TMI Blog1999 (4) TMI 578X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to that assessment year (or years, as the case may be) from the assessing/appellate/ revising authority and deal with the case, as a whole, by itself. In other words, the proceedings before the Commission are not confined to the income disclosed before it alone. Once the application is allowed to be proceeded with by the Commission, the proceedings pending before any authority under the Act relating to that assessment year have to be transferred to the Commission and the entire case for that assessment year will be dealt with by the Commission itself. ] 2. If the answer to question No. 1 is in the affirmative, would it be correct to say that once the Settlement Commission determines a liability of the applicant for tax, penalty and interest under section 245D(4), the orders of the lower authorities would automatically stand set aside and, consequently, there will be no liability under section 220(2) of the Act ? 3. If the answer to question No. 1 is in the affirmative and question No. 2 in the negative, has the Settlement Commission powers to waive interest under section 220(2) of the Act ? The Special Bench of the Income-tax Settlement Commission in its decision in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l orders passed before the admission of the settlement application. Although an oblique reference was made to the status of such order after the Commission s order under section 245D(4), it was not an issue referred to the Bench and the observation is claimed to be based solely on the reading of the proviso to section 220(2), without harmonising it with the scheme of Chapter XIX-A dealing with settlement of cases. Further, the said decision of the Special Bench created a situation of ambiguity in the face of a separate regime of charge of interest as laid down in Chapter XIX-A and allegedly resulted in a situation of double jeopardy in the matter of charging of interest for non-payment of taxes. Ambiguity was also highlighted with reference to the significantly different treatments meted out to the class of applicants who approach the Commission before the assessment order is passed and to those who approach it after the passing of the assessment order by the Assessing Officer. While in the former case, there is only one order which is that of the Commission, there are two orders in the latter case, requiring a decision as to whether the former order merges with the latter or wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 245D(2A), 245D(8), 245F(4), etc., were not brought to the notice of the earlier Bench, certain vital points connected with the specific provisions in sections 245DD(1), 245F(3), 245HA(1) and 245D(7) were not considered by the Bench and the purpose behind the amendment made in the proviso to section 220(2) was not properly argued and appreciated. Reliance was also placed on certain observations made by the Supreme Court in the case of CIT v. Express Newspapers Ltd. [1994] 206 ITR 443 and the apparent situation of double jeopardy in the matter of chargeability of interest, likely to arise as a consequence of the said decision. Learned counsel appearing for the applicants and as interveners and the learned Additional SolicitorGeneral appearing for the department made an incisive analysis of the above and other relevant provisions of the Act, judicial pronouncements and the administrative instructions and the lively discussion that followed was of valuable assistance to the Bench in answering the questions referred to it. Opening the argument, Smt. Shobha Jagtiani, representing the applicant, Damani Bros., confined herself to the question whether interest under section 220(2) can be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... validity, after the order of admission. As held by the Supreme Court in Express Newspapers Ltd. s case [1994] 206 ITR 443, the Commissioner can carry on the investigation even after the filing of the application up to the date of the Commissioner s report. But once the application is admitted, the admission relates back to the date of application. In support of this proposition, she pointed out the provisions of the Act according to which the date of application only is relevant to determine the validity of actions taken. In this regard, she relied on the provisions of section 245H under which no immunity can be granted if prosecution is already launched on the date of application, section 245E under which a case can be reopened only if no pendency existed on the date of application, section 245DD under which provisional attachments made prior to application remain valid up to the date of application, unless revalidated by the Commission for the remaining term by its order. Further, it was pointed out that the additional tax payable in terms of section 245D(2A) read with section 245C(1A) is worked out not with reference to tax on the income as assessed but with reference to tax on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to modify the order passed by the Assessing Officer, with conclusiveness attached to such order. Shri Chandrachud referred to the observation of the Supreme Court in Express Newspapers case [1994] 206 ITR 443 in this regard (reproduced in the question) to say that once the application is allowed to be proceeded with by the Commission, the proceedings pending before any authority under the Act relating to that assessment year have to be transferred to the Commission. According to him, to say that earlier orders are invalidated is to circumscribe the powers vested in the Commission. It will also give an unfair advantage to an applicant approaching the Commission after the assessment order who, with an offer of additional income carrying tax implication of a mere one lakh of rupees, will be able to get earlier orders nullified and all consequences avoided, even if the same is ultimately approved by the Commission. Pointing out to various observations in the Supreme Court decision in the Express Newspapers case [1994] 206 ITR 443, he argued that the said decision dealt with the question of admission in the particular facts of the case and cannot have much relevance to the issues b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be said to have become dead. According to Shri Agarwalla, suspended animation can also come to an end if, during the proceedings, the provisions of section 245HA are