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TMI Blog2018 (12) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... by annulling the assessment order passed by the Assessing Officer whereas the order under section 245HA(1) r.w.s 245D(2) of the Income Tax Act, 1961 was received I the office of the Pr. CIT, Patiala on 02/05/2016 and the assessment orders were passed by the Assessing Officer within 60 days of the receipt of the same from the office of the Pr. CIT, Patiala i.e. on 22/06/2016. 2. It is prayed that the order of Ld. CIT(A) be set aside and that of the Assessing Officer restored. 2.1 Only one effective ground taken by the Assessee in C.O. No. 66/CHD/2017 reads as under: 1. That the first appellate authority has failed to appreciate that no notice under section 143(2) of the Act was neither issued nor served on the assessee within statutory time. Hence, the assessment framed under section 143(3) of the Act is not maintainable as per decision of Punjab & Haryana High Court in case of CIT v. Cebone India Ltd. (2010) 229 CTR 188 (P&H). 3. The brief facts of the case as taken from the order of the Ld. CIT(A) are that, after filing return of income on 27/03/1996, the assessee filed an application before the Hon'ble Settlement Commission u/s 245C (1) on 30/08/1996. The Hon'ble Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the section 245D(2D) and 245HA vide writ petition No. 96(as applicable) of 2008 dt. 06/01/2008. 4.3 On 21.09.2012, the Hon'ble Punjab and Haryana High Court disposed of the bunch of writ petitions by following the ratio in the case of Star Television News Ltd. v. Union of India [2009] 317 ITR 66 (Bom.) as decided by the Hon'ble Bombay High Court. Later, the Hon'ble Settlement Commission passed an ex-parte order u/s 245D(4) on 28.02.2014 as the assessee did not represent before them. The assessee, being aggrieved by the ex-parte order passed by the Hon'ble Settlement Commission u/s 245D (4), filed a writ petition before the Hon'ble Punjab and Haryana High Court on 02/09/2014 which was disposed of on 24.04.2015 by the Hon'ble Court with a direction to the Settlement Commission to pass a fresh order after affording reasonable opportunity of being heard to the assessee, as the earlier order dt. 28/02/2014 was an ex-parte order passed without affording any opportunity to the assessee. 4.4 Thereafter, the Hon'ble Settlement Commission passed an order on 25.04.2016 under section 245HA(1) r.w.s 245D(2D) and the Assessing Officer was also marked a copy of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition before the Hon'ble High Court of Punjab and Haryana on the ground that No opportunity of being heard was given to the Assessee before passing the said order. 6. That AO submitted the reply affidavit to the Civil writ petition No. 17951 of 2014 and took the objection that the civil writ petition filed by the Assessee should be dismissed as the Assessee has not even made payment on the additional income declared before the settlement commission. 7. That the Hon'ble High Court of Punjab and Haryana vide order dated 24.04.2015 decided the writ petition directing to the ITSC to pass a fresh order after affording the reasonable opportunity of being heard to the Assessee. 8. That during the second round of hearing before the ITSC at Kolkotta, AO once again took the objection that application of the assessee filed by the Assessee should be dismissed as the Assessee has not even made payment of the additional income declared before the settlement commission. The ITSC issued intimation letter dated 25.04.2016 U/s 245HA(1) read with 245D(2) of the IT Act stating that the proceedings had abated. It has not passed the order on the ground that the additional tax on the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) ......... ; or (iv) ............ , the proceedings before the Settlement Commission shall abate on the specified date." "Explanation - For the purposes of this sub-section, "specified date" means - (a).......... (b) in respect of an application referred to in clause (ii), the 31st day of July, 2007; (c)..............; (d) .............. " 15. Section 245(HA)(4) r.w.s. 2nd proviso to section 153(4) provides the time limit to pass assessment order, on abatement of Settlement proceedings. Section 245(HA)(4) reads as under: "(4) For the purposes of the time-limit under sections 149, 153, 153B, 154, 155, 158BE and 231 and for the purposes of payment of interest under section 243 or 244 or, as the case may be, section 244A, for making the assessment or reassessment under subsection (2), the period commencing on and from the date of the application to the Settlement Commission under section 245C and ending with "specified date" referred to in sub-section (1) shall be excluded; and where the assessee is a firm, for the purposes of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the TTSC on 25.04.2016 and the same was received in the office of the Pr. CU, Patiala on 02.05.2016. Therefore, as per the provisions of section 153(4) read with proviso the assessment is to be completed within 60 days from receipt of order u/s 245C by the CTT. As stated above, the assessee in the present case is covered u/s 245HA(l)(ii) and therefore, the proceedings before the ITSC shall abate on the specified date as referred to in Explanation (b) i.e. 31st day of July, 2007. Once the proceedings before the TTSC are abated on 31st July, 2007, then, there cannot be any occasion for the TTSC to pass any order u/s 245D(4). Also the proceedings which have been abated once, i.e. on 31st day of July, 2007 cannot again abate on a later date i.e. on 25.04.2016 which is the case of AO. 21. Reliance is placed on the following decisions: a. Late Shri Thakorbhai M. Patel v. TTO (TTA.No.937/Ahd/2010) dt. 01.06.2016 b. Gurmeet Singh v. DOT49 taxmann.com 431 dt. 30.07.2014 c. Nawada Investment Ltd. v. TTO (TTA No.l769/Kol/2009) dt. 17.9.2010 d. ShyamkumrP. Modi v. ACIT (TTA No.28/Mum/2012) dt. 15.01.2014 22. In the present case, taxes and interest thereon have not been paid on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;ble High Court from framing abated assessment order on or before 31.07.2008. 