2025 (2) TMI 836 - SCH - Income Tax

Rectification application u/s 254 - pendency of the application filed by the assessee before the Settlement Commission as per the provision of Section 245F(2) - assessee filed an appeal before the ITAT challenging the order passed by the CIT(Appeal) with an application to condone the delay in preferring the appeal - ITAT by order condoned the delay of 4379 days and remitted the matter back to the CIT(Appeal) for fresh consideration on merits. As decided by HC 2024 (4) TMI 1230 - GUJARAT HIGH COURT No infirmity in the impugned order passed by the Tribunal to come to the conclusion that there is no mistake apparent on record in the order of the Tribunal wherein after following the decision of the Coordinate Bench the Tribunal condoned the delay and as the CIT(Appeal) did not adjudicate the issue on merits and dismissed the appeals of the respondent-assessee as not maintainable in view of the order passed by the Settlement Commission on the ground that the matters have abated the Tribunal has rightly remanded the matter back to the CIT(Appeal) HELD THAT - As stated at the Bar that the application before the Settlement Commission has not been decided and an order under Section 245D(4) on the application is to be passed. It is only if the application for settlement is rejected without providing for terms of settlement that Section 245HA of the 1961 Act will be applicable and the appellate proceedings will stand revived. The stand of the Revenue that the assessee must give up his right to contest the assessment order on merits if the settlement application is rejected without providing for terms of settlement is misconceived and must be rejected. In the peculiar facts of the case the Income Tax Appellate Tribunal was justified in condoning the delay as well as setting aside the order of the Commissioner of Income Tax (Appeals) and restoring the first appeal. Recording the aforesaid we dismiss the present special leave petition. Keep the appellate proceedings in abeyance till the disposal of the application by the Settlement Commission in terms of the 1961 Act

Summary

The Supreme Court, in a judgment delivered by Hon'ble Chief Justice Sanjiv Khanna and Hon'ble Mr. Justice Sanjay Kumar, addressed a matter related to an application before the Settlement Commission under Section 245D(4) of the Income Tax Act, 1961. The Court clarified that if the settlement application is rejected without providing for terms of settlement, Section 245HA of the 1961 Act will apply, leading to the revival of appellate proceedings. The Court rejected the Revenue's stance that the assessee must waive the right to contest the assessment order on merits in such a scenario. In this specific case, the Income Tax Appellate Tribunal was deemed justified in condoning the delay, setting aside the Commissioner of Income Tax (Appeals) order, and restoring the first appeal. The Court dismissed the special leave petition but directed the Commissioner of Income Tax (Appeals) to suspend the appellate proceedings until the Settlement Commission disposes of the application in accordance with the 1961 Act. Any pending applications were to be considered disposed of.