1989 (3) TMI 158 - AT - Income Tax

Summary

Issues:
1. Withdrawal of appeals under section 245M of the Income-tax Act, 1961.
2. Entitlement to make an application to the Settlement Commission.
3. Effect of non-entertainment of application by the Settlement Commission.
4. Interpretation of Section 245M(7) of the Act.

Analysis:
The judgment pertains to an application for withdrawal of appeals under section 245M of the Income-tax Act, 1961. The assessee sought permission to withdraw appeals for assessment years 1973-74 to 1979-80 in order to make an application to the Settlement Commission. The ITAT granted permission for withdrawal under section 245M of the Act. Subsequently, the Settlement Commission refused to entertain the assessee's application on the grounds of non-disclosure of income. The crucial issue was the effect of non-entertainment of the application by the Settlement Commission on the withdrawal of appeals.

The judgment highlighted the provisions of Section 245M of the Act, both before and after the amendment by the Taxation Laws (Amendment) Act, 1984. It emphasized that under Section 245M(7), if an application made to the Settlement Commission is not entertained, the assessee shall not be deemed to have withdrawn the appeal from the Appellate Tribunal. This provision was crucial in determining the status of the withdrawn appeals in light of the Settlement Commission's decision.

The judgment clarified that as per the amended Section 245M, where the Settlement Commission does not entertain the application, the appeals are deemed to have not been withdrawn. Therefore, on the date when the Settlement Commission refused to entertain the application, the appeals stood restored to the file of the Appellate Tribunal. Consequently, the appeals were to be treated as not withdrawn, and notices were to be issued to both parties for the hearing of the appeals in accordance with the law.

In conclusion, the judgment allowed the application and directed that the appeals, which were initially permitted to be withdrawn but later deemed as not withdrawn due to the Settlement Commission's decision, be restored to the file of the Appellate Tribunal for further proceedings. The decision was based on the interpretation of Section 245M(7) of the Act and its application in the given circumstances.