2022 (4) TMI 1389 - HC - Income Tax

Cessation of the Settlement Commission - validity of the amendment to the Income Tax Act 1961 in Section 245A by inserting sub-clauses (da) (ea) and (eb) and Sections 245B 245BC 245BD proviso to Sections 245C 245D 245DD 245F 245G 245H and insertion of new Sections 245AA and 245M by way of Sections 54 to 65 of Finance Act 2021 with retrospective effect from 01.02.2021 on the ground that such amendment is arbitrary illegal and void and infringing the fundamental rights conferred under Articles 14 19(i)(g) 20 20(2) and 21 of Constitution of India 1950 thus unenforceable and unconstitutional - HELD THAT - Since during the pendency of the writ petitions the CBDT came out with a press release dated 7.9.2021 followed by an order dated dated 28.9.2021 directing to admit all applications filed after 31.1.2021 and before 30.9.2021 and treat such applications as valid and process them as pending applications for consideration by the Interim Board learned counsel for the petitioners are not pressing the writ petitions in regard to the challenge to the constitutional validity of the amended provisions referred to above as all the petitioners submitted applications on or before 30.9.2021. However learned counsel for the petitioners seek clarification about the pendency of the proceedings as on 31.1.2021. It has been agreed by the parties to govern the issue aforesaid by Explanation (iv) to Section 245A(b) of the Act of 1961. The provision aforesaid has been quoted in the preceding paragraph. In view of the above we dispose of all these writ petitions with a direction to the respondents to send applications for consideration by the Interim Board if submitted before 30.9.2021. The consideration of applications by the Interim Board would be if the proceedings were pending as on 31.1.2021. To determine the pendency of the proceedings the Interim Board would be governed by Explanation (iv) to Section 245A(b) of the Act of 1961. The Interim Board would exercise the jurisdiction as conferred by the order dated 28.9.2021 passed by the CBDT.

Summary

Issues:
Challenge to the constitutional validity of the amendment to the Income Tax Act, 1961.
Clarification on the pendency of proceedings as of January 31, 2021.

Analysis:
The batch of writ petitions was filed to challenge the constitutional validity of the amendment to the Income Tax Act, 1961, specifically in Section 245A and related sections by the Finance Act, 2021. The challenge was based on the grounds of arbitrariness, illegality, and violation of fundamental rights under the Constitution of India. The petitioners sought a declaration that the amendment was unenforceable and unconstitutional.

During the pendency of the writ petitions, the Central Board of Direct Taxes (CBDT) issued a press release and an order allowing eligible assesses to file settlement applications until September 30, 2021. An Interim Board for Settlement was constituted by the Central Government to process these applications. The respondents argued that applications submitted before the deadline could be considered by the Interim Board for Settlement.

The petitioners did not contest the disposal of their writ petitions if applications were submitted before September 30, 2021. However, they sought clarification on considering the applications based on the pendency of proceedings as of January 31, 2021. The Income Tax Department objected to this, citing specific provisions from the Act of 1961 regarding the commencement of proceedings.

After hearing arguments from both sides, the court decided to dispose of the writ petitions with a direction to consider applications submitted before September 30, 2021, by the Interim Board for Settlement. The consideration of applications would be based on the pendency of proceedings as of January 31, 2021, as per the provisions of the Act of 1961. The Interim Board was instructed to follow the jurisdiction conferred by the CBDT's order dated September 28, 2021.

In conclusion, the court's decision provided clarity on the processing of settlement applications in light of the constitutional validity challenge and the specific provisions of the Income Tax Act, 1961. The judgment aimed to ensure a fair and consistent approach in dealing with the applications before the Interim Board for Settlement.