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TMI Blog2019 (2) TMI 1143X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of the Commissioner. The petitioner in order to succeed would require substantive relief. The petitioner after praying for quashing the revisional order of the Commissioner has further prayed that this Hon’ble Court may be pleased to issue a Writ of Mandamus and / or any other appropriate writ order or direction under Article 226 of the Constitution of India directing the respondents to treat the subsidy received under the said scheme as being capital in nature, not eligible to tax, issue the refund of 24.01 crore with interest in accordance with law and accordingly, allow the revision application. When we find that this prayer could not have been granted by the Commissioner, even if the ground of rejection of the revision petition by the Commissioner may not be entirely convincing, quashing the order of the Commissioner would be issuing a futile writ. We do not understand which order the petitioner seeks revision of. It could not have been the order of Settlement Commission which is clearly the stand of the petitioner, though while explaining delay, the petitioner has taken the order of the Settlement Commission as the starting point for computing delay. If the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TOTAL 80.15 5. The petitioner periodically filed the returns of income for all the above mentioned assessment years and offered the subsidy benefits received from Government of India under the said scheme to tax as revenue receipt. The petitioner was subjected to search operation on 11.1.2012. By that time, the petitioner's assessment for certain years were already completed under Section 143(3) of the Act. The rest were not. Pending assessment under Section 153A of the Act pursuant to the search, the petitioner applied to the Settlement Commission for settlement of all cases under a joint application filed on 22.10.2013. This petition did not contain the Settlement Application and accompanying documents. We had, therefore, requested the learned counsel for the petitioner to make said documents available. These documents have, accordingly, been supplied to us which are taken on record. 6. The petitioner's application for settlement after passing through the various stages envisaged under the Act, came to be finally disposed of by the Settlement Commission by an order dated 30.8.2014 (as at 'Annexure M' to the petition). In such order, the Settlement Commission concluded as und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before us. Therefore, immunity from Penalty under the Income Tax Act, 1961 as prayed for by the applicant is granted. For same reasons, Immunity from Prosecution under the Income Tax Act, 1961 as prayed for by the applicant is also granted. The A.O. is directed to adjust refund pending after verification while giving effect to order u/S. 245D(4) of the Income Tax Act, 1961, including adjustment of seized cash amounting to ₹ 64,58,000/-. 12. The immunity granted to the applicant, however, may be withdrawn if the Commission is satisfied that the applicant has in the course of the settlement proceedings, concealed any particular material to the settlement, or has given false evidence. Thereupon, the applicant may be tried for the offence for which immunity was granted, or for any offence for which the applicant appears to have been guilty in connection with the settlement, and the applicant shall also become liable to the imposition of penalty under the Act to which the applicant would have been liable had such immunity not been granted. This order shall be void if it is subsequently found by the Commission that the same has been obtained by fraud or misrepresentation of the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to tax during all the said assessment years. It was argued that the powers of the Commissioner under Section 264 of the Act are wide enough to entertain such contention. It was contended that the issue which was not adjudicated by the Settlement Commission was open to revision under Section 264 of the Act. 11. Curiously, however, the petitioner did not point out which order it wishes the Commissioner to revise. Petitioner's averments and prayers titled as "Conclusions" may be noted:- "E. Revision of settlement commission order 29. In view of the above, it is clear that TUF subsidy received by the MIL is capital receipt in nature and not chargeable to tax. However, inadvertently the same was offered to tax in AY 2006-07 till AY 2013-14. Accordingly, we request your Honour to consider this revision application of the MIL and direct the AO to re-compute the income by excluding the TUF subsidy from the total income. 30. Reference in this regard is also invited to the decision in the case of C. Parikh & Co. Vs. CIT 138 ITR 689 (All) wherein it has been held that the revisional powers conferred by Sec. 264 on the CIT are very wide and it is also open to the CIT to entertain even a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in filing of present application (if date for counting time limit is computed from date of settlement commission order). In this regard, it is humbly submitted that the delay in filing the application is purely attributable to the lack of clarity under the Income Tax Act and the same was clarified by Finance Act 2015 on 14 May 2015. Hence, Assessee has sufficient cause for making delay application and the same should be condoned and it is humbly prayed that matter should be decided on merits of the case." 13. The Commissioner, by the impugned order, dismissed the revision petition on three grounds namely:- i. That the petitioner had failed to explain the delay in