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TMI Blog1995 (1) TMI 308X X X X Extracts X X X X X X X X Extracts X X X X ..... Chander Kant Jain, New Delhi (applicant No. 1) and Suraj Mal Meena (Hindu undivided family), Rajasthan (applicant No. 2) were heard. One could not be heard. Shri Mohan Lal, advocate, represented applicant No. 1. Shri Y. P. Sabharwal, advocate, represented applicant No. 2. Shri S. K. Bhardwaj, Commissioner of Income-tax (Departmental Representative), represented the Department. As a single common issue is to be considered in two cases, this common order is passed in respect of them. Facts in brief giving rise to the constitution of the Special Bench : The three cases under consideration were earlier taken up by the Principal Bench, New Delhi, for passing necessary orders under section 245D(1) either allowing the applications to be proceeded with or to reject them. The law enjoins an opportunity of hearing being given to the applicant, if the Commission proposes to reject his application. The application (S. A. No. 8/9/515 of 1989-I.T.) was fixed for hearing on June 7, 1993. The Bench recorded the view that the issue for consideration whether the proceeding by way of appeal in respect of the assessment year 1986-87 continued to be pending even after passing of an order in appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question came up for consideration on June 7, 1993, in the case of applicant No. 1 and the Bench recorded that the earlier decision of the same Bench required reconsideration. Thus, the order of the Chairman to constitute the Special Bench is well in accordance with law as explained in the decision (supra). Factual matrix of the issue for consideration in the three applications : Applicant No. 1_Chander Kant Jain (i) Date of filing the settlement application for the assessment years 1986-87 and 1987-88 2-1-1990 (ii) Date of appellate order of the Commissioner of Income-tax (Appeals) for the assessment year 1986-87 21-12-1989 (iii) Date of service of the appellate order on the applicant 22-1-1990 (iv) Date of despatch of the appellate order to the Commissioner of Income-tax 28-12-1989 The issue for consideration in this case is whether the proceeding by way of appeal for the assessment year 1986-87 was pending before the Commissioner of Income-tax (Appeals) on the date (i.e., January 2, 1990) of making the application under section 245C(1), after the Commissioner of Income-tax (Appeals) had passed the appellate order on December 21, 1989, and served it on the applicant on Janu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of the appeal under sub-section (7) of section 250. (b) Section 250 with sub-sections (1) to (7) entitled "Procedure in appeal" is a complete code on the subject. The obligation on the Commissioner of Income-tax (Appeals) to communicate the order passed by him to the assessee and to the Commissioner of Income-tax is the last stage of the completion of appeal proceeding. It is significantly put separately in sub-section (7). That it is significant is proved by the fact that despite section 253(3) providing for the right of appeal to the Appellate Tribunal to be filed within 60 days of the date of communication, the Legislature still provided for an obligation on the Commissioner of Income-tax (Appeals) to communicate the order. By comparison, there is significant absence of such obligation of communication on the Commissioner of Income-tax who passes an order under section 263(1) or 264. Likewise, there is no requirement of law for communication of the assessment orders framed under sections 143(3), 144 and 147. The provisions speak about the assessment order in writing, but are silent about the service of the order. (c) The applicant can make an application under section 245C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order made by an authority under a statutory provision does not become an order as soon as it is drawn up and signed. It does not become an effective and valid order until it is served upon the party affected. The requirement of communication arises only when a party is likely to be deprived of his right to property or is likely to be otherwise prejudiced by the order. To sum up, counsel for the applicant pleaded that the Special Bench may uphold the decision in the case of Super Rubber Enterprises. Shri S. K. Bhardwaj, Commissioner of Income-tax (Departmental Representative), countered all the foregoing arguments. He argued that the reliance by the applicants on the decision in CIT v. Mahabir Prasad Poddar [1974] 93 ITR 215 (Cal), is not apposite because whatever was observed there in the context of an administrative order under section 132(8) of the Income-tax Act cannot be applied while interpreting the provisions of section 250(6) and (7) which deal with the quasi-judicial order disposing of appeal. The Calcutta High Court drew support from the judgment of the Supreme Court in Bachhittar Singh v. State of Punjab, AIR 1963 SC 395, which case also dealt with the validity of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therein ;" Webster's Third New International Dictionary : "Not yet decided ; in continuance ; in suspense.'' According to him, the proceeding once commenced remain pending till concluded by the concerned authority. A proceeding by way of appeal before the Commissioner of Income-tax (Appeals) commences as soon as an appeal in the prescribed form duly verified is filed within the prescribed time. This is provided in section 249. The next section 250 with headnote "Procedure in appeal" provides for the steps of hearing and disposal of the appeal and also for