2023 (2) TMI 317 - HC - Income Tax

Settlement of a Case - Procedure u/s 245D - Non deposit of admitted tax u/s 245C on time - Payment of the taxes of additional income partly by way of adjustment against cash seized. - On receiving notice, petitioner paid the amount through challan and placed the same on file - HELD THAT - The provisions of Section 245C impose a pre-condition that the entirety of the admitted tax in respect of the amount offered be deposited along with the settlement application at the time of filing. The petitioner has proceeded in line with the contents of letter dated 17.12.2018 that convey that an amount of Rs.11.15 crores (approx.) is available to the credit of the petitioner in the PD account. It is thus that the petitioner has availed credit of a sum of Rs.9,23,01,365/- from the said amount towards the amount of tax due. The confusion and the error, if at all, arises only from the contents of letter dated 17.12.2018. The unambiguous impression that it conveys is that the entirety of the credit determined as balance in the PD account enured to the benefit of this petitioner. Immediately and coming to know of the same, the petitioner has remitted the sum of Rs.1.5 crores and this, in my considered view, constitutes substantial and adequate compliance of the statutory condition. The impugned order is thus set aside. The Settlement application stands restored to the file of the Settlement Commission (Interim Board) that shall hear the petitioner as expeditiously as possible.

Summary

Issues:
Settlement application before Income Tax Settlement Commission, Remittance of taxes, Adjustment of seized cash, Confirmation of amounts in personal deposit account, Compliance with statutory pre-condition, Rejection of application for want of maintainability, Interpretation of letter regarding credit in PD account.

Analysis:
The petitioner, a trust, filed a settlement application before the Income Tax Settlement Commission concerning assessments from 2011-12 to 2017-18 following a search conducted under Section 132 of the Income Tax Act. The application was admitted for further proceedings under Section 245D (1) after the petitioner made a partial remittance of taxes due on additional income, partly adjusted against seized cash. The trust sought confirmation of amounts in its personal deposit account, which was provided by the Principal Commissioner of Income Tax, indicating a credit balance available to the petitioner. The Settlement Commission accepted the adjustment of seized cash against tax/interest due. However, a subsequent report by the Department raised discrepancies regarding the availability of certain deposits in the petitioner's account, leading to a difference in the amount credited. The petitioner promptly remitted the disputed sum, but the Settlement Commission rejected the application for not remitting the admitted tax in full at the time of filing, citing a statutory pre-condition under Section 245C.

The petitioner argued that the confusion arose from the interpretation of the letter confirming the credit in the PD account, which led them to believe the entire credit benefited them. The petitioner contended that their subsequent remittance of the disputed amount constituted substantial compliance with the statutory condition. The Court agreed, setting aside the impugned order and restoring the settlement application for further consideration by the Settlement Commission. The Court emphasized the importance of expeditiously hearing and disposing of the application on its merits. The judgment concluded by disposing of the writ petition and closing connected miscellaneous petitions without costs.