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2014 (2) TMI 520 - HC - Income TaxPower of AO to pass an assessment order where application was filed before settlement commission – Income Tax Settlement Commission, rejected the petitioner’s application on the ground that the assessment was time barred. – The petitioner contended that the entire proceedings had to be closed since the block assessment had become time barred on 29.02.2000 - Held that:- The decision in Deen Dayal v. Union of India [1985 (5) TMI 8 - DELHI High Court] followed - even while upholding the authority of the Assessing Officer to complete assessment, clarify that there will be no impediment to the Settlement Commission in exercise its powers if it decides to exercise them. The consequence of accepting the argument of the assessee would be that even though there was a search of his premises u/s 132 of the Act which yielded incriminating material, the proceedings arising out of which he wanted to settle by approaching the Settlement Commission, he would still end up not paying any tax, as the block assessment became barred by time and there would also be no settlement order u/s 245D(4). Such a situation could not have been intended by the statute. Though now the situation has been taken care of by the insertion of the first proviso to Section 245F(2) by the Finance Act, 2007 w. e. f. 01.06.2007, but that cannot prejudice the rights of the revenue prior to that date as it seems to us that it was inserted only “ex abundant cautela". In Calcutta Jute Manufacturing Co. vs. CTO, (1997 (7) TMI 118 - SUPREME COURT OF INDIA), the Supreme Court held that a machinery provision must be so interpreted as to effectuate its purpose, and the distinction between a charging section and a machinery provision whose function is to effectuate the charge, was pointed out in the context of the rule of interpretation to be adopted. The details of the application, probe, consideration, hearing and disposal, found in the report, had been incorporated in the statutory provisions in Chapter XIX-A - it was only in the nature of machinery provisions for the purpose of settlement of tax disputes between the assessee and the Revenue - The provisions do not compel any assessee to resort to section 245C, but that can be availed of, if the assessee so chooses - the remedy provided under section 245C, as a machinery provision for effecting settlement of tax disputes, was only in the nature of a concession or option open to the assessee who desired to settle his tax matters – Decided against Assessee.
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