2018 (7) TMI 463 - HC - Income Tax

Settlement Commission disposing of the proceedings as having abated - petitioners had taken a stand that the abatement proceedings are not valid and cannot apply so harshly as to terminate their proceedings for no fault of theirs - Held that - By the time the commission took up the applications for settlement for further hearing, the law was made sufficiently clear by virtue of declaration by Bombay High Court in case of Star Television (2009 (8) TMI 86 - BOMBAY HIGH COURT) and approval of such view of Bombay High Court by the Supreme Court. 2015 (4) TMI 19 - SUPREME COURT When the Settlement Commission was therefore taking up the applications for settlement for further hearing, it was obliged to apply such law. If the proceedings were delayed due to the reasons attributable to the applicants, the provision for abatement would apply but not otherwise. The Settlement Commission has not recorded any such finding. The department has not brought any facts to our notice to permit any further inquiry in this respect by the Settlement Commission. In plain terms therefore there is no material before us to hold that the application for settlement of the present petitioners were belated due to the reasons attributable to the petitioners. The impugned order of the Settlement Commission is set aside. The proceedings are revived

Summary

Issues:
Petitions challenging settlement applications abatement due to statutory provisions in Income Tax Act, 1961.

Analysis:
The petitions arose from a common background challenging a Settlement Commission order dated 28.08.2017 due to amendments in the Income Tax Act, 1961. Petitioners contended that their settlement applications might abate soon without any fault of theirs, questioning the validity of the statute imposing such consequences. The Division Bench disposed of the petitions directing compliance with the Supreme Court's judgment in a related case. After this order, the Supreme Court allowed withdrawal of the related case without deciding the controversy, and the Bombay High Court interpreted the abatement provisions, emphasizing that proceedings should only abate if delayed due to reasons attributable to the applicant. The Settlement Commission, in the impugned order, declared abatement solely based on petitioners' approach to the High Court and the Supreme Court's non-decision in the related case.

The High Court held that the Settlement Commission erred in declaring abatement without considering the reasons for delay attributable to the petitioners. Despite the Supreme Court not deciding the related case on merits, the petitioners' rights and contentions should not be extinguished. The law was clear post the Bombay High Court judgment and Supreme Court's approval, requiring the Settlement Commission to apply such law. Since no finding was recorded attributing the delay to the petitioners, and no material was presented to support further inquiry, the application for settlement should not be considered belated solely based on the previous court approach.

Consequently, the impugned order of the Settlement Commission was set aside, and the proceedings were revived for disposal in accordance with the law. All petitions were disposed of accordingly.