2023 (7) TMI 349 - HC - Income Tax

Settlement application u/s 245C(1) - mandatory requirements of Section 245D (2D) - application admitted u/s 245D(1) for which original petitioner was required to pay the additional amount of income tax payable on the income disclosed within 35 days of the receipt of the order - HELD THAT - As the original petitioner would be entitled to interest on the excess payment. If we add together the amount interest on refund of AY-1997-1998, 1999-2000 and 2000-2001, towards refund and interest thereon relating to AY-1998-1999 and 2003-2004 and interest on excess payment of tax the original petitioner would have paid amount more than the short fall indicated by respondent no. 2 in Statement-A, vide his letter dated 29th March 2007. Therefore, we are satisfied that original petitioner has complied with his obligations under the provisions of Section 245D of the Act. We are quashing and setting aside the impugned order dated 3rd January 2008. We direct the matter be placed before the Interim Board for Settlement constituted under Section 245AA for consideration. Since the matter is old, petitioners shall file a copy of the settlement application that was originally filed on 27th April 1997 before the Board within two weeks of this order being uploaded.

Summary

Issues Involved:
1. Validity of the order by the Income Tax Settlement Commission.
2. Compliance with Section 245D(2D) of the Income Tax Act, 1961.
3. Entitlement to interest on excess tax paid.

Summary:

Validity of the order by the Income Tax Settlement Commission:
The petitioners challenged the order dated 3rd January 2008 by the Income Tax Settlement Commission which dismissed the application of the original petitioner for AY-1989-1990 to 1996-1997. The Commission's decision was based on the non-compliance with Section 245D(2D) of the Income Tax Act, 1961, which required the petitioner to pay additional tax and interest by 31st July 2007.

Compliance with Section 245D(2D) of the Income Tax Act, 1961:
The core issue was whether the original petitioner had paid the required amounts of tax and interest by the stipulated date. The petitioners argued that the original petitioner had indeed complied with the payment requirements. They provided evidence that the petitioner had paid more than the required amount, including a payment of Rs. 1,30,000 on 5th December 2007 to cover a shortfall indicated by the respondents.

Entitlement to interest on excess tax paid:
The petitioners contended that the original petitioner was entitled to interest on the excess tax paid. The court referred to the judgment in Stock Holding Corporation of India Ltd Vs. N. C. Tewari & Ors., which held that tax paid on self-assessment is eligible for interest under Section 244A(1)(b) of the Act. The court concluded that the original petitioner was entitled to interest on the excess payment of Rs. 53,098, which amounted to Rs. 50,674.

Conclusion:
The court quashed and set aside the impugned order dated 3rd January 2008, directing the matter to be placed before the Interim Board for Settlement for consideration. The court emphasized that it had not considered the matter on merits but only whether the petitioner had complied with Section 245D(2D) of the Act. The petition was disposed of accordingly.