21.09.2012 No stay was granted by the Hon'ble High Court from framing abated assessment order on or before 31.07.2008. 21.09.2012 No stay was granted by the Hon'ble High Court from framing abated assessment order on or before 31.07.2008. 21.09.2012 No stay was granted by the Hon'ble High Court from framing abated assessment order on or before 31.07.2008. 10. Date of order of ITSC u/s 245D(4) during the first round of hearing 28.02.2014 28.02.2014 28.02.2014 28.02.2014 11. Date of filing second Writ (CWP No. 17937 of 2014) challenging the order of FTSC u/s 245D(4) dated 28.02.2014 before the Hon'ble High Court. 02.09.2014 02.09.2014 02.09.2014 02.09.2014 12. Date of order of the Hon'ble High Court in second writ. 24.04.2015 Setting aside Order u/s 245D(4) dated 28.02.2014. 24.04.2015 Setting aside Order u/s 245D(4) dated 28.02.2014. 24.04.2015 Setting aside Order u/s 245D(4) dated 28.02.2014. 24.04.2015 Setting aside Order u/s 245D(4) dated 28.02.2014. 13. Date of intimation of Abatement of proceedings before ITSC u/s 245HA(1) r.ws 245D(2D) 25.04.2016 25.04.2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n was sent to the Assessing Officer under section on 25/04/2016 and the same was received by the PCIT on 02/05/2016 and since the assessment was completed on 22/06/2014, the order passed was well within the due time allowed by the Act. 9.1 The Ld. DR further argued that the proceedings before the Settlement Commission were concluded only on 25/04/2016 against the application filed by the assessee on 15/03/1999 / 14/02/2001 (the dates of filing of applications before the ITSC mildly vary from assessee to assessee). Since the proceedings concluded on 25/04/2016 abating the proceedings, the Assessing Officer was correct in passing the assessment order. 10. The Ld. AR vehemently argued that the case has been time barred based on the amendment made in the Section 275HA (1)(ii) r.w. explanation (b) being a specific date i.e; 31/07/2007 and therefore the assessee is covered under section 245HA(1)(ii) and therefore the proceedings before ITSC shall abate on the specified date as referred in the Explanation (b) i.e. 31st day of July, 2007 and the proceedings before the AO get revived on 01.08.2007. Therefore, the AO was required to pass the assessment order by 31.07.2008, which in fact ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, a copy of the order of the Commission allowing the application to be proceeded with, the assessee shall be required to pay interest on such delayed payment as prescribed under section 245D(2C). In case of default on the part of the applicant, the assessing officer may be directed by the Commission to recover the remaining unpaid amount together with interest payable thereon under sub-section 2(C) of section 245D of Income-tax Act, 1961, and with any penalty imposed in accordance with the provisions of section 245D(2D) and under Chapter XVII of the Income-tax Act, 1961. 12.1 The amended provisions of section 245D are as under: 64. In section 245D of the Income-tax Act,- (i) for sub-section (1), the following sub-section shall be substituted with effect from the 1st day of June, 2007, namely:- "(1) On receipt of an application under section 245C, the Settlement Commission shall, within seven days from the date of receipt of the application, issue a notice to the applicant requiring him to explain as to why the application made by him be allowed to be proceeded with, and on hearing the applicant, the Settlement Commission shall, within a period of fourteen days from the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said period, the Settlement Commission shall proceed further in the matter without the report of the Commissioner. (2D) Where an application was made under sub-section (1) of section 245C before the 1st day of June, 2007 and an order under the provisions of sub-section (1) of this section, as they stood immediately before their amendment by the Finance Act, 2007, allowing the application to have been proceeded with, has been passed before the 1st day of June, 2007, but an order under the provisions of sub-section (4), as they stood immediately before their amendment by the Finance Act, 2007, was not passed before the 1st day of June, 2007, such application shall not be allowed to be further proceeded with unless the additional tax on the income disclosed in such application and the interest thereon, is, notwithstanding any extension of time already granted by the Settlement Commission, paid on or before the 31st day of July, 2007."; (iii) for sub-sections (3), (4) and (4A), the following sub-sections shall be substituted with effect from the 1st day of June, 2007, namely:- "(3) The Settlement Commission, in respect of- (i) an application which has not been declared invalid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed writ petition on 06/01/2008 challenging the validity of the amendments of section 245D(2D) made by the Finance Act, 2007 before the Hon'ble High Court of Punjab and Haryana. The ITSC has already passed an order under section 245D(1) on 14/10/1999 (and 05/10/2001 as applicable) by issuing a notice requiring to explain as to why the application made by him be allowed to be proceeded with. Since the matter of legal validity of the amendment to 245D(2D) of the Act has been subject matter of litigation before the Hon'ble High Court the ITSC could not have completed the proceedings nor passed any order rejecting the application of the assessee owing to nonpayment of the tax. The core subject matter of payment of the tax and interest as amended by the Finance Act, 2007 was before the Hon'ble Court and is sub judice owing to the writ petition filed by the assessee. 