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TMI Blog2024 (11) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... of case by operation of the provisos which were deleted (as already noticed, two provisos deleted in 2010 and the rest were deleted in 2014) the Explanation Clauses that were ancillary to the provisos, continued to remain in the statute book. With the deletion of the provisos, the Explanation Clauses cannot by themselves control or restrict the definition of case in Section 245A(b). If the interpretation now sought to be canvassed by the Revenue is accepted, the legislative intent behind the deletion of the provisos will not be achieved and the period which was originally excluded by operation of the provisos read with the explanations will become the period during which an application for settlement could be filed. This is, obviously, not the intention of the parliament. It is settled that where two views are possible and one produces anomalous results it is the duty of the Court to adopt the view that does not produce anomalous results. The right that had accrued to eligible assessees to approach the Income- tax Settlement Commission until the the Finance Act, 2021 came into force on 01-04-2021 remained vested in them and such rights continued to be enforceable notwithstanding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained in the Finance Act, 2021, which came into force with effect from 01-04-2021, amendments were made to the provisions of Chapter XIX-A of the 1961 Act, providing inter alia for the abolition of the Income-tax Settlement Commission (hereinafter referred to as the Settlement Commission ) and providing that no application shall be made for settlement before the Settlement Commission on or after 01.02.2021. The amendments were to take effect from 01-02-2021. A search under the provisions of Section 132 of the 1961 Act had taken place in respect of the petitioners in all these cases prior to 01-02-2021. However, the notices following the search were issued to the petitioners under the provisions of Section 153A of the 1961 Act only after 01-02-2021. The question arising for consideration of this Court is whether, in the light of the amendments to the provisions of Chapter XIX-A of the 1961 Act, persons like the petitioners in whose cases a search under Section 132 of the 1961 Act was prior to 01-02-2021, but notices under Section 153A had been issued only after 01-02-2021, could maintain an application for settlement before the Settlement Commission/Interim Settlement Board. 3. Sri. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew that the applications before the Interim Settlement Board could be maintainable, provided they were filed on or before 30-09-2021. The learned Senior Counsel also submitted that, if the right to file an application for settlement had to be determined with reference to the date of issuance of the notice, the same would result in a very anomalous situation, where, some assessees whose premises were the subject matter of search under Section 132 of the 1961 Act (on the same day) would have the right to approach the Settlement Commission if the notice under Section 153A was issued to them before 01-02-2021 (31-3-2021 by virtue of the law laid down in Senapati Santaji Ghorpade Sugar Factory Ltd. (supra)) while other assessees would have no such right if the notices were issued to them after 31-03-2021. In other words, it is submitted that if in the case of one of the persons involved, the notice was issued prior to 31-03-2021 they would be entitled to maintain an application before the Settlement Commission/Interim Settlement Board while certain others to whom notices were issued thereafter would not be in a position to do so. 4. Sri. Anil D. Nair, the learned Senior Counsel appeari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 153A of the 1961 Act had been issued prior to 31-03-2021. It is also submitted that the extension of time to file an application by the Central Board in the exercise of jurisdiction vested under Section 119(2)(b) of the 1961 Act does not mean that the operation of statutory provisions abolishing the Settlement Commission with effect from 01-02-2021 stood adjourned till 30-09-2021. In other words, it is the submission that the Central Board cannot be deemed to have any authority to extend or give life to the Settlement Commission when the Parliament had categorically abolished the Settlement Commission with effect from 01-02-2021. It is submitted that these writ petitions deserve to be dismissed. 6. Having considered the submissions made across the bar, I am of the view that the petitioners are entitled to succeed. 7. The Finance Bill, 2021 ((2021) 430 ITR (Stat) 74) proposed certain amendments to Chapter XIX-A of the 1961 Act. The bill was placed before Parliament on 01-02-2021 and obtained the assent of the President on 28-3-2021. For the purposes of this case, the following amendments to the provisions of Chapter XIX-A are relevant:- i. Insertion of sub-section (5) to Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which an application under sub-section (1) of section 245C is made. There is an Explanation Clause to Section 245A(b) which starts with the words For the purposes of this clause . Explanation (ii) of Section 245A(b) of the 1961 Act (which was deleted w.e.f 1.6.2010) provided as under:- (ii) a proceeding for assessment or reassessment referred to in clause (ii) or clause (iii) of the proviso shall be deemed to have commenced on the date of initiation of the search under section 132 or requisition under section 132A Explanation (iiia) (which was inserted w.e.f 1.6.2010) of Section 245A(b) of the 1961 Act reads thus:- (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; A conjoint reading of the definition of 'case' under Section 245A(b) of the 1961 Act and Explanation (iiia) does not lead me to conclude that the definition of 'case' for the purposes of Section 245A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubt that in the case of a person, who is the subject matter of a search under Section 132, a case as defined in Section 245A(b) can be said to be pending for the purposes of Section 245A(b) on the date of the search or immediately thereafter or from the date of the requisition, as every proceeding taken on the basis of the search or requisition is intrinsically connected to the date of the search or requisition. To a pointed question from the Court, the learned Senior Standing Counsel conceded that even concluded assessments for any of the years mentioned in Section 153A would stand re-opened if a search is conducted under Section 132. 