invoked when, on account of non-co-operation by the applicant, the case is sent to the Assessing Officer to be completed as per law. In all other cases, suspended animation comes to an end with the passing of final order of settlement under section 245D(4), when the assessment order in question becomes non est/annulled and no demand raised through notice under section 156 remains recoverable. Shri T. M. Manoharan argued that the view that assessment orders do not survive is implied in the observations of the Supreme Court made in the case of Express Newspapers Ltd. [1994] 206 ITR 443 which is extracted under question No. 1. The Commission is an independent high-powered body which can settle matters once and for all. Its orders are more than assessment orders and comprehensive, as it can settle not only matters contained in the application but also other matters as may be referred to in the report of the Commissioner of Income-tax. It has exclusive jurisdiction over the case. Making an assessment or judging the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is admitted. It was also pointed out by him that there had been instances where, before admission of a settlement application, the pending proceedings crossed several stages. It is possible that apart from the assessment order, there may be an order passed by the Commissioner of Income-tax (Appeals) or even, in some cases, the order passed by the Income-tax Appellate Tribunal. If a view is taken that the assessment order survives, the corollary shall be that other orders passed by other authorities should also be construed as surviving. This conflicts with the underlying principles of settlement by the Commission, which exercises exclusive jurisdiction. In the light of the above arguments, Shri Manoharan expressed the view that the Commission s order under section 245D(1) sets aside the prior orders and renders them ineffective. Any matter considered and settled by the assessment order gets unsettled for fresh settlement by the Commission. Reliance was also placed on the language of section 245HA which requires the case to be sent back to the Assessing Officer only. He is entitled to use all the material and other information, results of enquiry held or evidence recorded by the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r which is not before the Commission and directions are issued under section 245D(4) read with section 245D(8) to that effect. The proviso to section 220(2) will, in such a case, come to the rescue of the applicant who will be able to get the interest reduced for that year in consequence of the exclusion of income pursuant to the Commission s direction. In other words, what Shri Agarwalla wants to say is that the amendment is relevant for persons other than the applicants or for the assessment years other than those covered by the settlement application, if those persons/ assessment years are affected by the Commission s finding in an order under section 245D(4). Shri Manoharan indicated another limited relevance to the proviso. According to him, this amendment will have relevance where a fresh intimation under section 143(1)(b) is to be issued, in respect of a year subsequent to the one for which the case has been settled, because of modification required to be made in carrying forward loss, deduction, allowance or relief in pursuance of the Commission s order under section 245D(4). If such modification results in reduced income, the amended proviso enables the reduction of intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 245D(7) indicates that the earlier order was not just suspended. Referring to the object of setting up the Commission, he pleaded that the body has been envisaged as a permanent authority before whom disclosure of undisclosed income can be made and on the analogy of VDIS and Kar Vivad Samadhan Scheme, the order of settlement overrides all other orders. Shri C. V. Kothari, representing the case of Shri M. L. Gupta, stated that the order of the Special Bench in Om Metals and Minerals (P.) Ltd., In re [1992] 193 ITR 57 (ITSC), of which he was one of the Members, stands impliedly overruled by the observation of the Supreme Court in the case of Express Newspapers Ltd. [1994] 206 ITR 443. The implication of this observation is that all the proceedings completed before the admission of the settlement application become nonest on such admission. The Commission deals with the case afresh. It makes a fresh adjudication, giving rise to a fresh demand, which is totally unconnected with the demand created by the Assessing Officer. No consequences flow from any earlier order. Although the Commission is a Tribunal, it is not an Appellate Tribunal and the question of merger of orders does not aris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the proviso to section 220(2). Referring to the decision of the Bombay High Court in the case of CIT v. Ramchandra Shivnarain [1993] 201 ITR 862, he argued that a proviso cannot be treated as a charging section. The limited purpose of the proviso is to enable the department to issue refund of interest, already collected. Shri Chetan Karia, referring to the decision of the Patna High Court in Gunpat Rai Santu Lal v. CIT [1984] 147 ITR 224, was of the view that no specific provision was needed to revise the interest downward as a result of the Commission s order. He did not agree with others in the submission that a notice under section 156 is not envisaged to be issued by the Commission but argued that there cannot be two demands simultaneously. According to him, recovery proceedings cannot be enforced and, therefore, there can be no question of charge of interest under section 220(2). Shri K. Shivram, speaking for the All India Federation of Tax Practitioners, argued that once an application is admitted, earlier orders do not survive and no proceedings for recovery or otherwise can be continued. With the passing of the order under section 245D(4), all earlier orders are nullified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 618 (SC)]. It is not to confine itself to the income disclosed before it but has to deal with the case as a whole ; its order is comprehensive enough to take into account not merely what is stated in the application but also what is covered by the report of the Commissioner of Income-tax ; its order not merely determines the tax liability but also the amount of any interest or penalty ; it determines