2019 (12) TMI 863 - HC - Income Tax

Settlement Application - Reopening of assessment - HELD THAT - Order passed in the case of Parasmal Jain by the Settlement Commission has become final. While that being so if the objections of the learned Standing Counsel for the respondents is to be accepted the possibility of double taxation for one transaction may occur. As such this Court is of the view that the issue in the case of Umed C. Mehta could be reconsidered in the light of the subsequent development through the orders passed by the Settlement Commission in the case of Parasmal Jain. Consequently deem it proper to refrain from addressing any other grounds raised by the petitioner challenging the impugned proceedings in this writ petition and that any further decision could await after final orders are passed by the Settlement Commission on remand. It would be relevant to point out herein that when Umed C. Mehta had challenged the order of the Settlement Commission passed in his Settlement Application before this Court in had set aside the order of the 1st respondent herein dated 23.10.2009 and remanded the matter back for fresh consideration. It would not be appropriate to interfere with the present impugned notice at this stage but it would be appropriate to await the decision of the Settlement Commission after remand in the case of Umed C. Mehta.

Summary

Issues:
1. Rejection of Settlement Application by Income Tax Settlement Commission
2. Re-assessment notice under Section 148 of the Income Tax Act
3. Possibility of double taxation due to Settlement Commission orders in related cases

Analysis:
1. The petitioner filed a writ petition challenging the rejection of a Settlement Application by the Income Tax Settlement Commission, where undisclosed income was linked to a commission from an accommodation transaction. The rejection led to a re-assessment notice under Section 148 for the assessment year 2006-07.

2. The petitioner argued that another party involved in the transaction had a Settlement Application processed by the Commission, leading to concerns about double taxation. The petitioner sought a review based on the related party's Settlement Application outcome, which could impact the petitioner's tax liability.

3. The Standing Counsel for the respondents contended that each case before the Settlement Commission is independent, and findings in one case should not automatically apply to others, even if the transactions are the same. The Commission must be satisfied independently in each case, preventing automatic deductions based on related cases.

4. The Court acknowledged the possibility of double taxation if the Settlement Commission's decision in the petitioner's case stood, given the related party's finalized Settlement Application. Considering the risk of double taxation, the Court decided to re-examine the petitioner's case based on the related party's Settlement Commission orders.

5. Notably, a previous challenge by Umed C. Mehta against the Settlement Commission's order had been successful, leading to a remand for fresh consideration. Therefore, the Court opted to await the final decision of the Settlement Commission in Umed C. Mehta's case before addressing other grounds raised in the writ petition.

6. The Court concluded that interfering with the re-assessment notice at that stage would be premature, emphasizing the importance of awaiting the Settlement Commission's decision after the remand in Umed C. Mehta's case. Consequently, the writ petition was closed without costs, pending the final outcome of the related Settlement Application.