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TMI Blog2024 (7) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... ch may be pending before the Assessing Officer on the date on which application is made under Section 245C (1) of the Act. It is pertinent to note that when the Finance Bill came into force and became the law with effect from 01.04.2021, provisions of Section 245C (5) of the Act, which provides that no application shall be made under this Section on or after 01.02.2021 cannot obliviate, the applications already filed by the petitioners as on the date of filing of the application for settlement, amendment of Section 245C (5) of the Act was not a statute and therefore by retrospective amendment the petitioners cannot be prohibited from making an application because if the legislature intended to make applications filed between 01.02.2021 and 01.04.201 as invalid and bad in law, it would have instead provided that such application would be treated as null and void. Therefore the provisions of Section 245C (5) of the Act cannot be placed into service to invalidate the applications filed between 01.02.2021 and 31.03.2021. When the petitioners have filed their applications before 31.03.12021, the date on which amendment Finance Act, 2021 did not come into effect and therefore the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iding the applications filed by the petitioners on merits. - HONOURABLE MR. JUSTICE BHARGAV D. KARIA AND HONOURABLE MR. JUSTICE NIRAL R. MEHT Appearance: For the Petitioner(s) No. 1 : Mr Dhinal A Shah (12077). For the Petitioner(s) No. 1: Ms Vaibhavi K. Parikh. For the Petitioner : Mr Jimi Patel Adv For Mr Darshan Gandhi. For the Respondent(s) No. 1 : Karan G Sanghani And Mr Varun K Patel AGP (7945). For the Respondent(s) No. 2,3 : Notice Served. ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1. Heard learned advocate Mr. Dhinal Shah, learned advocate Ms. Vaibhavi K. Parikh, learned advocate Mr. Jimi Patel for learned advocate Mr. Darshan Gandhi for the petitioners and learned Senior Standing Counsels Mr. Varun K.Patel and Mr. Karan Sanghani for the respondents. 2. Rule returnable forthwith. Learned advocates for the respective parties waive service of notice of rule for the respective respondents. 3. Having regard to the controversy in narrow compass, with the consent of learned advocates for the respective parties, these petitions are taken up for hearing. 4. As the issue arising in these petitions is similar, the same were heard analogously and are being dispose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (2) of section 119 of the Income- tax Act, 1961 (the Act), in order to avoid genuine hardship to assesses authorizes the Commissioner of Income-tax, posted as Secretary to the Settlement Commission prior to 01.02.2021, to admit an application for settlement on behalf of the Interim Board filed after 31.01.2021 which is the date mentioned in sub-section (5) of section 245C of the Act for filing such application, and before 30.09.2021 and treat such applications as valid and process them as pending applications as defined in clause (eb) of section 245A of the Act. 4. The above relaxation is available to the applications filed:- (i) by the assesses who were eligible to file application for settlement on 31.01.2021 for the assessment years for which the application is sought to be filed (relevant assessment years); and (ii) where the relevant assessment proceedings of the assessee are pending as on the date of filing the application for settlement... 10. It was submitted that the respondents have misinterpreted above Notification to hold that the petitioner must be eligible to file application for settlement on 31.01.2021 for the relevant Assessment Years as per Section 245A (b) read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to in clause (1) 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 1538 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 application, has been paid on or before the date of making the application and the proof of such payment is attached with the application. 11. Referring to the above provisions it was submitted that the respondent Board could not have passed the following order challenged in case of Special Civil Applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterim Board and the orders passed by the Interim Board holding such applications as not pending were set aside and such applications were ordered to be pending applications for consideration by the Interim Board, if otherwise in order eligible to be dealt with and in accordance with law on merits and in accordance with the scheme that may be framed by the Central Government as in respect of other cases which arose prior to 31.01.2021. 13. On the other hand, learned advocates for the respondent submitted that the orders passed by the Hon ble Madras High Court in case of Jain Metal Rolling Mills (Supra) is challenged by the respondents before the Hon ble Supreme Court and the matter is pending. 