2023 (7) TMI 1284 - HC - Income Tax

Application for settlement of cases u/s 245C - Application abated in accordance with the provisions of Section 245HA(1)(ii) - as mandated additional tax on the income disclosed in such application and the interest thereon had to be paid on or before 31st day of July, 2007 - HELD THAT - Petitioner had complied with the provisions of Section 245D(2D) of the Act by paying the additional tax and interest on the income disclosed by him in his Applications before 31st July, 2007 as per his calculations, as required by Section 245D(2D) of the Act, and that is what was required of the Petitioner. Therefore, his Applications have to be allowed to be further proceeded with. This is more so, as, at no point of time prior to 31st July, 2007, the Respondents intimated to the Petitioner that the taxes and interest paid by him on the additional income disclosed by him in his Applications were not correct. In our view, the fact that Respondent No. 2 intimated to the Petitioner by his letter dated 18th December 2007 what, according to Respondent No. 2, was the correct tax and interest to be paid by the Petitioner under the provisions of Section 245D(2D is irrelevant. It is absurd to interpret the provisions of Section 245D(2D) as suggested by Respondents. How is one expected to know before 31st July 2007, the figure disclosed only in December 2007. Therefore, it says disclosed in the application. Thus the Order which holds that the proceedings arising out of the two Applications filed by the Petitioner had abated in accordance with provisions of Section 245HA(1)(ii) of the Act, is erroneous and contrary to the provisions of Section 245D (2D) of the Act. Petitioner had complied with the requirements of Section 245D(2D) of the Act, Respondent No. 1 ought to have allowed the Applications of the Petitioner to be further proceeded with and wrongly came to the conclusion that the same had abated in accordance with the provisions of Section 245HA(1)(ii) .

Issues Involved:
1. Validity of the Order dated 11th January, 2008 under Section 245HA of the Income Tax Act, 1961.
2. Compliance with Section 245D(2D) of the Income Tax Act, 1961.
3. Abatement of Settlement Applications under Section 245HA(1)(ii) of the Income Tax Act, 1961.

Summary:

1. Validity of the Order dated 11th January, 2008 under Section 245HA of the Income Tax Act, 1961:
The Petitioner challenged the Order dated 11th January, 2008, which held that the Applications filed by the Petitioner under Section 245-C of the Act had abated. The Petitioner argued that they had complied with the provisions of Section 245D(2D) by paying the additional tax and interest on the income disclosed before 31st July, 2007, as required. The Respondent, however, contended that the Petitioner had not paid the taxes and interest as calculated by the Revenue, leading to the abatement of the Applications.

2. Compliance with Section 245D(2D) of the Income Tax Act, 1961:
Mr. Singh, representing the Petitioner, argued that the Petitioner had paid the taxes calculated by them and informed Respondent No. 2 by a letter dated 4th January, 2007. The Petitioner had complied with the provisions of Section 245D(2D) by paying the additional tax and interest on the income disclosed in the Applications before 31st July, 2007. The Court noted that the Respondents did not inform the Petitioner about any shortfall in the tax and interest paid before the deadline. Therefore, the Petitioner had fulfilled the requirements of Section 245D(2D), and the Applications should have been allowed to proceed further.

3. Abatement of Settlement Applications under Section 245HA(1)(ii) of the Income Tax Act, 1961:
The Court found that the Order dated 11th January, 2008, which held that the Applications had abated, was erroneous and contrary to the provisions of Section 245D(2D). Since the Petitioner had complied with the requirements of Section 245D(2D), the Applications should have been allowed to proceed further. The Court quashed and set aside the Order dated 11th January, 2008, and directed that the matter be placed before the Interim Board for Settlement for consideration.

Conclusion:
The Court ruled in favor of the Petitioner, stating that the Petitioner had complied with the provisions of Section 245D(2D) by paying the additional tax and interest on the income disclosed before 31st July, 2007. The Order dated 11th January, 2008, was quashed and set aside, and the matter was directed to be placed before the Interim Board for Settlement for further consideration.

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