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TMI Blog1992 (2) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... tained in sub-section (1), an application shall not be proceeded with under that sub-section if the Commissioner objects to the application being proceeded with on the ground that concealment of particulars of income on the part of the applicant or perpetration of fraud by him for evading any tax or other sum chargeable or imposable under this Act, has been established or is likely to be established by any income-tax authority, in relation to the case : Provided that where the Settlement Commission is not satisfied with the correctness of the objection raised by the Commissioner, the Settlement Commission may, after giving the Commissioner an opportunity. of being heard, by order, allow the application to be proceeded with under sub-section (1) and send a copy of its order to the Commissioner." 1.2 The provisions of sections 1 and 66 of the Finance (No. 2) Act, 1991 are as under : "1. Short title and commencement.-(1) This Act may be called the Finance (No. 2) Act, 1991. (2) Save as otherwise provided in this Act, sections 2 to 119 and 126 (except sections 45, 47, 62, 66, 67, 69, 75, 76, 78, 79, 87, 88 and 120) shall be deemed to have come into force on the 1st day of April ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . M/s. R. R. Industries, Faridabad 8.1.92 -------------------------------------------------------------------------------------------------------------------------------------------------- It may be mentioned that, though a notice of hearing in the case of M/s. Krishan Beharilal jewellers (Application No. 14/1/245/90-I.T.) was duly served, the applicant did not appear on the date of hearing. No application seeking adjournment of hearing was also received. 3.2. Briefly stated, on behalf of the applicants, the following two arguments were made: (a) As regards matters of procedure, the Legislature can make changes and those changes apply to all pending actions. (b) The deletion of sub-section (1A) of section 245D by the Finance (No. 2) Act, 1991, alters only the procedure to be followed by the Settlement Commission in dealing with applications received under section 245C and, therefore, the changed procedure would be applicable not only to applications received on and after September 27, 1991, but also to all old applications pending as on September 27, 1991. 3.3. The first limb of the -argument was attempted to be supported by relying on a large number of decided case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 61 of the "Memorandum explaining the Provisions in Finance (No. 2) Bill, 1991", which is as under : "Modification of provisions of section 245D regarding procedure on receipt of an application under section 245C for settlement of cases. 61. Under the existing provisions of sub-section (1) of section 245D of the income-tax Act, the Settlement Commission, on receipt of an application under section 245C, has to call for a report from the Commissioner and on the basis of the materials contained in such report and having regard to the nature and circumstances of the case, etc., the Settlement Commission may allow the application to be proceeded with or reject the application. Further, sub-section (1A) of section 245D provides for filing of objections by the Commissioner against proceeding with the application made under section 245C. The above provisions cause delay, at times, in the disposal of applications filed before the Settlement Commission under section 24 C. In order to expedite the disposal of such applications, the Bill seeks to provide that the Commissioner shall furnish the report within a period of six months of the receipt of communication from the Settlement Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was stated that "the new procedure" would facilitate quicker handling of cases by the Settlement Commission. Secondly, it was pointed out that the title of the "Press Release" was "Simplification of the procedure before the Settlement Commission -relating to receipt of application." (vi) The decision of the Supreme Court in the case of R. B. Shreeram Durga Prasad v. Settlement Commission (I. T and W. T.) [1989] 176 ITR 169, was strongly relied upon by each and every counsel and it was submitted that, in view of the ratio of this decision, it would have to be held that the changed procedure applied to pending applications under section 245C too. 3.5. On behalf of the Department, it was firstly stated that the Department had no quarrel with the proposition that, as regards matters of procedure, the Legislature can make changes and those changes apply to all pending proceedings. However, it was the submission of the Commissioner of Income-tax (DRs) that "Marginal Notes" printed at the side of sections were not conclusive of the contents of the sections and that the sections have to be properly analysed to find out whether they conferred any right(s) on any of the parties befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received on and after September 2 7, 1991, but also to applications received prior to September 27, 1991. The reasons why we have come to this conclusion have been elaborated in the succeeding paragraphs. 4.2. When Chapter XIX-A was inserted in the Income-tax Act by the Taxation Laws (Amendment) Act, 1975, with effect from April 1, 1976, the provisions of section 245D(1) were as under : "245D. Procedure on receipt of an application under section 245C(1) On receipt of an application under section 245C, the Settlement Commission shall call for a report from the Commissioner and on the basis of the materials contained in such report and having regard to the nature and circumstances of the case or the complexity of the investigation involved therein, the Settlement Commission may, by order, allow the application to be proceeded with or reject the application : Provided that an application shall not be rejected under this subsection unless an opportunity has been given to the applicant of being heard: Provided further that an application shall not be proceeded with under this sub-section, if the Commissioner objects to the application being proceeded with on the ground that conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the part of the applicant or perpetration of fraud by him for evading any tax or other sum chargeable or imposable under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act, has been established or is likely to be established by any income-tax authority, in relation to the case : Provided that where the Settlement Commission is not satisfied with the correctness of the objection raised by the Commissioner, the Settlement Commission may, after giving the Commissioner an opportunity of being heard, by order, allow the application to be proceeded with under sub-section (1) and send a copy of its order to the Commissioner." Both these amendments became effective from April 1, 1979. 4.4. In connection with the amendments made in Chapter XIX-A by the Finance Act, 1979, this is what the Deputy Prime Minister and Minister of Finance had to say in his "Budget Speech". (See [1979] 116 ITR (St,) 34) : " While I want to step up the drive against tax evasion, I also would like to promote greater expedition in the settlement of income-tax cases. At present, the Income-tax Settlement Commission is debarred from proceeding with a case if the Commissioner of Income-tax objects ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of natural justice". Thereafter, their Lordships, in their judgment, have observed as under (at page 174) : "If that is so, then the order made in violation of the principles of natural justice was of no value. If that is so, then the application made for the settlement under section 245C was still pending before the Commission when the amendment made to the Finance Act of 1979, came into effect and the said amendment being procedural, it would govern the pending proceedings and the Commission would have the power to overrule the objections of the Commissioner." 4.6. From the above, it is abundantly clear that, according to the Supreme Court, the amendments made by the Finance Act, 1979, with effect from April 1, 1979, which had the effect of depriving the Commissioner of Income-tax of his "veto" power and empowering the Settlement Commission to overrule the objections raised by the Commissioner of Income-tax, only changed the procedure to be followed by the Settlement Commission while dealing with settlement applications and that the changed procedure applied to pending applications. 4.7. In view of the Supreme Court decision, in the case of R. B. Shreeram Durga Prasad v. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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