2022 (3) TMI 222 - HC - Income Tax

Settlement Commission u/s 245C - Powers and procedure of Settlement Commission - legality and validity of the show cause notice issued by the Assessing Officer under Section 153A / 143(3) - whether the impugned show cause notice could have been issued pending the adjudication before the Settlement Commission? - HELD THAT - The proviso to Sub-section (2) makes it abundantly clear that if any application has been made under Section 245C on or after the first day June 2007, it is the Settlement Commission who shall have the exclusive jurisdiction from the date on which the application was made. In view of the aforesaid, the impugned show cause notice issued under Section 153A read with Section 143(3) of the Act could not have been issued. The same could be said to be without jurisdiction.On the above short ground alone, this writ application succeeds and is hereby allowed. The impugned notice is hereby quashed and set aside

Summary

Issues:
Jurisdiction of Assessing Officer to issue show cause notice during Settlement Commission proceedings.

Analysis:
1. The writ applicant sought various reliefs through a writ application under Article 226 of the Constitution of India, challenging the impugned show cause notice dated 15.09.2021 issued by the Assessing Officer under Section 153A / 143(3) of the Income Tax Act for the assessing year 2019-20.

2. The core issue revolved around whether the show cause notice could be validly issued while the applicant was before the Settlement Commission under Section 245C of the Income Tax Act, 1961. The Revenue's reply highlighted that the notice was issued due to the applicant's failure to submit proof of application before the Settlement Commission, which was later rectified by the applicant.

3. The Court examined Section 245F of the Act, which delineates the powers and procedures of the Settlement Commission. It was noted that the Settlement Commission has exclusive jurisdiction once an application under Section 245C is allowed to proceed, as per the provisions of the Act.

4. The Court emphasized that the proviso to Sub-section (2) of Section 245F clarified that if an application was made after June 2007, the Settlement Commission holds exclusive jurisdiction from the date of application. Consequently, the issuance of the impugned show cause notice during Settlement Commission proceedings was deemed to be without jurisdiction.

5. Based on the above legal analysis, the Court allowed the writ application, quashed the impugned notice, and directed the Assessing Officer to proceed in accordance with the law once the Settlement Commission proceedings concluded. The judgment highlighted the importance of adhering to the statutory provisions governing the jurisdiction of the Settlement Commission and Assessing Officers in income tax matters.