communication of the order to both the parties. The conclusion of the proceeding is with the passing of an order disposing of the appeal in writing under sub-section (6) of section 250. The communication of such order to the concerned parties is a stage subsequent to disposal of the appeal by an order. This is clear from the opening words in sub-section (7) of section 250 : "On the disposal of the appeal . . . ." No special meaning can be attached to sub-section (7) by comparing these provisions with the provision in sections 143(3), 144, 147, 263 and 264. A quasi-judicial order like an assessment order, an appellate order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (8) must be made as expeditiously as possible after the order of approval is passed by him. It is nobody's case before the Special Bench that the Commissioner of Income-tax (Appeals)'s order under section 250(6) was not served on the applicant within reasonable time. None of the counsel has pleaded that the relevant appellate order in the applicant case is ineffective and invalid for whatever reason. The reliance on the Calcutta decision is, therefore, misplaced. Special Bench's conclusion : We have carefully considered the contentions of counsel for the applicants and also of the Commissioner of Income-tax (Departmental Representative). We feel that the controversy before us has been blown up out of focus by the sheer force of sophistry and by quoting from the judicial decisions out of the context. The real issue is whether a proceeding in appeal which commenced with the filing of an appeal under section 249 before the Commissioner of Income-tax (Appeals) gets concluded with the passing of an order in writing by him under section 250(6) or with the communication of the said order under section 250(7). For our focus, the relevant provisions of law are as follows : Section 245C( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribed time. We have now to decide whether the pendency of such proceeding concluded with the passing of the appellate order by the Commissioner of Income-tax (Appeals) or it continued even up to the date on which the appellate order was communicated to the applicant and the Commissioner of Income-tax. There is no dispute regarding the commencement of the proceedings in appeal in the cases before us. Significantly the Act envisaged a dispute in this regard and it has been provided in the proviso to section 245A(b) that where an appeal has been preferred after the expiry of the period specified for the filing of such appeal and which has not been admitted such appeal shall not be deemed to be a proceeding pending. It is clear that by the passing of an order by the Commissioner of Income-tax (Appeals) in accordance with the provisions of sub-section (3) of section 249 admitting a belated appeal, there would be a commencement of the proceeding in appeal and as such it would be pending till it is disposed of by an order of disposal in writing under section 250(6). Thus, the Act has clearly stipulated the passing of an order admitting the belated appeal and there is no suggestion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icial order is made or passed on the date on which it purports to have been made and the communication of such order would not vest it with any special significance as regards the validity of such order. We are aware of the case-law on the subject of completion of assessment proceeding, vis-a-vis, the date of limitation. The learned Commissioner of Income-tax (Departmental Representative) copiously quoted from judicial decisions on the subject. We also see the relevance of such case-law while deciding the issue of pendency of appeal proceeding. One of the cases cited before us is K. N. K. Reddy v. CIT [1974] 97 ITR 450 (Mys). At page 456, the following observations are very apposite and helpful : " It cannot be denied that an order, before it is made effective, must be served on the person against whom the order is made. Thus, from the point of view of the person who is affected by the order, the order is made when it is communicated to him. But this does not mean that until an order is communicated, the order is not made at all. Notice under section 29 of the Income-tax Act presupposes an order of assessment under section 23(1) or 23(3). Notice under section 29 can only be ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if it were a mere rubber stamp or yet another limb of the ordinary executive mechanism of tax-gatherers. A party approaching the Settlement Commission has to adjust itself to the requirements of the scheme and the needs of the procedure. We, therefore, conclude that in terms of the definition of "case" under section 245A(b), the proceeding by way of appeal in respect of any assessment year cannot be said to be pending before the Commissioner of Income-tax (Appeals) after the appellate authority has disposed of the appeal by an order in writing under section 250(6) of the Income-tax Act. Further the communication of the appellate order by the Commissioner (Appeals) to the assessee and to the Commissioner is subsequent to the conclusion of the appeal proceeding. We, therefore, overrule the decision of the Principal Bench, New Delhi, in the case of Super Rubber Enterprises, New Delhi. The applications in the cases of Chander Kant Jain and Suraj Mal Meena (Hindu undivided family) as also in the case of Guli Chand, Faridabad, will now go back to the Principal Bench of the Settlement Commission, New Delhi, for appropriate orders to be passed by them under section 245D(1) of the Incom ..... 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