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TMI Blog2024 (2) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The assessment order passed by the respondent No. 3 on 27.07.2021 for A.Ys. 2013-14 to 2019-20 could not have been passed as the application filed by the petitioner for settlement is considered to be pending and the Interim Board is required to exercise all the powers of the Settlement Commission with regard to pending application and accordingly, as per provision of section 245F(2) of the Act, the Interim Board is vested with the powers of the Settlement Commission and jurisdiction and Income Tax authority could not have proceeded further with the assessment proceedings in view of the pendency of the settlement application before the Interim Board. The Interim board therefore would have exclusive jurisdiction over the case and the respondent No. 3 had no jurisdiction to pass any assessment order during the pendency of the application before the Settlement Commission/Interim Board. It appears that the respondent No. 3 has passed assessment orders in July 2021 when there was no clarity with regard to settlement applications filed after 31.01.2021. In view of the clear legal position prevailing even after 01.02.2021, the assessment orders passed by the respondent No. 3 are non-est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d final disposal of this petition, stay implementation and operation of the impugned order dated 27.12.2023 at Annexure A. 6. Brief facts of the case are as under: 6.1 The applicant is engaged in the business of share trading activities through stock exchange and outside stock exchange, facilitation of dematerialization of shares held physically, advisory/consultancy services, other ancillary activities connected to shares/stock market/money leading against security obtained. The petitioner derived income from partnership firm (only A.Y. 2019-20) besides income from dividend, capital gains and other sources in other years. 6.2 A search proceedings u/s. 132 of the Income Tax Act, 1961 [for short the Act ] was initiated at the business premises of the petitioner on 06.03.2018. 6.3 A notice u/s. 153A for the A.Y. 2013-14 to 2018-19 and u/s. 143(2) for A.Y. 2019-20 on 22.10.2020 was issued. 6.4 Section 245B of the Income Tax Act, 1961 (for short the Act ) was amended by the Finance Act, 2021 which provides that Income Tax Settlement Commission shall cease to operate w.e.f. 1st Day of February, 2021. Further, it has also been provided that no application for settlement can be filed on o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner approached this Court by way of present petition seeking aforesaid reliefs. 7. Learned Senior Advocate Mr. S.N. Soparkar submitted that as per the provision of section 245F(i) the Act, the Interim Board is defined under section 245A(da) of the Act w.e.f. 01.02.2021 and respondent No. 1 -Interim Board is vested with all powers of the settlement board to adjudicate pending applications after 01.02.2021. 7.1 Learned Senior Advocate Mr. S. N. Soparkar submitted that as per the provision of section 245F(1) (2) of the Act, the Settlement Commission has the exclusive jurisdiction once the application is made under section 245C has been allowed to be proceeded with under section 245D of the Act. It was therefore submitted that the Income Tax authorities could not have passed the assessment order as the petitioners have already filed the settlement application on 30.03.2021. 7.2 It was further submitted that as per the circular dated 28.09.2021 being ORDER F.No. 299/22/20211-DIR (INV.III)/174, the Central Board of Direct Taxes, in exercise of powers under clause (b) of sub-section (2) of section 119 of the Act in order to avoid genuine hardship to assessee, has authorized the Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y stage of a case relating to him, make an application in such form and in such manner as may be prescribed, and containing a full and true disclosure 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 the Settlement Commission to have the case settled and any such application shall be disposed of in the manner hereinafter provided : .. 245F:-Powers and procedure of Settlement Commission:- (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 applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny other offence of which he appears to have been guilty in connection with the settlement and shall also become liable to the imposition of any penalty under this Act to which such person would have been liable, had not such immunity been granted. 10. The circular dated 28.09.2021 issued by the CBDT reads as under: ORDER F. NO. 299/22/2021- IR(INV.III)/174, DATED 28.09.2001 The Finance Act, 2021 has amended the provisions of the Act to inter alia provide that the Income Tax Settlement Commission (ITSC) shall cease to operate with effect from 1.2.2021. Further, it has also been provided that no application for settlement can be filed on or after 1.2.2021 which was the date on which the Finance Bill, 2021 was laid before the Lok Sabha. In order to dispose off the pending settlement applications as on 31.1.2021, the Central Government has constituted Interim Board for Settlement (hereinafter referred to as the Interim Board ), vid notification No. 91 of 2021 dated 10.08.2021. 2. Meanwhile, in order to avoid genuine hardship to number of taxpayers who were in the advanced stages of filing their application for settlement before the ITSC as on 1.2.2021 and also due to the hardship face ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent application before the Interim Board. The Interim board therefore would have exclusive jurisdiction over the case and the respondent No. 3 had no jurisdiction to pass any assessment order during the pendency of the application before the Settlement Commission/Interim Board. It appears that the respondent No. 3 has passed assessment orders in July 2021 when there was no clarity with regard to settlement applications filed after 31.01.2021. 13. Be that as it may, in view of the clear legal position prevailing even after 01.02.2021, the assessment orders passed by the respondent No. 3 are non-est and would not survive as the same could not have been passed as per provision of section 245F(2) of the Act. 14. In view of the above facts, the impugned assessment orders are hereby ordered to be quashed and set aside and in view of quashing of the setting aside of the assessment order dated 27.07.2021 passed by the respondent No. 3, the very basis of rejecting the application by the Interim Board also ceases and accordingly, impugned order passed by the Interim Board is also quashed and set aside and the matter is remanded back to the Interim Board to decide the settlement application t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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