2023 (12) TMI 719 - HC - Income Tax

Application for settlement filed by the petitioner rejected - application came to be rejected by the first respondent/Interim Board for Settlement II for the reason that the petitioner had filed the application without payment of tax and interest on the income disclosed as mandated under the provisions of section 245 C (1) - petitioner submitted that the entire tax liability along with interest has been discharged and no further amount is liable to be paid by the petitioner towards tax as well as interest - HELD THAT - A mere perusal of the order impugned herein as well as the application made by the petitioner for third occasion, dated 10.3.2021, it is seen that the petitioner has clearly furnished the details with regard to the discharge of entire tax liability along with interest, however, the application came to be rejected, without stating as to why, the application is rejected and further, in the impugned order, there is not even a reference made with regard to the payment details made by the petitioner towards tax and interest and mechanically, the first respondent rejected the application for settlement filed by the petitioner. Hence, this Court is inclined to direct the 1st respondent to take up the application of the petitioner on record and dispose of the same on merits and in accordance with law within a specified time. Writ Petition is disposed of by directing the 1st respondent to take the application of the petitioner on record and dispose of the same on merits and in accordance with law on or before 31.12.2023.

Summary

Issues:
The judgment involves the rejection of the petitioner's application by the Interim Board for Settlement-II despite the petitioner paying the entire tax due and interest as required under the Income Tax Act, 1961.

Details of the Judgment:

Issue 1: Rejection of Application by Interim Board

The petitioner approached the Income Tax Settlement Commission twice, but the applications were rejected for non-payment of tax on additional income and interest. Following the amendment of the Act and the establishment of the Interim Board for Settlement II, the petitioner submitted a third application on 10.03.2021, paying the entire tax due amounting to Rs.8,84,47,668. Despite this, the application was rejected by the Interim Board on 15.09.2023, citing non-payment of tax and interest as required by section 245 C (1) of the Income Tax Act, 1961.

Issue 2: Petitioner's Contentions

The petitioner contended that they had indeed paid the entire tax liability and interest, and their application was wrongfully rejected without considering the payments made. The petitioner submitted a rectification application detailing the payment dates and modes, but this was also disregarded by the Interim Board. The petitioner then filed a Writ Petition seeking redressal.

Issue 3: Respondent's Argument

The Senior Standing Counsel for the respondents argued that the petitioner had only made a partial payment of the tax liability and further payments were required, leading to the rejection of the application.

Issue 4: Court's Decision

After hearing both parties, the Court observed that the petitioner had indeed discharged the entire tax liability along with interest. The Court noted that the rejection of the application lacked justification and directed the Interim Board to consider the petitioner's application on its merits and in accordance with the law within a specified time frame.

Conclusion

The Writ Petition was disposed of with the direction for the Interim Board to process the petitioner's application by 31.12.2023. No costs were awarded, and the connected miscellaneous petitions were closed as a result of the judgment.