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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 ..... case was without jurisdiction under the aforesaid Chapter of the Income Tax Act, 1951 as far as these three AYs. As far as AY 2008-09 is concerned, the last date for completing the assessment in terms of section 153 expired on 31.12.2010. However, for this Assessment Year also no assessment order was passed by AO. If Circular No.3 of 2008 dated 12.03.2008 is applied, assessment is deemed to have been completed on the date of service of assessment on the 2nd respondent applicant. If Circular No.16/2014[F.No.142/14/2007- TPL(PART)] dated 17.11.2014 is applied, assessment shall be deemed to have been completed on the date on which the assessment order is passed. Only after the statutory amendment in 2015, restriction have been imposed. However, such restriction cannot be retrospectively made applicable to the application filed in 2012. The fate of the application is to be decided in the light of the provision as it stood in 2012. Subsequently, though the Explanation to Section 245A of the Act was amended, it cannot be made applicable retrospectively. 1st respondent Settlement Commission has therefore correctly entertained the application of the 2nd respondent. If the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 24.12.2012, the 2nd respondent had conceded for payment of an additional amount of ₹ 60,00,000/- over and above the amount already offered for settlement in the application dated 27.4.2012. Accordingly, the 2nd respondent prayed as follows:- i. No penalty under any provision of the Income Tax Act, 1961 in respect of Settlement of assessment by the Hon'ble Settlement Commission namely AY(s) 2008-09, 2010-11, 2011-12 2012-13 and also no prosecution. ii. The tax due on the additional income shall be paid in two quarterly installments on or before 15.03.2013 and on or before 30.06.2013. iii. The applicant will be permitted to capitalise from out of the additional ₹ 60,00,000/- an amount equal to the tax payable. 8. Since both the petitioner and the 2nd respondent were unable to furnish any copy of the order of the 1st respondent Settl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or to the above development are as follows:- i. The 2nd respondent had originally filed an application on 27.04.2012 under Section 245C of the Income Tax Act, 1961, to settle the case under the Chapter XIX-A of the Income Tax Act, 1961, for the Assessment Years 2008- 09, 2010-11, 2011-12 and 2012-13. ii. Thereafter, an order dated 02.05.2012 came to be passed under Section 245D(1) of the Act. Thereafter, the petitioner was called upon to furnish a report under Section 245D (2B) of the Act. iii. The petitioner also filed a report dated 04.06.2012 before the 1st respondent Settlement Commission. It was stated that the time limit for passing regular assessment under Section 143(3) for the Assessment Years 2008-09 and 201-11 had already lapsed and therefore, the application to settle the case for these Assessment Years were liable to be dismissed as not maintainable. iv. For the Assessment Year 2011-12, it was submitted on behalf of the petitioner that Assessing Officer had not issued any notice under Section 143(3) of the Act till the date of filing the application and therefore, on this count also, it cannot be stated that the proceedings were pending for these Assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/2012-13/1/IT. In view of explanation (iv) to Section 245A of the Income-tax Act, 1961, the application for these years may be taken as valid. 14. The petitioner has also stated in report dated 04.06.2012 as follows:- 2.1. Validity of the application for the relevant years: The assessee's Income tax Return, for the AY: 2008-09, was not scrutinized; but, can be re-opened on the basis of the information obtaining for the AY: 09-10, if the 'Commission' rejects the application. The Return of Income (RI) for AY:2010-11 was not selected for scrutiny through the CASS; but, can be re-opened on the basis of the information obtaining for the AY: 09-10, if the 'Commission' rejects the application. And, there is probability of section of RI of AY: 2011-12 for scrutiny by CASS; alternatively, it can be selected manually for scrutiny, if the 'Commission' rejects the application. In view of the foregoing information the filing the Settlement Application is found valid as, as on the date, no proceedings are pending. 15. It is stated that the words valid appears to be typographical mistake. 16. I have considered the arguments advanced by the learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anted 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 Court to the 1st respondent Settlement Commission on 24.12.2012. 26. The 1st Respondent Settlement Commission proceeded to accept a memo from the 2nd respondent on the said dated. The 1st Respondent agreed to pay an additional amount of ₹ 60 lakhs, i.e. ₹ 10 lakhs each for the Assessment Years 2008-09 and 2010-11 and ₹ 20 lakhs each for the Assessment Years 2011-12 and 2012-13. 27. Since the Writ petition has been kept pending, it would be therefore appropriate to pass order on mertis after examining the rival contention of the parties. 