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TMI Blog2016 (7) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... sstt.Year 1984-85. ITA No.939/Ahd/2010 is also filed by the assessee against the order of the ld.CIT(A) dated 27.1.2010 passed for the Asstt.Year 1984- 85. In this appeal, the issue involved is that the ld.CIT(A) has erred in confirming the action of the AO in cancelling the registration of firm under provision of section 186(2) of the Income Tax Act. In the quantum appeal i.e. ITA No.937/Ahd/2010 and 938/Ahd/2010 both the assessees have taken preliminary issue, whereby, they have pleaded that the assessment orders were passed after expiry of limitation, therefore, these assessment orders deserve to be quashed in respective cases. Other two appeals, one at the instance of assessee and one at the instance of the Revenue in both the cases relate to proceedings initiated under section 154 and 186(2) of the Income Tax Act. If it is held that the assessment orders were time barred, then both the assessment orders would be quashed. Consequent thereupon, other two appeals would become redundant. Therefore, we first take ITA No.938/Ahd/2010 and 937/Ahd/2010. 2. In the case of Patel Land Corporation, the assessee has filed a list of events. It is pertinent to take note of certain dates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. According to the assessee, there was an amendment in section 245D and new provision i.e. (2D) was inserted by Finance Act, 2007 w.e.f. 1.6.2007. According to the newly inserted provision, the assessee is required to discharge its tax liability and additional taxes on the income disclosed on such application along with interest before 31.7.2007. In case an assessee fails, then, the application deemed to have been as not proceeded with. The contention of the assessee was that as per sub-clause (4) of section 245HA r.w.s section 245(2D), its application would be deemed to have been abated on 31.7.2007 on account of non-payment of taxes. The AO was required to pass the assessment order within a period of one year from 31.7.2007. This has been contemplated in second proviso to section 153(4) as per clause (4) to section 245HA. The AO had issued a notice in the case of Jashwantilal T. Patel on 6.3.2009. He has passed an assessment order on 31.3.2009, hence, the assessment order is time barred. The AO did not consider this plea of the assessee, and his conclusion met the approval of the ld.CIT(A). 4. Before us, the ld.counsel for the assessee contended that a bare perusal of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hstanding any extension of time already granted by the Settlement Commission, paid on or before the 31st day of July, 2007." "Explanation - In respect of the applications referred to in this subsection, the 31st day of July, 2007 shall be deemed to be the date of the order of rejection or allowing the application to be proceeded with under sub-section (1)." 7. The next provision is section 245(HA). It was also inserted on 1.6.2007 with the Explanation appended to this section. It reads as under: "Abatement of proceeding before Settlement Commission. 245HA. (1) Where- (i) an application made under section 245C on or after the 1st day of June, 2007 has been rejected under sub-section (1) of section 245D; or (ii) an application made under section 245C has not been allowed to be proceeded with under sub-section (2A) or further proceeded with under sub-section (2D) of section 245D; or (iii) an application made under section 245C has been declared as invalid under sub-section (2C) of section 245D; or (iv) in respect of any other application made under section 245C, an order under sub-section (4) of section 245D has not been passed within the time or period specified under su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest under section 243 or section 244 or, as the case may be, section 244A, this proviso shall also apply accordingly." 9. It is an admitted position that the ld.Settlement Commission has not passed any order on the applications of the assessees after the amendment carried out by way of Finance Act, 2007. The area of dispute between both the parties relates to very narrow compass. As per Revenue, the Settlement Commission was to pass an order under subsection 4 on or before 31.3.2008. However, since the requisite order was not passed by the ld.Settlement Commission by 31.3.2008, the assessees' case was covered under clause (4) of sub-section (1) of section 245(HA) r.w.s Explanation (d). On the other hand, the case of the assessee is that once they failed to make payment of taxes in terms of section (2D), their application would deem to have been abated on 31.7.2007, because, their application would not be allowed to be proceeded with. 10. We have duly considered rival contentions and gone through the record carefully. A bare perusal of the above provisions would indicate that, if the an assessee files an application under section 245C of the Income Tax Act before Settlement Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovided in sub-section-4(A). In our opinion, this is the erroneous construction of provision at the end of the ld.CIT(A). Sub-clause 4(A) is applicable on those applications, where the taxes were paid by an assessee before 31.7.2007. In all these applications, the order ought to be passed by 31.3.2008. A perusal of the provisions extracted (supra), it is clear that in case where taxes were not paid by 31.7.2007, then, the application will be deemed to have been abated on this date. The order of the ITAT (Amristar) Bench) has also given this interpretation in the case of Gurmeet Singh (supra). 11. In order to find out whether the assessees have paid taxes before 31st July, 2007 or not, we have directed the ld.counsel to demonstrate this fact. The ld.counsel for the assessee for the applicants before the Settlement Commissioner try to demonstrate the tax liability and the amounts paid by both these assessees. However, we find that both the orders are totally silent on this issue. If we arrive at a conclusion that the taxes were not paid by the assessee before 31.7.2007, then, the application before the Settlement Commissioner would abate on 31st July. But if it is established that ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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