14. The Hon'ble High Court while disposing the bunch of applications, vide order dt. 21/09/2012 on the issue of constitutional validity of Section 245HA(1)(iv) and 245HA(3) of Income Tax Act, 1961 as amended by the Finance Act, 2007 held that, the issue before them was that where the settlement application is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 007 created two classes of applicants - those whose applications were pending as of 1.6.2007 and those who filed thereafter. While the classification was not unreasonable, the choice of 31.3.2008 as the cut-off date was arbitrary & irrational. The question whether an application could be disposed of by 31.3.2008 depended on the fortuitous circumstance of the Settlement Commission at its whims and fancies deciding to do so. The said date had no rational relation to the object of expeditious disposal of cases; (ii) S. 245HA (3) which makes available to the AO the hitherto confidential information furnished by the applicant has the effect of severely prejudicing the assessee for no fault of his but solely for the inability of the Settlement Commission to dispose of the application by the specified date. This provision is also arbitrary, unreasonable and violative of Article 14; (iii) S. 278 AB inserted by the FA 2008 to confer power in the Commissioner to grant immunity from penalty and prosecution in abated proceedings is no remedy to the unconstitutionality because it is inconceivable that the CIT who may have earlier objected to the maintainability of the application would now ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titled as Prabhu Dayal v. UOI was being abated. Keeping in view the proceedings before the respectable higher judiciary the ITSC has rightly kept the proceedings in abeyance as the moot issue revolves around the validity of the amendments brought by the Finance Act, 2007 which goes to the root of the issue before them. Hence, the assessee's contention that no stay has been given by the Hon'ble High Court cannot be accepted especially more so when the assessee's application has been dealt by the ITSC against which the assessee again approached the Hon'ble High Court for affording principles of natural justice. On obtaining the order from the Hon'ble High Court of Punjab & Haryana, the assessee has diligently represented himself before the ITSC. 15.5 To elaborate, thereafter the ITSC has passed an order in relation to the application filed by the assessee. Thus at this juncture it can be said that the application of the assessee has been considered rightly by the ITSC based on the judicial pronouncement that the assessee is fairly eligible to be treated as if the amendment is not applicable to the assessee's case. It is a matter of fact that the assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making assertions or from going back on his word. The assessee has no doubt represented himself before the Hon'ble High Court on constitutional validity of the amendment and further approached the High Court for giving him another opportunity of being heard after the ITSC has passed its order once on 28/02/2014 and again an order was passed on 25/04/2016 taking into cognizance the representation and submissions of the assessee. There was no other new application before the ITSC other than the one filed by the assessee on 30/08/1996 which has gone through two stages of writ petitions and two rounds of ITSC orders. The orders and directions given by the Hon'ble High Courts stands merged legally in the order of the Settlement Commission. The facts make it very clear that it was very same application and the processes thereof have gone through different rounds and stages of judgments by judicial hierarchy. Hence, the assessee's contention that his case got time barred by the virtue of amendment of 2007 cannot be accepted as the benefit of the judgments has been well obtained by the assessee at all stages. A judgment pronounced by the Hon'ble High Court in exercise of it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or on which the assessee may rely, in support of such claim: Provided that no notice under this clause shall be served on the assessee on or after the 1st day of June, 2003; (ii) notwithstanding anything contained in clause (i), if he considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, serve on the assessee a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced, any evidence on which the assessee may rely in support of the return: Provided that no notice under clause (ii) shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished. Section 245HA(2)... (2) Where a proceeding before the Settlement Commission abates, the Assessing Officer, or, as the case may be, any other income-tax authority before whom the proceeding at the time of making the application was pending, shall dispose of the case in accordance with the provisions of this Act as if no application under section 245C had been made. 245A (a) (b) " ..... X X X X Extracts X X X X X X X X Extracts X X X X
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