filing there vision petition. Issue discussed in this context was whether the revision petition can be treated as being 270 days beyond the period of limitation prescribed, reconning the period of limitation from the date of the order of Settlement Commission or whether the limitation should be considered from the date the assessment orders (in given cases) were passed by the Assessing Officer. The Commissioner held that in either case, the petitioner had failed to show sufficient cause preventing it from filing the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintainable as order of the Commission is conclusive only on the issues which are decided by it. i. Section 245D(4) - Commission passes order only on the matters which are covered in the application made by the assessee and any other matter referred by the CIT in its report. ii. Section 245-I - Order of Commission is conclusive only on the matter which is covered by such order. iii. Section 245F(4) - All other provisions of the Act apply to the matter other than before Commission. iv. As can be seen in the present case for AY 2009-10, where before the order of Commission, the petitioner was assessed under MAT. However, after the order of Commission, AO passed the order assessing the income of the Petitioner under normal provisions of the Act. v. Order passed by the AO after the order of the Commission can be revised under Section 264 of the Act Vaata Infra Vs. ITO (229 Taxman 373)(Mad). Therefore, the CIT had jurisdiction to consider this matter which was not at all dealt with by the Commission on its order. On the other hand, Mr. Suresh Kumar for the Revenue opposed the petition contending that the Commissioner correctly held that he had no power to revise the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r containing full and true disclosures of his income which has not been disclosed before the Assessing Officer, the manner in which such income has been derived, the additional amount of income tax payable on such income and such other particulars as may be prescribed, to have his case settled by the Settlement Commission. Sub-section (1A) of Section 245C provides that for the purpose of sub-section (1), the additional amount of income tax payable in respect of the income disclosed in an application made under sub-section (1) shall be the amount calculated in accordance with the provisions of sub-sections (1B) to (1D). Sub-sections (1B) to (1D) essentially provide for computing additional tax liability to be paid by the applicant of settlement, depending upon the various situations. 20. Section 245D of the Act pertains to procedure on receipt of an application under Section 245C. This section contains a detail procedure that the Commission would follow upon the assessee filing application under Section 245C of the Act. Sub-section (2B) of Section 245D envisages sending a report from Principal Commissioner or the Commissioner to the Settlement Commission within prescribed time. Und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application was allowed to be proceeded with by the Settlement Commission and the income tax authority concerned, may, notwithstanding anything contained in any other provisions of this Act, compete such proceedings at any time before the expiry of two years from the end of the financial year in which the settlement became void. 21. Section 245F of the Act pertains to powers and procedure of Settlement Commission and reads as under:- "(1) In addition to the powers conferred on the Settlement Commission under this Chapter, it shall have all the powers which are vested in an income- tax authority under this Act. (2) Where an application made under section 245C has been allowed to be proceeded with under section 245D, the Settlement Commission shall, until an order is passed under sub- section (4) of section 245D, have, subject to the provisions of sub- section (3) of that section, exclusive jurisdiction to exercise the powers and perform the functions of an income- tax authority under this Act in relation to the case: [Provided that where an application has been made under Section 245C on or after 1st day of June, 2007, the Settlement Commission shall have such exclusive jurisdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time of making the application was pending, shall dispose of the case in accordance with the provisions of the Act as if no application under Section 245C had been made. 23. Section 245I of the Act pertains to order of settlement to be conclusive and reads as under:- "Every order of settlement passed under sub-section (4) of Section 245D shall be conclusive as to the matters stated therein and no matter covered by such order shall save as otherwise provided in this Chapter, be reopened in any proceeding under this Act or under any other law for the time being in force." 24. These are the provisions which would come up for interpretation as we proceed further with the discussion. For the time being, we may notice that in the application for settlement which the petitioner filed under Section 245C(1) of the Act, the reference in the first annexure was to the amount of income tax which has not been disclosed before the Assessing Officer. This application contains annexure C which gives particulars of the issues to be settled and revolves around the determination and quantification of income for all assessment years under the application for settlement. Annexure D to the applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'case' has been defined to mean any proceedings for assessment under this Act of any person in respect of any assessment year or assessment years which may be pending before the Assessing Officer on the date on which the application under sub-section (1) of Section 245C is made. In other words, the application for settlement can be filed as long as the proceedings for assessment of the return is pending before the Assessing Officer. The previous definition of word 'case' would cover within its scope any proceedings of assessment pending also before the appellate or revisional stage. This amendment, however, is of no importance for our discussion. What is important to note is that in whatever form the word 'case' may have been defined, the settlement application should be filed only as long as such 'case' is pending. 