14. Learned advocates for the respondents referred to and relied upon the decision of the Hon ble Bombay High Court in case of EBR Enterprises and Another Vs. Union of India reported in (2019) 107 taxmann.com 220 (Bombay) to submit that in the facts of the said case arising under Section 80-(IB)(10) of the Act, the legislature granted deduction in relation to income arising out of the development of housing projects to the assessee, fulfilling the conditions contained therein as inserted by F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Supreme Court has also confirmed decision of this Court. 17. Reliance was also placed on the decision of the Madras High Court in case of S.P.A.M. Krishnan Chettiar Sons Vs. Income Tax Settlement Commission reported in [1993] 202 ITR 81 (Madras), wherein it is held that amendment of Section 245C by the Amendment Act with effect from 01.10.1984 was purely procedural and would govern the application filed on 09.08.1989 and the application was rejected on the ground that it did not contain the particulars required by the Section 245C of the Act and was not entertained. It was therefore submitted that, if the application is filed without taking the procedural changes in the provisions of the Section 245C of the Act, which is held to be purely a machinery Section without providing certain particulars as prescribed in Form 34B, application was not entertained by the Settlement Commission. 18. Reliance was also placed on the decision of the Madras High Court in case of Pitchai Rajagopal Shiva Kumar Vs. Union of India reported in [2022] 442 ITR 33 (Madras), wherein the petitioner gave up the challenge to the Constitutional validity in view of the directions to the respondents to send a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scribed format disclosing the manner in which the income has been derived and the additional amount of income tax payable on such income for settlement of the case and such application to be disposed of by the Settlement Commission in accordance with provisions of the Act. 21. Section 245A (b) of the Act defines the word case to mean any proceedings for the assessment under the Act of the any person in respect of any Assessment Year or Assessment Years, which may be pending before the Assessing Officer on the date on which application is made under Section 245C (1) of the Act. The proceedings of assessment or reassessment of any Assessment Year therefore would commence from the date of issuance of the notice initiating such proceedings and concluded on the date on which the assessment is made. Therefore in the facts of the petitioners, proceedings for relevant Assessment Years would fall within meaning of the case when the notice under Section 148 or 153 is issued and as the petitioner has made an application as per Section 245C (1) of the Act on issuance of the notice, prior to 31.03.2021, there was no prohibition on the petitioner to make such application as the Finance Bill, 202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 28.09.2021 extending the time limit for filing applications before the Interim Board upto 30.09.2021. However, paragraph (4) of the said Order reads thus:- 4. The above relaxation is available to the applications filed:- (i) by the assessees who were eligible to file application for settlement on 31.01.2021 for the assessment years for which the application is sought to be filed (relevant assessment years); and (ii) where the relevant assessment proceedings of the assessee are pending as on the date of filing of the application for settlement. 7. As a matter of fact, immediately after the introduction of the Bill before the Parliament, fresh applications were not accepted before the ITSC as such, several petitioners had approached the Courts of law and upon directions of Court their applications were received and are pending. After the extension of time upto 30.09.2021, in some cases, the applications were rejected on the ground that the Orders/Notices of re-opening etc., were issued on or after 01.02.2021, by considering the eligibility clause as contained in the circular dated 28.09.2021. Hence, the aggrieved petitioners are before this Court, broadly with the above prayers ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e any new burden on him. 36. In that conspectus, with the Finance Act, 2021, in the background as such, it can be seen that by virtue of proviso to Section 245B, the ITSC is made inoperative with effect from 01.02.2021. Similarly, the Section 245C (5) also plays an embargo that no application shall be made under the section on or after 01.02.2021. The proviso to Section 245D (2C) deems that if no order is passed as on 31.01.2021 under the section, the application is deemed to be valid. The powers of the ITSC under Sections 245DD, 245F, 245G, 245H are all specifically entrusted to be exercised by the Interim Board with effect from 01.02.2021. Further, Sections 245D(9), stipulates that from 01.02.2021, the provisions of Sub-Sections (1)(2)(2B), (2C), (3), (4), (4A), (5), (6) and (6B) shall apply to pending applications allotted to Interim Board with the modifications mentioned therein. In this background, the circular can only grant administrative relief to the assessees. Therefore, considering the fact that the Finance Act, 2021 was retrospective in nature. Those who have had