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TMI Blog2002 (12) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... section 245BA(5A) of the Act constituted a Special Bench vide order dated September 18, 1998, for adjudicating the following three issues: "1. Was the Special Bench of the Settlement Commission right in holding in the case of Om Metals and Minerals Pvt. Ltd., In re [1992] 193 ITR 57 (ITSC) (Delhi) that the assessment order passed by, the Assessing Officer before the admission of the settlement application subsisted and recovery proceedings continued, even after the admission of the said application, especially after the judgment of the Supreme Court in the case of CIT v. Express Newspapers Ltd. [19941 206 ITR 443? 2. If the answer to question No. 1 is in the affirmative would it be correct to say that once the Settlement Commission determines a liability of the applicant for tax, penalty and interest under section 245D(4), the orders of the lower authorities would automatically stand set aside and consequently there will be no liability under section 220(2) of the Act? 3. If the answer to question No. 1 is in the affirmative, or the question No. 2 in the negative, has the Settlement Commission powers to waive interest under section 220(2) of the Act?" The Special Bench by major ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to proceed with the petition under section 245D. With reference to the definition of the expression "case" as appearing under section 245A, it is submitted that the proceedings may be pending before the concerned authority, i.e., the assessing authority, the appellate authority or the revisional authority; and Explanation (1)(v) to section 153(3) makes it clear that extension is granted for completing the pending proceedings in case the petition under section 245C is rejected. Therefore, the Commission gets jurisdiction to deal with the matter, as soon as an application is made under section 245C. The Commission till admission of the petition exercises powers of the income-tax authorities and after admission it functions as a Settlement Commission in addition to powers exercisable by the income-tax authorities. With reference to Anjum M.H. Ghaswala's case [2001] 252 ITR 1 (SC) it was submitted that the specific power of waiver is given to the concerned authority and, therefore, interest charged can be waived. There cannot be double levy of interest and when interest is charged under section 245D(2C)/(6A) interest under section 234B cannot be charged. In order to appreciate the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of this section, where, in any financial year, an assessee who is liable to pay advance tax under section 208 has failed to pay such tax or, where the advance tax paid by such assessee under the provisions of section 210 is less than ninety per cent. of the assessed tax, the assessee shall be liable to pay simple interest at the rate of one and one-half per cent. for every month or part of a month comprised in the period from the 1st day of April next following such financial year to the date of determination of total income under sub-section (1) of section 143 and where a regular assessment is made, to the date of such regular assessment, on an amount equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid as aforesaid falls short of the assessed tax. Explanation 1--In this section, 'assessed tax' means,-- (a) for the purposes of computing the interest payable under section 140A, the tax on the total income as declared in the return referred to in that section; (b) in any other case, the tax on the total income determined under subsection (1) of section 143 or on regular assessment, as reduced by the amount of tax deducted or colle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tlement Commission in case of all applications made under section 245C on or after the 1st day of July, 1995 and if the Commissioner fails to furnish the report within the said period, the Settlement Commission may make the order without such report. (1A) Omitted.... (2C) Where the additional amount of income-tax is not paid within the time specified under sub-section (2A), then, whether or not the Settlement Commission has extended the time for payment of the amount which remains unpaid or has allowed payment thereof by instalments under sub-section (2B), the assessee shall be liable to pay simple interest at fifteen per cent. per annum on the amount remaining unpaid from the date of expiry of the period of thirty-five days referred to in sub-section (2A)... (4) After examination of the records and the report of the Commissioner received under sub-section (1), and the report, if any, of the Commissioner received under sub-section (3), and after giving an opportunity to the applicant and to the Commissioner to be heard, either in person or through a representative duly authorised in this behalf, and after examining such further evidence as may be placed before it or obtained by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expression "may" but the change brought about in the Finance Act, 1987 is a clear indication that the intention of the Legislature was to make the collection of statutory interest mandatory. The expression "shall" is used deliberately. It has to be noted that the Commission exercises power in respect of income which was not disclosed before the authorities in any proceeding, but are disclosed in the petition under section 245C. It is not that any amount of undisclosed income can be brought to the notice of the Commission in the said petition. The Commission exercises jurisdiction if the additional amount of tax on such undisclosed income is more than a particular figure (which at different points of time exceeded rupees fifty thousand or rupees one hundred thousand, as the case may be). The assessee must have in addition furnished the return of income which he is or was required to furnish under any of the provisions of the Act. In essence the requirement is that there must be an income disclosed in a return furnished and undisclosed income disclosed to the Commission by a petition under section 245C. A new Chapter XIX-A was introduced by the Taxation Laws (Amendment) Act, 1975 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion decides to proceed with the petition. Emphasis was laid by the assessee on certain observations made by this court in CIT v. Express Newspapers Ltd. [1994] 206 ITR 443. The observations to the effect that the proceedings before the Commission are not confined to the income disclosed before it, does not mean that even before the Commission decides to proceed with the case, it can deal with disclosed income. While determining the total income, the Commission has to take note of both the disclosed income and the undisclosed income. This is logical because there cannot be two different total incomes for the same assessment year, i.e., disclosed total income and undisclosed total income. Aggregation of both the disclosed and undisclosed income is also necessary because in several years different rates of tax for various slabs of income are provided. By way of an illustration, it may be said that supposing the disclosed income is rupees two lakhs and the undisclosed income is five lakhs, the rate of tax levied on rupees two lakhs may be one but may be different for an income of rupees seven lakhs. For the purpose of computation of taxes, there is a requirement to club both the disclo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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