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TMI Blog2020 (5) TMI 656X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at a later stage. Accordingly, the petitioner was directed to submit a report under Rule 9 of the Income Tax Settlement Commission (Procedure) Rule for further action within 45 days from the receipt of the order. The Secretary, Income Tax Settlement was required to take necessary action in this regard. 4. The impugned order was received by the petitioner on 05.07.2012. It appears that the present Writ Petition was prepared as early as September 2012, as it evident from the date mentioned in the affidavit and in the index to typed set of papers. 5. However, the Writ Petition was filed on 18.12.2012 and an exparte interim order was obtained staying all further proceedings on 20.12.2012 before the 1st respondent Settlement Commission. 6. Though the order was obtained on 20.12.2012, it appears that the petitioner had failed to communicate the content of exparte stay order to the 1st respondent Settlement Commission and therefore, the case was taken up for hearing on 24.12.2012 by the 1st respondent Settlement Commission. According to the 2nd respondent, the 1st respondent Settlement Commission had also passed order on 24.12.2012 unaware of the above development. 7. On 24.12.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - reg. A copy of the order dtd: 20-12-2012 (under MP No: 1 of 2012 in W.P.No.34365 of 2012) by the Hon'ble High Court of Madras granting 'Interim stay' in the case of CIT-I, Coimbatore Vs. ITSC, Additional Bench, Chennai & M/s.R.C.Auto Centre (SI), Coimbatore, is enclosed. This office is given to understand that the Hon'ble Settlement Commission (ITSC) has passed the order on 24.12.2012, which is after the "interim stay". This is being intimated to you for taking action, as deemed fit. (D.B.Manival Raju), Commissioner of Income - tax, Coimbatore. Copy with the order of the Hon'ble High Court of Madras, to the: i. Secretary, Income Tax Settlement Commission, No:640, Anna Salai, Nandanam, Chennai - 600 028. ii. file - copy. 11. Thus, there are indications that the case was indeed settled by the 1st respondent Settlement Commission and the case was settled on 24.12.2012. However, there is no order of the 1st respondent Settlement Commission. Therefore, I shall examine the case on the assumption that no order was passed on 24.12.2012. 12. The background of the case prior to the above development are as follows:- i. The 2nd respondent had originally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of an intimation u/s. 143(1). It is not material whether time-limit for issue of notice u/s. 143(2) has expired or not; (b) the assessment shall be deemed to have been completed only on the date of assessment order to the applicant. viii.The 1st respondent Settlement Commission considered decisions cited by the petitioner and ultimately concluded that when Returns of Income Tax were filed by the 2nd respondent (applicant) as accepted under Section 143(1) of the Act and no notice was issued under Section 143(2) of the Act, the 2nd respondent (applicant) could file Settlement Application even after the time limit for passing the regular assessment order under Section 143(3) of the Act as no assessment has been made in this case as per Clause (iv) of Section 245A of the Act. 13. While passing the impugned order, the 1st respondent Settlement Commission has also extracted a portion of report dated 16.05.2012 of the petitioner, which reads as under:- "The assessee has filed settlement application for the A.Ys. 2008-09, 2010-11, 2011-12 and 2012-13 in S.A.No. TN/CB 1/2012-13/1/IT. In view of explanation (iv) to Section 245A of the Income-tax Act, 1961, the application for these y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 18.12.2012 despite the fact that the petitioner was required to submit a report under Rule 9 of Income Tax Settlement Commission (Procedure) within a period of forty five days from date of receipt of the impugned order. 22.To this effect, there were inter-departmental deliberations and exchange of communications in the form of report of the Income Tax Officer on 27.07.2012; report of the Joint Commissioner of Income Tax on 7.08.2012 and a report of the petitioner under section 245D (2C) of the Income Tax Act, 1961. 23. Thus, having acquiesced to the impugned order, the petitioner has filed the present writ petition on 18.12.2012. Having acquiesced into the proceedings before the 1st respondent Settlement Commission, it was not open for the petitioner to challenge the impugned order. 24. It further appears that the writ petition appears to have been made ready as early 21.09.2012 but its filing was postponed to 18.12.2012 for reasons best known to the petitioner. 