2016 (10) TMI 778 - HC - Income Tax

Rejection of application for settlement of the case by the Settlement Commission - as per the revenue, AO passed the assessment orders for five assessment years in question. - Orders were passed as on 15.3.2016 - Refusal of hand delivery through inspector - On 16.3.2016, the assessee filed application for settlement before the Settlement Commission. Held that - No sooner an application for settlement is filed under subsection( 1) of section 245C of the Act, the Assessing Officer would be divested of his jurisdiction to assess the return further. The jurisdiction would vest solely and exclusively in the Settlement Commission. - There cannot be one order of assessment by Assessing Officer for the same period for which the Commission would also pass the order of settlement. Accepting the contention of the petitioner that even if the order of assessment has been passed by the Assessing Officer, his case may still be deemed to be pending since such order was not dispatched or served, would lead to a conflicting situation. For the purpose of application under section 245C(1) of the Act, a case would be pending only as long as the order of assessment is not passed. Once the assessment is made by the Assessing Officer by passing the order of assessment, the case can no longer be stated to be pending. Application for settlement would be maintainable only if filed before the said date. Date of dispatch of service of the order on the assessee would not be material for such purpose. Petition dismissed - Decided against the petitioner.

Issues Involved:
1. Whether the assessment orders were actually passed on 15.3.2016.
2. Whether the assessment orders were served to the petitioner on 15.3.2016.
3. Whether the application for settlement under section 245C of the Income Tax Act was maintainable after the assessment orders were passed but before they were served.

Detailed Analysis:

1. Whether the assessment orders were actually passed on 15.3.2016:

The petitioner contended that the assessment orders were not passed on 15.3.2016, arguing that it was improbable for the assessment orders to be approved and finalized on the same day. However, the department provided substantial evidence, including affidavits from the Assessing Officer, the Inspector, and the Joint Commissioner, along with various registers documenting the sequence of events. These documents showed that the draft orders were sent to the Joint Commissioner, approved, and returned to the Assessing Officer on 15.3.2016, who then finalized the orders on the same day. The court found no evidence of pre-dating the orders and concluded that the assessment orders were indeed passed on 15.3.2016.

2. Whether the assessment orders were served to the petitioner on 15.3.2016:

The department asserted that the assessment orders were tendered for service on 15.3.2016, but the partners of the petitioner firm refused to accept them. The court reviewed the affidavits and the report from the visiting officers, which stated that the orders were tendered but refused by the petitioner. The petitioner’s argument that the orders were not served on 15.3.2016 was countered by the department’s consistent documentation and the logical sequence of events. The court concluded that the assessment orders were tendered for service on 15.3.2016, and the refusal to accept them constituted complete service.

3. Whether the application for settlement under section 245C of the Income Tax Act was maintainable after the assessment orders were passed but before they were served:

The petitioner argued that the application for settlement was maintainable as the assessment orders were not served before the application was filed. The court examined the legal provisions, particularly the explanation (iiia) to section 245A(b), which states that an assessment is deemed to conclude on the date the assessment is made. The court cited various precedents, including the Supreme Court's and High Courts' decisions, which consistently held that the date of making an order is the date it is passed, not the date of service. The court emphasized that the statutory framework intends to avoid conflicting situations where both the Assessing Officer and the Settlement Commission could have jurisdiction over the same assessment period. Thus, the court concluded that the application for settlement was not maintainable once the assessment orders were passed on 15.3.2016, regardless of the date of service.

Conclusion:

The court dismissed the petitions, holding that the assessment orders were validly passed and tendered for service on 15.3.2016. The application for settlement under section 245C was not maintainable as the assessment proceedings concluded on the date the orders were passed. The stay granted previously was extended until 15.12.2016.

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