28. The issue to be decided is whether the 1st respondent Settlement Commission was justified in admitting the case of the 2nd respondent for settlement. In other words, whether the 2nd respondent was entitled to file an application for settlement of cases under Section 245C of the Income Tax Act, 1961 as amended with effect from 01.06.2007, for the Assessment Years 2008-09, 2010-11, 2011-12 and 2012-13. 29. As per Section 245C of the Income Tax Act, 1961, an assessee may at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 application, has been paid on or before the date of making the application and the proof of such payment is attached with the application. Explanation .-For the purposes of clause ( ia ),- ( a ) the applicant, in relation to the specified person referred to in clause ( ia ) , means,- ( i ) where the specified person is an individual, any relative of the specified person; ( ii ) where the specified person is a company, firm, association of persons or Hindu undivided family, any director of the company, partner of the firm, or member of the association or family, or any relative of such director, partner or member; ( iii ) any individual who has a substantial interest in the business or profession of the specified person, or any relative of such individual; ( iv ) a company, firm, association of persons or Hindu undivided family having a substantial interest in the business or profession of the specified person or any director, partner or member of such company, firm, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment 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 the purposes of this clause- ( i ) a proceeding for assessment or reassessment or recomputation referred to in clause ( i ) of the proviso shall be deemed to have commenced from the date on which a notice under section 148 is issued; ( ii ) [***] ( iii ) a proceeding for making fresh assessment referred to in clause ( iv ) of the proviso shall be deemed to have commenced from the date on which the order under section 254 or section 263 or section 264, setting aside or cancelling an 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 153 A or section 153C, shall be deemed to have commenced on the date of issue of notice initiating such proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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; ( f ) Settlement Commission means the Income-tax Settlement Commission constituted under section 245B; ( g ) Vice-Chairman means a Vice- Chairman of the Settlement Commission and includes a Member who is senior amongst the Members of a Bench. 32. Sine Qua Non for filing an application under Section 245C of the Income Tax Act, 1961 is pendency of a case before an assessing officer. 33. A plain reading of Explanation (iv) to Section 245A as it stood during the period in dispute indicates that an assessment proceeding is deemed to have commenced from the date of 1st day of assessment year and concludes on the date on the date of assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 Section 139; or (ii) in response to a notice served under section 142. and concluded on (a) the date on which the assessment is made; or (b) on the expiry of the time specified for making assessment under sub-section (1) of section 153, in case where no assessment is made. 40. The 2015 amendment for the first time makes it very clear that an assessment proceeding shall stand concluded under the above two mentioned circumstances. In other words, if no assessment order is passed, no assessment proceeding sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 qua those assessment years were held not maintainable. 48. In Commissioner of Income Tax Vs. Income Tax Settlement Commission , [2012] 27 Taxmann.com 239 (Delhi), the decision of the Calcutta High Court in Director of IT (International Taxation) Vs. Income Tax Settlement Commissioner and others, [2012] 1 CAL LT 309 : 2011 SCC OnLine Cal 5547 was extracted to arrive at the conclusion. 49. The Delhi High reproduced the following paragraph from the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vious 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, very consciously excluded proceedings under section 147, from the purview of a settlement application, this Court ought not to interpret the expression case in a manner that would in effect bring within the purview of a settlement application, something which has consciously been excluded by the legislature. 39. If two reasonable constructions of a taxing provision are possible, the construc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nger 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) referred to supra , Paragraph 27 to 29 also should be read. Paragraph 27 to 29 has set the context. They are extracted below:- 27. However, a proceeding for assessment under section 147 has clearly been excluded from the purview of pending proceedings for the purpose of making a settlement application. The question is whether an application for settlement can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apter 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 expired on 31.12.2010. However, for this Assessment Year also no assessment order was passed by Assessing Officer. 66. If Circular No.3 of 2008 dated 12.03.2008 is applied, assessment is deemed to have been completed on the date of service of assessment on the 2nd respondent applicant. 67. However, if Circular No.16/2014[F.No.142/1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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