27. Once such application is filed, the same would be considered by the Settlement Commission as provided under Section 245F of the Act which lays down powers and procedure of Settlement Commission. Sub-section (1) to Section 245F as noted above provides that the Settlement Commission shall have all the powers which are vested in an income tax authority under the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eport of the Commission. Any other view would require the Assessing Officer to continue with the assessment minus the matters before the Settlement Commission, thus giving rise to two parallel proceedings. 31. On reading the provisions contained in Chapter XIX-A of the Act, a clear picture that emerges is that an assessee can apply for settlement of a case as long as same is pending. Once such an application is filed (and in case of application filed before 1.6.2007) allowed to proceed further, all powers vested in income tax authority would vest in Settlement Commission in relation to such a case. The Settlement Commission would continue to enjoy such exclusive jurisdiction till the application is either rejected, declared as invalid or not allowed to proceed further. As provided in subsection (2) of Section 245HA, where the proceedings before the Settlement Commission abate, the Assessing Officer or the Income Tax Authority as the case may be before whom the proceedings at the time of making the application is pending, would dispose of the case in accordance with the provisions of the Act as if no application under Section 245C has been made. Likewise under sub-section (7) of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is only the Settlement Commission which can pass any order concerning such a case. At all stages, the Act refers to a case for which an application for settlement can be filed, a case which the Settlement Commission considers for settlement, a case the Commission either allows to be settled or does not allow to be so settled. The Act does not envisage a return of an assessee to be split into two parts, one for consideration before the Settlement Commission by way of settlement and another for normal assessment at the hands of the Assessing Officer or the appellate or the revisional authority. In other words, if an application for settlement is allowed and the case is settled, the entire assessment for the assessment years in question would stand settled. On the other hand, if such an application is rejected, not allowed to be proceeded further or declared as void or abates, the concerned Authority wold proceed further from the stage at which the proceedings were pending when the application for settlement was made and would get time prescribed under the said chapter to complete such assessment. In fact, this is how the petitioner also understood the provisions. This is evident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shing of the order of the Commissioner. The petitioner in order to succeed would require substantive relief. It is in this context the petitioner after praying for quashing the revisional order of the Commissioner has further prayed as under:- "b. this Hon'ble Court may be pleased to issue a Writ of Mandamus and / or any other appropriate writ order or direction under Article 226 of the Constitution of India directing the respondents to treat the subsidy received under the said scheme as being capital in nature, not eligible to tax, issue the refund of ₹ 24.01 crore with interest in accordance with law and accordingly, allow the revision application." When we find that this prayer could not have been granted by the Commissioner, even if the ground of rejection of the revision petition by the Commissioner may not be entirely convincing, quashing the order of the Commissioner would be issuing a futile writ. 38. We do not understand which order the petitioner seeks revision of. It could not have been the order of Settlement Commission which is clearly the stand of the petitioner, though while explaining delay, the petitioner has taken the order of the Settlement Commission as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years to tax. In this context, the Supreme Court reiterated that an application under Section 254C can be made only in respect of the income not disclosed by the assessee before the Assessing Officer. It was further observed as under:- "19. The idea underlying the said words [in the main limb of subsection (I-A)] is self-evident. The disclosure under Section 245-C must be of an income not disclosed before the Assessing Officer. If the Assessing Officer (or the income tax authority) has already discovered it and has either gathered the material to establish the particulars of such income or fraud fully or is at a stage of investigation/enquiries where the material gathered by him is likely to establish the particulars of such income or fraud, the assessee cannot be allowed to defeat or forestall, as the case may be, the entire exercise of the income tax authorities just by approaching the Commission. In such a case, it cannot be said that he is acting voluntarily or in good faith. He should not be allowed to take advantage of the comparatively easy course of settlement. He must be allowed to face the normal channels of assessment/appeal etc. Section 245-C is meant for those asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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. 