Receipt of application u/s 245C of Income-tax Act, 1961/22C of the Wealth-tax Act, 1957. - Income Tax - 1293/CBDT

INSTRUCTION NO. 1293/CBDT Dated : December 11, 1979 Section(s) Referred: 245C ,245D Statute: Income - Tax Act, 1961 On receipt of an application under section 245C of the Income-tax Act, 1961/22C of the Wealth-tax Act, 1957, the Settlement Commission calls for a report from the Commissioner as provided in section 245D(1)/22D(1). The second proviso to Section 245D(1)/22D(1) before its deletion with effect from 1st April 1979 and sub-section (1A) of section 245D/22D introduced with effect from that date, stipulate that an application shall not be proceeded with if the Commissioner objects thereto on the ground that concealment of particulars of income/net wealth on the part of the applicant or perpetration of fraud by him for evading any tax etc. has been established or is likely to be established by an Income-tax/Wealth-tax authority, in relation to case. However, the new sub-section(1A) introduced with effect from 1st April 1979 empowers the Settlement Commission to go into the correctness of the objection raised by the Commissioner and over-rule it after giving the Commissioner an opportunity of being heard. 2. A question has been raised whether, in a case in which the Commissioner had made an objection under the second proviso to section 245D(1)/22D(1) before its deletion w.e.f. 1st April 1979 and on the basis thereof and without giving a hearing to the assessee, the Commission has passed an order not allowing the application to be proceeded with, (a) it is open to the Commissioner of Income-tax to reconsider the matter either on the assessee requesting him to do so or on the Commission asking him for a further report, and (b) if, on reconsideration the Commissioner can intimate to the Commission that he has no objection to the application being proceeded with by the Commission. 3. Once an application under section 245C/22C has been disposed of by the Settlement Commission's order under section 245D/22D not allowing the same to be proceeded with, any subsequent request by the assessee direct to the Commissioner of Income-tax to reconsider his earlier objection cannot be entertained, as the law does not provide for the same. However, the position is different if the Settlement Commission, after having refused to proceed with the application on the basis of the Commissioner of Income-tax's objection but without hearing the assessee, is approached by the assessee to reconsider his case after hearing him, and the Settlement Commission calls for a report from the Commissioner. On similar facts, in CIT v. B.N. Bhattacharjee Another (1979)118 ITR 461, the Supreme Court have held that the Settlement Commission did a fresh order in the presence of both parties. It would thus appear that in such circumstances it is open to the Settlement Commission to call for a fresh report from the Commissioner of Income-tax/Wealth-tax. 4. While making his fresh report in the above circumstances, there is no objection to a Commissioner revising his view if he has any fresh facts in his possession. In the absence of any fresh facts, if the Commissioner on a re-examination of facts, comes to the conclusion that his earlier conclusion was based on misappreciation of the facts and circumstances of the case, there may also be no objection to his revising his view and informing the Settlement Commission accordingly. It may also be added that a Commissioner making a report under section 245D(1)/22D(1) does not pass either a judicial or a quasijudicial order. It is, therefore, not a case of a review of any judicial or quasi-judicial order made by a Commissioner. This would be a case of only revision of opinion. Such a revision could be either on the basis of fresh facts or on the basis of a conclusion that his earlier view was based on misappreciation of the facts and circumstances of the case. It is essentially for the Commissioner to come to a conclusion whether there was misappreciation of the facts and circumstances earlier in the matter. In this connection, the Commissioners of Income-tax/Wealth-tax will, no doubt, always keep in mind the observations of the Supreme Court in CIT v. B.N. Bhattacharjee and Another to the effect that the Commissioner of Income-tax has a duty to the public Revenue and his discretion under section 245D/22D has to be exercised with statutory seriousness.