TMI Blog2011 (8) TMI 944X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, where the period of twenty one months from the end of the assessment year expired on the date of making of the application, the settlement application cannot be proceeded with. - WP No. 341 of 2011, WP No. 344 of 2011 and WP No. 345 of 2011 - - - Dated:- 1-8-2011 - Indira Banerjee, J. Md. Nizamuddin, Adv. for the Appellant Debi Pal and J.P. Khaitan, Sr. Advs.; Malay Dhar and Nilanjan Banerjee (Pal), Advs. for the Respondent JUDGEMENT Indira Banerjee:- The issues involved in the three writ petitions, being Writ Petition Nos. 341, 344 and 345 of 2011, being identical, the three writ petitions were heard together and are now being disposed of by this common judgement and order. These writ petitions have been filed by the Revenue challenging orders dated 11th August, 2010 passed by the Income Tax Settlement Commission under Section 245D(2C) of the Income Tax Act, 1961 inter alia holding that the settlement applications filed by the respective private respondents in the three writ applications were not invalid. On 29th June, 2010, the respective private respondents in the three writ petitions, which are collectively referred to as Outotec G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceeding for making fresh assessment in pursuance of an order under section 254 or section 263 or section 264, setting aside or canceling an assessment' shall not be a proceeding for assessment for the purposes of the 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; (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 canceling an assessment was passed; [(iiia) a proceeding for assessment or reassessment for any of the assessme3nt years, referred to in clause (b) of sub-section (I) 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 proceedings and concluded on the date on which the assessment is made;] (iv) A proceeding for assessment for any assessment year, other than the proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of the total income of that year, tax shall be calculated on the aggregate of the total income returned and the income disclosed in the application as if such aggregate were the total income.] [(1C) The additional amount of income-tax payable in respect of the income disclosed in the application relating to the previous year referred to in subsection (1B) shall be,- (a) in a case referred to in clause (i) of that subsection, the amount of tax calculated under that clause; (b) in a case referred to in clause (ii) of that subsection, the amount of tax calculated under that clause as reduced by the amount of tax calculated on the total income returned for that year; (c) [***].] (1D) Where the income disclosed in the application relates to more than one previous year, the additional amount of income-tax payable in respect of the income disclosed for each of the years shall first be calculated in accordance with the provisions of sub-sections (1B) and (1C) and the aggregate of the amount so arrived at in respect of each of the years for which the application has been made under sub-section (1) shall be the additional amount of income-tax payable in respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C on or after the 1st day of June, 2007 has been rejected under sub-section (1) of section 245D; or (ii) an application made under section 245C has not been allowed to be proceeded with under subsection (2A) or further proceeded with under subsection (2D) of section 245D; or (iii) an application made under section 245C has been declared as invalid under sub-section (2C) of section 245D; or (iv) in respect of any other application made under section 245C, an order under sub-section (4) of section 245D has not been passed within the time or period specified under sub-section (4A) of section 245D, the proceeding before the Settlement Commissioner shall abate on the specified date. Explanation:- For the purposes of this sub-section, "specified date" means:- (a) in respect of an application referred to in clause (i), the day on which the application was rejected; (b) in respect of an application referred to in clause (ii), the 31st day of July, 2007; (c) in respect of an application referred to in clause (iii), the last day of the month in which the application was declared invalid; (d) in respect of an application referred to in clause (iv), on the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r fresh assessment in pursuance of any orders under Section 254 or Section 263 or Section 264, setting aside or cancelling an assessment, from the purview of proceedings for assessment, for the purposes of Clause (b) of Section 245 A. After the amendment of the Income Tax Act, 1961, by the Finance Act of 2007, 'case' means any proceeding for assessment under the Income Tax Act, of any person, in respect of any assessment year or years, which may be pending before any Assessment Officer on the date on which an application under sub-section (1) of section 245C is made, except for proceedings for assessment, reassessment or computation under Section 147 or proceedings for fresh assessment in pursuance of any order under Section 254, 263 or 264 setting aside or cancelling an assessment. Explanation (iv) to Section 245A(b) provides that proceedings for assessment other than proceedings for assessment or reassessment referred to in clause (i) or clause (iv) of the proviso or clause (iiia) of the Explanation, are to be deemed to have commenced on the first day of the assessment year and concluded on the date on which the assessment is made. Before the amendment, a case was defined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argued by Dr. Pal, appearing on behalf of the assessee, for the purpose of clause (1) of the proviso to Section 245A(b) a proceeding for assessment or re-assessment or re-computation referred to in clause (i) of the proviso was to be deemed to have commenced from the date on which a notice under Section 148 was issued. Dr. Pal rightly argued that clause (1) of the proviso had to be read in conjunction with clause (i) of the Explanation and thus read, a proceeding for assessment or re-assessment or recomputation under Section 147 would commence once a notice under Section 148 had been issued. No settlement application could, therefore be filed after the date on which a notice under section 148 had been issued. Dr. Pal argued that as admittedly no notice under Section 148 had been issued for any of the assessment years in issue, before the settlement applications were made, the assessees were entitled to apply for settlement before the Settlement Commission, even though no returns had been filed and the time for making assessment under Section 143 had expired. Dr. Pal argued that the Settlement Commission was fully justified in entertaining and proceeding with the settlement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to accept Dr. Pal's submission that the proceedings would be deemed to continue even after expiry of the statutory time limit for making an order of assessment and until such time as notice, if any, under Section 148 were issued. After the amendment only the cases pending before the Assessing Officer on the date on which an application under sub-section (1) of Section 245C is made, comes within the definition of the word 'case' appearing in Section 245A(b). If Parliament in its wisdom excluded proceedings under Section 147 from the purview of pending proceedings, Explanation iv to the definition of 'case' in Section 245A(b) cannot be construed to include within the purview of pending proceedings, the requisite time period for issuance of notice for proceedings under the aforesaid section. In the case Asgarali Nazarali vs. State of Bombay reported in AIR 1957 SC 503, the Supreme Court held as follows:- "Pending":- (1) A legal proceeding is "pending" as soon as commenced and until it is concluded, i.e., so long as the Court having original cognizance of it can make an order on the matters in issue, or to be dealt with, therein. Similar are the observations of Jessel, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Explanation iv to Section 245A(b). 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. As held in K. P. Varghese vs. 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". Since the legislature has, in its wisdom, very consciously excluded proceedings under Section 147, from the purview of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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