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 245-C." 44. In case of Brij Lal & Ors Vs. CIT (2011) 1 SCC 1, the Constitution Bench of the Supreme Court in a reference considered various aspects concerning the powers and procedure before the Settlement Commission in context of terminal point for charing the interest and powers of the Settlement Commission to rectify its own order. Thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007 w.e.f. 1.6.2007 in which interest is required to be paid for maintainability of the Application for Settlement. 39. Moreover, as stated above, under the Act, there is a difference between assessment in law [regular assessment or assessment under section 143(1)] and assessment by settlement under Chapter XIX-A. The order under section 245D(4) is not an order of regular assessment. It is neither an order under section 143(1) or section 143(3) or section 144. Under sections 139 to 158, the process of assessment involves the filing of the return under section 139 or under section 142; inquiry by the A.O. under sections 142and 143 and making of the order of assessment by the A.O. under section 143(3) or under section 144 and issuing of notice of demand under section 156 on the basis of the assessment order. The making of the order of assessment is an integral part of the process of assessment. No such steps are required to be followed in the case of proceedings under Chapter XIX-A. The said Chapter contemplates the taxability determined with respect to undisclosed income only by the process of settlement/ arbitration. Thus, the nature of the orders under Sections 143(1), 143 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is not constricted from proceeding further where the Commissioner does not submit a report at all. The evidence which the Commission examines is that which is placed before it or obtained by it. Evidence which is obtained by the Commission is that which emerges on the initiative or directions of the Commission. The Commission is in other words not designed to act as a passive spectator - confined to what the assessee discloses. The Commission can act proactively in gathering or obtaining evidence. The statute confers upon it the power to settle a case, which is nothing but an assessment. The settlement is intended to be final, comprehensive and conclusive. The orders which the Settlement Commission passes are on matters covered by the application and on any other matter relating to the case not covered by the application but referred to in the report of the Commissioner. The Settlement Commission, therefore, can pass orders on matters covered by the application and on any other matter relating to the case which is referred to in the report of the Commissioner, though not covered by the application. 15. The provisions of Chapter XIX-A emphasise that the object underlying the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nctions of an income tax authority under the Act in relation to the case. When the Settlement Commission decides to proceed with a case under Section 245D(1), it assumes exclusive jurisdiction in regard to the assessment. That is because the Settlement Commission is then seized of the case in respect of which a settlement is sought and the expression "case" itself is defined to mean any proceeding for assessment under the Act which is pending before the Assessing Officer. The Act does not contemplate a parallel proceeding before the Settlement Commission and before the Assessing Officer, once the Settlement Commission has decided to proceed with the application under Section 245D(1). So long as the proceedings remain before the Settlement Commission, it is that authority alone which has jurisdiction in all matters pertaining to assessment. The jurisdiction of the Settlement Commission is to pass orders (i) on matters covered by the application; and (ii) on any other matter relating to the case, not covered by the application but referred to in the report of the Commissioner. 18. ..... The nature of the determination by the Commissioner does not determine the jurisdiction of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o vest the jurisdiction to process a case of the assessee either in the Settlement Commission or in the Assessing Officer. No sooner an application for settlement is filed under sub-section(1) of section 245C of the Act, the Assessing Officer would be divested of his jurisdiction to assess the return further. The jurisdiction would vest solely and exclusively in the Settlement Commission. If for some reason as envisaged under section 245D of the Act, proceeding for settlement becomes void, under sub-section(7) thereof, the proceedings before the Assessing Officer would be deemed to have revived upon which he would complete the assessment within the extended time frame provided therein. The overwhelming intention of the legislature thus is that there can be only one order concerning an assessment, be it by the Assessing Officer termed as order of assessment or by the Settlement Commission termed as settlement order. There cannot be one order of assessment by Assessing Officer for the same period for which the Commission would also pass the order of settlement." 47. We are conscious that on the issue of when can an order of assessment be stated to have been passed, the view taken by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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