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2016 (7) TMI 319 - AT - Income TaxRectification of mistake - CIT(A) confirming the action of the AO in cancelling the registration of firm under provision of section 186(2) - application to Settlement Commission - Held that:- In the present case, there is no dispute that the ld.Settlement Commission has taken cognizance under section 245D in both these cases, and the applications of the assessees were proceed with. Clause 2(A) has been inserted with section 245D by Finance Act, 2007. This clause contemplates that where the application was made under section 245C before the first day of June, 2007, but an order under sub-section (1) of section 245D was not passed, i.e. the application was not proceed with, then, such application will be deemed to have been allowed to proceed with, but, the condition is that the additional taxes on the income-tax disclosed in such application ought to have been paid before 31st day of July, 2007 In the present case since no order has been passed by the Settlement Commission, therefore, it is to be construed that the applications of the assessee have abated on 31.3.2008, i.e. the time limit provided in sub-section-4(A). In our opinion, this is the erroneous construction of provision at the end of the ld.CIT(A). Sub-clause 4(A) is applicable on those applications, where the taxes were paid by an assessee before 31.7.2007. In all these applications, the order ought to be passed by 31.3.2008. A perusal of the provisions extracted (supra), it is clear that in case where taxes were not paid by 31.7.2007, then, the application will be deemed to have been abated on this date. In order to find out whether the assessees have paid taxes before 31st July, 2007 or not, we have directed the ld.counsel to demonstrate this fact. The ld.counsel for the assessee for the applicants before the Settlement Commissioner try to demonstrate the tax liability and the amounts paid by both these assessees. However, we find that both the orders are totally silent on this issue. If we arrive at a conclusion that the taxes were not paid by the assessee before 31.7.2007, then, the application before the Settlement Commissioner would abate on 31st July. But if it is established that tax liability was discharged in spite of that no specific order has been passed by the Settlement Commission, the application would be considered as abated on 31.3.2008. This situation would goad us to record a different finding on the limitation. If the applications are abated on 31st July, then, the assessment orders are time barred. But if the applications are abated on 31.3.2008, then, the assessment orders are within the time limit. Therefore, for limited purpose, we restore the dispute to the file of the ld.CIT(A). The ld.CIT(A) shall determine the tax liability on the basis of disclosure made by both the assessees in the settlement application. After determination of the tax liability, he would find out how much amounts have been paid by both the assessees before 31st July, 2007. After conclusively arriving on the figures of both these aspects, she would decide whether the assessment orders should be termed as time barred or not. - Decided in favour of assessee for statistical purpose.
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