to the proposed Finance Bill 2021, which suggested the Commission's discontinuation from 01.02.2021. The petitioner urged the Court to direct the Commission to accept the application and follow the prescribed procedures under Section 245C.

The petitioner's counsel highlighted instances where other High Courts allowed similar petitions for applications under Section 245C, citing the judgments of the Rajasthan High Court and the High Court of Jharkhand. The Court acknowledged that the Finance Act had not been promulgated by Parliament, indicating that the Settlement Commission had not been abolished. Consequently, the Court, as an interim measure, granted the petitioner liberty to file an application before the Income Tax Settlement Commissioner by a specified date, following the procedure outlined in the Act. The Court also directed the respondent's counsel to seek instructions on the matter and scheduled the case for further proceedings on a specific date.