10. There is yet another aspect of the matter. Immediately prior to its amendment by the provisions of the Finance Act, 2010, Section 245A(b) reads thus:- 245A. Definitions. In this Chapter unless the context otherwise requires,- (a) xxxx xxxx xxxx (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 sub-section (1) of section 245C is made: Provided that - (i) a proceeding for assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the proceedings under the excluded provisions would COMMENCE . In other words, no application for settlement could not be made at any time after the commencement date in respect of proceedings under the excluded provisions. The inescapable conclusion is that each explanation relates specifically to the four provisos referred to above. This can be easily demonstrated by putting each of the provisos against each of the related explanations in tabular form:- The provisos The Explanations (i) a proceeding for assessment or reassessment or recomputation under section 147 Note: This proviso was deleted w.e.f 1.10.2014 by the Finance Act (No.2), 2014 (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) a proceeding for assessment or reassessment for any of the assessment years referred to in clause (b) of section 153A in case of a person referred to in Section 153A or Section 153C Note: This proviso was deleted w.e.f. 1.6.2010 by the Finance Act, 2010 (ii) a proceeding for assessment or reassessment referred to in clause (ii) or clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be made in this regard to a Circular issued by the Government of India in the Ministry of Finance, Department of Revenue (Central Board of Direct Taxes) dated, the 6th April, 2011 (CIRCULAR NO.01/2011.F.No.142/1/2011-SO (TPL)), which to the extent relevant reads thus:- 22.1 Under the existing provisions of section 245A (b), the term case , in relation to which an application can be made is defined as any proceeding for assessment 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 is made to the Settlement Commission. However, it excluded, among others, proceedings for assessment or reassessment resulting from a search or as a result of requisition of books of account or other documents or any assets, initiated under the Act. The Act has been amended to include proceedings for assessment or reassessment resulting from search or as a result of requisition of books of account or other documents or any assets, within the definition of a case which can be admitted by the Settlement Commission. Explanation to section 245A (b) has been amended to specify the date on which the proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 2010-2011 it was stated:- 123. To expeditiously resolve disputes with taxpayers I propose to expand the scope of cases which may be admitted by the Settlement Commission to include proceedings related to search and seizure cases pending for assessment. I also propose to expand the scope of Settlement Commission in respect of Central Excise and Customs so that certain categories of cases that hitherto fell outside its jurisdiction may be admitted. In the Budget Speech of the then Union Finance Minister on 10/07/2014 for the Financial year 2014-2015 it was stated:- Advance Ruling and Other Tax Related Measures 11 12. .. I further propose to enlarge the scope of the Income-tax Settlement Commission so that taxpayers may approach the Commission for settlement of disputes. This would continue to be once in a lifetime opportunity for any taxpayer. 12. Section 245A(b), as it stands, after the amendment by Finance Act (2) of 2014 (together with the explanations) is extracted below:- 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 applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he time-frames mentioned in the Explanation Clause only identified the period of exclusion with reference to each of the proceedings taken out of the definition of case by operation of the provisos which were deleted (as already noticed, two provisos deleted in 2010 and the rest were deleted in 2014) the Explanation Clauses that were ancillary to the provisos, continued to remain in the statute book. With the deletion of the provisos, the Explanation Clauses cannot by themselves control or restrict the definition of case in Section 245A(b). If the interpretation now sought to be canvassed by the Revenue is accepted, the legislative intent behind the deletion of the provisos will not be achieved and the period which was originally excluded by operation of the provisos read with the explanations will become the period during which an application for settlement could be filed. This is, obviously, not the intention of the parliament. It is settled that where two views are possible and one produces anomalous results it is the duty of the Court to adopt the view that does not produce anomalous results. In the words of Venkatarama Iyer, J., in N.T. Veluswami Thevar v. G. Raja Nainar, AIR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioners herein, the search under Section 132 of the 1961 Act, was prior to or on 31-03-2021 they would be entitled to maintain an application for settlement under Section 245C of the 1961 Act; (ii) Such applications could have been filed till 30-9-2021 in view of the Order bearing F.No. 299/22/2021 - Dir(Inv.III)/174 dated 28-09.2021 under Section 119(2)(b) of the 1961 Act and such applications will be disposed of in accordance with the law by the Interim Board for Settlement constituted under Section 245AA of the 1961 Act; (iii) No application for settlement can be maintained if the search was conducted on or after 01-04-2021 as the Settlement Commission ceased to exist. In that view of the matter and since it is not disputed before me that the search under Section 132 in the case of all the petitioners in these cases was prior to 31-03-2021, the persons/entities, who were subject matter of the search, will be entitled to maintain an application for settlement before the Interim Settlement Board, provided such application has been filed on or before 30-09-2021. These writ petitions are therefore ordered directing that if the search under Section 132 in respect of the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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