25. It is further noticed that though an exparte interim stay was granted by this court on 20.12.2012 the content of the order was communicated after 24.12.2012. No attempt was made to communicate the order of this Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion (1) of section 153B in case of a person referred to in section 153A or section 153C have been initiated, the additional amount of income-tax payable on the income disclosed in the application exceeds fifty lakh rupees, (ia) in a case where- (A) the applicant is related to the person referred to in clause (i) who has filed an application (hereafter in this sub-section referred to as "specified person"); and (B) the proceedings for assessment or re-assessment for any of the assessment years referred to in clause (b) of sub-section (1) of section 153A or clause (b) of sub-section (1) of section 153B in case of the applicant, being a person referred to in section 153A or section 153C have been initiated, the additional amount of income-tax payable on the income disclosed in the application exceeds ten lakh rupees, (ii) in any other case, the additional amount of income-tax payable on the income disclosed in the application exceeds ten lakh rupees, and such tax and the interest thereon, which would have been paid under the provisions of this Act had the income disclosed in the application been declared in the return of income before the Assessing Officer on the date of appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch person is, on the date of search, beneficially entitled to not less than twenty per cent of the profits of such business or profession. 31. The expression "case" is used in Seciton 245C of the Income Tax Act, 1961. This expression is defined in Section 245A(b). It read differently when the application was filed on 27.4.2012 by the 2nd respondent before the 1st Respondent. This definiton now reads differntly. Both the definitions are reproduced below:- Table :1 Section 245A(b) during 2012 As it reads now and at the time of the application (b) "case" means any proceeding for assessment under this Act, of any person in respect of any assessment year or assessment years which may be pending before an Assessing Officer on the date on which an application under subsection (1) of Section 245C is made: Provided that- (i) a proceeding for assessment or reassessment or recomputation under section 147; (ii) [***] (iii) [***] (iv) a proceeding for making fresh assessment in pursuance of an order under section 254 or section 263 or section 264, setting aside or cancelling an assessment, shall not be a proceeding for assessment for the purposes of this clause. Explanation.-For t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n assessment was passed; iiia) a proceeding for assessment or reassessment for any of the assessment years, referred to in clause (b) of sub-section (1) of section 153A in case of a person referred to in section 153A or section 153C, shall be deemed to have commenced on the date of issue of notice initiating such proceeding and concluded on the date on which the assessment is made; (iv) a proceeding for assessment for any assessment year, other than the proceedings of assessment or reassessment referred to in clause (i) or clause (iii) or clause (iiia), shall be deemed to have commenced from the date on which the return of income for that assessment year is furnished under section 139 or in response to a notice served under section 142 and concluded on the date on which the assessment is made; or on the expiry of the time specified for making assessment under subsection (1) of section 153, in case where no assessment is made; (c) "Chairman" means the Chairman of the Settlement Commission; (d) "income-tax authority" means an income-tax authority specified in section 116; (e) "Member" means a Member of the Settlement Commission, and includes the Chairman and a Vice- Chairman; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce intimation under section 143(1) is not an assessment order, there will be no bar in filing an application for settlement subsequent to receipt of an intimation under section 143(1). It is not material whether time-limit for issue of notice under section 143(2) has expired or not; (b) the assessment shall be deemed to have been completed on the date on which the assessment order is passed." 36. As per Circular No.3 of 2008 dated 12.03.2008 assessment shall be deemed to have been completed on the date of service of assessment order to the applicant. 37. However, as per Circular No.16/2014 [F.No.142/14/2007- TPL(PART)], assessment shall be deemed to have been completed on the date on which the assessment order is passed. 38. This clarification was in tune with Explanation (iv) as was in force in 2012. In 2015, Explanation (iv) to Section 245A of the Income Tax Act, 1961 was amended [see right hand column of Table: 1]. 39. As per the above amendment, a proceeding for assessment for any assessment year other under than three specified instances shall be deemed to have commenced - (i) from the date on which the return of income for that assessment year is furnished under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Settlement Commissioner and others, [2012] 1 CAL LT 309 : 2011 SCC OnLine Cal 5547, passed on 1.8.2011 which in turn followed the decision of the Gujarat High Court in Ram Bhai Jethbhai Patel Vs. CIT, [1997] 108 ITR 771 Gujarat. 