a right to approach ITSC i.e., those who had a case pending against them would have missed the bus in not ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITSC. Like any other appellate or revisional remedy which is a creature of statute, to right to seek resolution through ITSC was also conferred by the statute. Of course, it is well within the policy realm of the State to take away the remedy. It is not for this Court to substitute its opinion as to the abolition of the ITSC and taking away the procedure of resolution of the disputes through ITSC under Chapter XIX-A. The State had every right to abolish the ITSC. Therefore, the Parliament had every right to enact impugned enactment. While being so, in appropriate cases, the right to enact a law with retrospective operation is also well recognized. In the instant case, on a perusal of the impugned legislation, it was given retrospective effect with effect from 01.02.2021 on the premise that it is on the said date, that the Bill was introduced by the Parliament, by which, all the assessees and the general public concerned are made to know about the policy decision in the making by which the State proposed to make the ITSC inoperative. The period of retrospectivity is also only two months as it can be seen that the Act itself was notified on 01.04.2021. It is also not regarding any le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of fact, the applications are either made by the petitioners or on direction by the orders of the Court as the ITSC was in the statute book in the interregnum period before the retrospective legislation came into force. Therefore, the retrospectivity also makes these directions of Court and the consequential applications being filed before the ITSC nugatory. Therefore, the ratio in Tushar Ranjan Mohanty quoted supra applies in all force. 40. At the material time, i.e., during the interregnum period of 01.02.2021 upto 31.03.2021, the petitioners had a case within the definition of Section 245A (b). Their applications were very much pending applications as per the definition of 245A(eb). As a matter of fact, their applications were dealt with as per Section 245D and on a perusal of Section 245M, it can be seen that these applications were also to be transferred to the Interim Board to be dealt with in accordance with the procedure laid down to the board. But, however, without amending the definition of case pending applications etc., Section 245C (5) simply provides that no application shall be made under the Section on or after the first day of February, 2021. The right to file app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard. Therefore, fixing the last date for filing the applications alone travels beyond the purpose and results in more retrospectivity than which is needed and thus, runs counter to the other parts of the Act. As a matter of fact, as per the principle of lex prospicit non respicit (law looks forward not back) it can be seen that the purport of the legislation is only to do away with the policy of resolution through ITSC. As a matter of fact, the Central Government has to make a Scheme for the purposes of Settlement in respect of pending applications by the Interim Board as per Section 245D (11) and such scheme had to be placed before the Parliament. Thus, neither there is any intent nor it is within the purpose to do away with the pending applications in respect of matters in which the cases arose from 01.02.2021 to 31.03.2021. Thus, we find that it is just and necessary to read down the last date mentioned for filing applications in Section 245C (5) as 31.03.2021 and consequently the last date mentioned in paragraph No. 4(i) of the Circular should also read as 31.03.2021. The Question No. ii is answered accordingly. Question No. iii : 41. As per our findings in respect of Questions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of preferring the application in absence of any statute prohibiting the same application. It is also pertinent to note that the CBDT has extended the last date from 01.02.2021 to 30.09.2021 for filing applications for settlement eligible on 31.01.2021 and the CBDT could not have prescribed the eligible date of filing of application up to 01.02.2021 for the assessee relying upon provisions of Section 245C (5) of the Act which was not in existence up to 31.03.2021 and therefore the application for settlement made by the petitioners are valid applications filed prior to 31.03.2021 in absence of provisions of Section 245C (5) of the Act. Therefore an application already filed after 01.02.2021 but before 31.03.2021 cannot be declared invalid and provision of section 245C (5) has rightly been read down that no application shall be made after 01.04.2021 once the provision of Section 245C (5) received the assent of the Hon ble President of India on 01.04.2021, however before the assent being accorded to the Finance Act, 2021 the applications made by the petitioners cannot be held to be invalid by virtue of subsection 5 of Section 245C of the Act. 26. In view of the foregoing reasons the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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