2022 (3) TMI 1037 - HC - Income Tax

Eligibility to file settlement application - benefit of extension of time to file application for settlement - Petitioner in support of his contention that his aforesaid application should have been accepted or entertained by the Settlement Commission since assessment proceeding shall be deemed to have been commenced only after issuance of notice under Section 153A of the Act which was issued in case of the petitioner on 2nd February, 2021 that is the date when the Settlement Commission had ceased to operate w.e.f. 1st February, 2021 in view of the aforesaid amended Finance Act - HELD THAT - Admittedly, in this case, application for settlement under Section 245C(1) of the Act was filed on 17th March, 2021 while the Settlement Commission had ceased to operate w.e.f. 1st February, 2021 in view of the aforesaid Finance Act, 2021 amending the provisions of the Act. In view of this admitted position of the petitioner himself that notice under Section 153A of the Act was issued to the petitioner on 2nd February, 2021 which according to the petitioner is the date of commencement of assessment proceeding, question of petitioner being eligible to file settlement application on 31st January, 2021 by virtue of said order of the Board does not arise since the case of the petitioner is not covered by the aforesaid order of the Board upon which the petitioner wants to rely to take benefit which was issued by the Board on 28th September, 2021 which is much after 1st February, 2021 and had the Board intended to consider the difficulties in respect of the cases like of the petitioner the aforesaid order would have covered it. The writ court is only to see that every statutory authority acts within the four corners of law and that the law is properly implemented and it is not the duty of the Court to legislate the law or to issue any circular, notification of like nature or to take such type of policy decision granting relief to the petitioner beyond the scope of the aforesaid order of the Board amounting to amend the aforesaid order of the Central Board of Taxes acting under the power conferred upon under Section 119 of the Income Tax Act, 1961. In view of the discussion made above,we hold that the impugned order dated 14th January, 2022 passed by the Settlement Commission is in accordance with law and is legal and valid and in rightful exercise of the jurisdiction conferred upon it - we do not find any legal infirmity in the said impugned order of the Commission and accordingly not inclined to interfere with the aforesaid impugned order dated 14th January, 2022. So far as challenged to the legality and validity of the order of the aforesaid order of Central Board of Direct Taxes dated 28th September, 2021, on the ground of discrimination in exercise of power under Section 119 (2) (b) of the Income Tax Act, 1961 is concerned, we hold the said order of the Board as constitutionally valid and legal and is perfectly within the power conferred upon it under the aforesaid provision of law and the same is not discriminatory for the reason that the petitioner does not stand on the equal footing as of the class of person covered under the said order of the Board.

Summary

Issues:
Challenge to rejection of application by Income Tax Settlement Commission under Section 245C of the Income Tax Act, 1961 post amendment by Finance Act, 2021. Interpretation of Central Board of Direct Taxes order dated 28th September, 2021 relaxing time for filing settlement applications. Legality and validity of impugned order of Settlement Commission and Central Board of Direct Taxes.

Analysis:

1. Challenge to Rejection of Application by Settlement Commission:
The petitioner challenged the rejection of their application by the Income Tax Settlement Commission under Section 245C of the Income Tax Act, 1961. The rejection was based on the amendment introduced by the Finance Act, 2021, which stated that the Settlement Commission would cease to operate from 1st February, 2021, and no settlement applications could be filed after the tabling of the Finance Bill, 2021. The petitioner filed their application on 17th March, 2021, after the Settlement Commission had already ceased to operate. The petitioner argued that since the assessment proceedings are deemed to commence only after the issuance of a notice under Section 153A, which was done on 2nd February, 2021, they should be allowed to file the settlement application. However, the court held that the petitioner was not eligible for the extension granted by the Central Board of Direct Taxes, as they had filed the application after the specified date, and the Board's order did not cover cases like the petitioner's. The court found the rejection by the Settlement Commission to be in accordance with the law and valid.

2. Interpretation of Central Board of Direct Taxes Order:
The petitioner relied on the Central Board of Direct Taxes order dated 28th September, 2021, which provided relief to taxpayers for filing settlement applications. The Board's order extended the time for filing applications for settlement for those eligible on 31st January, 2021, until 30th September, 2021. However, the court determined that the petitioner was not eligible for this extension as they had filed the application after the specified date. The court emphasized that it is not its role to legislate or amend orders issued by statutory authorities, and the petitioner's case did not fall within the scope of the Board's order. Therefore, the court upheld the validity and legality of the Board's order and dismissed the challenge to its discrimination under Section 119(2)(b) of the Income Tax Act, 1961.

3. Legality and Validity of Orders:
The court concluded that the impugned order of the Settlement Commission rejecting the petitioner's application was lawful and valid, as it was made in accordance with the law and within the Commission's jurisdiction. Additionally, the court found the Central Board of Direct Taxes order dated 28th September, 2021, to be constitutionally valid and not discriminatory, as it did not apply to cases like the petitioner's. Consequently, the writ petition challenging the rejection of the application and the Central Board of Direct Taxes order was dismissed, along with a similar petition. No costs were awarded in the matter.

In summary, the High Court of Calcutta upheld the rejection of the petitioner's application by the Income Tax Settlement Commission and found the Central Board of Direct Taxes order to be valid, dismissing the challenges raised by the petitioner.