46. The Court in Ram Bhai Jethbhai Patel Vs. CIT, [1997] 108 ITR 771 Gujarat held that "It is difficult to accept the submission that Explanation (iv)Section 245 A (b) is to be construed to provide that for assessment could only conclude with the passing of an assessment order of assessment and no order of assessment was made, such proceeding would be deemed to continue for a period of six years and nine months from the end of the relevant assessment years, within which period and assessment could be made under section 147 after issuing a notice under section 148". 47. Following the above ratio, the Gujarat High Court held that for the assessment years 2005-6 to 2008-09 assessment had become timebarred without any notice under section 143 (2) of the Act. Even timelimit for passing the order is even of such notices issued had expired by the time the assessee had filed application for settlement before the Settlement Commission and therefore application qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 148 would also involve some modification of the literal meaning of the Explanation iv to section 245A(b). 36. There can be no dispute with the proposition that where a strict and literal interpretation produces an absurd and unjust result, which could never have been the intention of the legislature, the Court might modify the language used by the legislature or do some violence to it so as to achieve the obvious intention of the legislature and produce a rational construction. 37. As held in K.P. Varghese v. Income Tax Officer reported in 131 ITR 597 (SC) and as held by Lord. Denning in (1969) 2 All. E.R. 912 and approved by the Supreme Court in AIR 1997 SC 1519 "whenever a statute comes up for consideration it must be remembered that it is not within the human powers to foresee the manifold sets of facts which may arise and even if it were, it is not possible to provide for them in terms free from all ambiguity. The question a Judge should ask himself is to how the makers of the Act would themselves have resolved the ruck? A Judge is not to alter material of which the Act is woven and should have to iron out the creases". 38. Since the legislature has, in its wisdom, v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessments which can still be validly made. Where by application of Section 153, an assessment order can no longer be made, the proceeding, for purposes of Section 245A, would have to be construed as terminated. 54. The court also held that after the expiry of the period for completion of assessment under section 153 of the Income Tax Act, 1961 an assessment order can no longer be made. 55. The ratio of the Calcutta High Court in Director of IT (International Taxation) referred to supra which has been quoted with approval both by the Delhi High Court and the Gujarat High Court dealt with a slightly different situation and therefore the ratio of the Calcutta High Court was misapplied. 56. The Calcutta High Court was concerned with issue where no returns were filed under Section 139 and therefore no assessment could be made except under Section 147 of the Income Tax Act, 1961. Therefore, the context in which the said decision was rendered should not be lost sight of while applying the ratio to the facts of the case. 57. To understand the conclusion in paragraphs 31 to 40 (extracted supra) in the decision of the Calcutta High Court in Director of IT (International Taxation) refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Section 245A of the Income Tax Act, 1961. 61. The last date for completing the assessment for these 3 assessment years expired only on 31.12.2012; 31.12.2013 and on 31.12.2014 for Assessment Years 2010-11, 2011-12 and 2012-13 respectively. 62. In the present case, when the application was filed on 27.4.2012 to settle the case under chapter XIX A of the Income Tax Act, 1961, case was pending. 63. Since the time for completion of assessment under section 153 of the Income Tax Act, 1961 had not expired as far as assessment years 2010-11, 2011-12 and 2012-13 when the application was filed Commission, it would be safe to hold that the case was pending before the Assessing Officer and therefore, the application was maintained under Chapter XIX-A of the Income Tax Act, 1961. 64. I am therefore of the view that there is no merits in the contention of the petitioner that the application filed for settling the case was without jurisdiction under the aforesaid Chapter of the Income Tax Act, 1951 as far as these three Assessment Years. 65. As far as Assessment Year 2008-09 is concerned, the last date for completing the assessment in terms of section 153 of the Income Tax Act, 1961 e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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