9911796707
TMI Blog2012 (4) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... er Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992 without appreciating that the said Act has not ruled that the provisions of Sections 234A, 234B, and 234C are not applicable to the notified persons or they are exempted from the liability of payment of interest under these sections of Income Tax Act, 1961." 2. The Appeal is admitted on the aforesaid questions and is taken up for hearing and final disposal by consent. 3. The assessee is a notified person under the Special Court (Trial of Offences relating to Transactions in Securities) Act 1992. The assets of the assessee including its bank accounts were attached and vested in the Custodian under the Act. The return of income for Assessment Year 2005-06 which was due on 31 October 2005 was filed on 26 February 2007 declaring a total income of Rs.37.54 lacs. The assessment was completed under Section 143(3) on 13 December 2007, determining a total income of Rs.45.73 lacs. The Commissioner (Appeals) disposed of the appeal by an order dated 29 August 2008. The Commissioner held that the provisions of Sections 234A, 234B and 234C of the Income Tax Act, 1961 were mandatory. In appeal, the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the other hand, it has been urged on behalf of the Respondent that - (i) The provisions of the Special Court Act would override the provisions of the Income Tax Act, 1961; (ii) A notified person by virtue of the notification under Section 3 of the Special Court Act loses right and control over his assets and is unable to discharge his statutory obligations as a result of a legal disability cast upon him; (iii)Interest under Sections 234A, 234B and 234C enjoys the last priority in payment under Section 11(2)(c). Reliance was sought to be placed on the decisions of the Supreme Court in Tax Recovery Officer v. Custodian (2007) 7 SCC 461 and in Solidaire India Limited v. Fairgrowth Financial Services Ltd. (2001) 3 SCC 71. 6. In Harshad Shantilal Mehta (supra) the decision of the Supreme Court dwelt on six questions of which two, questions 5 and 6, have a bearing on the issues which arise in this appeal. Those questions were : i) Whether the expression 'tax' in Section 11(2)(a) of the Special Court (Trial of Offences relating to Transactions and Securities) Act 1992 includes penalty or interest; and ii) Whether the Special Court has the power to absolve a notified person from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax Act, 1961 on 26 June 2006 directing that the Chief Commissioner of Income Tax and the Director General may reduce or waive interest charged under Sections 234A, 234B or 234C in the classes of cases or of income specified in paragraph 2 or the order for the period and to the extent that the Chief Commissioner / Director General may deem fit. However, it has been directed that no reduction or waiver of interest shall be ordered unless the assessee files a return of income for the relevant Assessment Year and pays the entire income tax due on the income as assessed. Both the authorities may impose any other conditions as deemed fit for reduction or waiver of interest. Paragraph 2 of the direction contains classes of income or classes of cases in which reduction or waiver of interest under Section 234A, 234B or 234C can be considered and which are as follows : "(a) Where during the course of proceedings for search and seizure under section 132 of the Income-tax Act, or otherwise, the books of account and other incriminating documents have been seized, and the assessee has been unable to furnish the return of income of the previous year, during which the action under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure. The Constitution Bench of the Supreme Court in Commissioner of Income Tax v. Anjum M.H. Ghaswala (2001) 252 ITR 1 held that the provision for the levy of interest contemplated under Sections 234A, 234B and 234C is mandatory in nature and a power of waiver or reduction has not been expressly conferred upon the Settlement Commission under Chapter XIX A of the Income Tax Act, 1961. The Supreme Court held that the Settlement Commission does not have the power to reduce or waive interest statutorily payable under those provisions except to the extent of granting relief under the circulars issued by the Board under Section 119. Section 119 statutorily confers a power upon the Board to issue general or special orders inter alia in respect of any class of income or class of cases, where it considers it is necessary or expedient to do so for the proper and efficient management of assessment and collection of revenue, on the guidelines, principles or procedures to be followed by other income tax authorities whether by way of realisation of the provisions of Sections 234A, 234B, 234C or otherwise. It is in pursuance of this power that the Central Board of Direct Taxes has issued its dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, or in any decree or order of any Court, tribunal or other authority. 12. In Commissioner of Income Tax v. A.K. Menon (1995) 5 SCC 200 the Supreme Court held that the Special Court has no power to sit in appeal over or overrule the orders of the tax authorities, the Income Tax Appellate Tribunal or the Courts in regard to the tax liabilities of notified persons. The only power of the Special Court is to determine the priorities in which claims upon the property under attachment shall be paid. There is no provision in the Special Court Act which governs the determination of tax liabilities. The determination of tax liabilities under the Income Tax Act, 1961 is not governed by the provisions of the Special Court Act. Section 11 of the Special Court Act provides for the discharge of liabilities and empowers the Special Court to make such order as it may deem fit directing the custodian in regard to the disposal of the property under attachment. Sub-section (2) of Section 11 provides for the liabilities which shall be paid or discharged in full. The Supreme Court has held that the expression 'tax' in clause (a) of sub-section (2) of Section 11 would not include penalty or int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xercisable immediately before such commencement by any Civil Court in relation to any matter or claim relating to any property standing attached under sub-section (3) of Section 3. The Supreme Court held that the jurisdiction of the Special Court is confined to the property of the notified person which stands attached under section 3(3). In paragraph 14 of the judgment, the Supreme Court observed as follows : "In Solidaire India Ltd.(2001) 3 SCC 71. the provisions of Section 13 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 and Section 32 of the Sick Industrial Companies (Special Provisions) Act 1985 were examined and it was held that both these Acts are special Acts and in such an event it is the later Act, namely, the Special Courts (Trial of Offences Relating to Transactions in Securities) Act, 1992 which must prevail. Thus there can be no manner of doubt that the provisions of the Special Courts Act, wherever they are applicable, shall prevail over the provisions of the Income Tax Act." The Supreme Court held that the Special Court could not have entertained the application moved by the Income Tax Department under Section 26(4) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