the manner in which such amount is to be paid and deals with any other matter necessary for the effective settlement of the case. Its orders are conclusive as to the matters stated therein and no matter covered by such order can be reopened in any proceeding. The vast powers vested in the Commission give it flexibility in approach, comprehensiveness in content and conclusiveness of its order under section 245D(4). Such powers vested in the Commission and the large canvas it covers do not, in our view, militate against the survival of the order passed earlier. When a superior authority starts dealing with the subject on transfer of jurisdiction to it, it does not necessarily mean that the order passed or the actions taken by the preceding authorities are invalidated, even if the supe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under these sections to be modified in pursuance of the Commission s order under section 245D(4). Had it been the intention of the Legislature that these orders do not subsist after the admission of the application, the law would have provided either for not charging of interest or would have made the Commission s order under section 245D(4) as the basis for computing such interest. With any other view, there will be apparent incongruity between such a view and the express provisions contained in these sub-sections. We are not inclined to agree with Shri Manoharan when he says that these sub-sections serve the purpose only of determining the terminal point of time up to which interest can be levied. These sub-sections clearly deal with the recomputation of the interest based on the modification of the amount in respect of which the interest is calculated and have no relevance to the period for which interest is to be computed. The Special Bench in the case of Om Metals and Minerals (P.) Ltd., In re [1992] 193 ITR 57 (ITSC) relied on the first proviso to section 220(2). We do not think such reliance was wholly unjustified or inappropriate when we consider the express mandate cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice under section 156 cannot be issued by the Commission. Much has been argued on the implications of the provisions of section 245HA and sub-sections (6) and (7) of section 245D. In the first instance, we are of the view that these are special provisions meant to deal with specific and abnormal situations and such provisions need not fall in line with the general procedure or principles. They are to be viewed in the context of the purpose that is sought to be achieved by them. Section 245HA is a provision which empowers the Commission, in the event of non-co-operation by the applicant, to send back the case to the Assessing Officer for disposing of it in accordance with the provisions of this Act, as if no application under section 245C had been made. Sub-section (2) of this section stipulates that the Assessing Officer shall be entitled to use all the material and other information produced by the assessee before the Commission or the results of enquiry held or evidence recorded in the course of the proceedings before it. Obviously, the Legislature did not want the Commission to continue with the proceedings before it in the case of non-co-operation by the applicant. It has, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings by him within the remaining time available to the Assessing Officer excluding the period from the date of application to the Commission to the date of receipt by the Assessing Officer of the Commission s order under this section. Same is the position with the provisions of sub-sections (6) and (7) of section 245D. These sub-sections provide for the revival of the proceedings from the stage at which the application was allowed to be proceeded with. The same is applicable when the settlement is vitiated as having been obtained by fraud or misrepresentation of facts before the Commission and, accordingly, declared void. The use of the expression deemed to have been revived is necessary, because these sub-sections are invariably invoked after the proceedings have become final by virtue of the Commission s order under section 245D(4). If, therefore, the order of settlement is to be declared void, the proceedings which were taken over by the Commission have to be reactivated from the very stage from which they were discontinued as a result of the Commission s order under section 245D(1). For the reasons mentioned above, we are of the view that the Special Bench in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed to continue with the proceedings before them because on the happening of the event up to which the extended time is granted, any order passed or action taken, by continuing the proceedings, is liable to be rendered invalid and extension of time is necessary to compensate for the loss of time due to such constraint. Clause (v) needs to be interpreted in the same spirit. In our opinion, clause (v) of Explanation 1 to section 153 provides a reasonable basis for the proposition that the Assessing Officer is not to proceed to pass an order and if he still does so, the order will cease to be valid after the case is admitted by the Commission. Further, Chapter XIXA provides for making an application for settlement of case only when some proceeding relating to assessment or reassessment, appeal or revision, is pending. This is evident from the definition of the term case under section 245A(b) of the Act. Pendency of proceeding is, therefore, an essential pre-requisite for the assumption of jurisdiction by the Commission and such pendency, by virtue of the definition of case as given in section 245A(b), is to exist on the date of application. If at the time of the order under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the settlement application or not. The observation does not militate against the above view which makes such proceedings non est in the event of the decision allowing the application to be proceeded with. Having said that only the assessment/reassessment orders passed before the date of making the settlement applications subsist, we have to consider the second aspect of the decision in Om Metals case [1992] 193 ITR 57 (ITSC)[SB] as to whether recovery proceedings can be continued even after the admission of the said application. This necessitates the consideration as to the enforceability of the above orders and what happens to them after an order of final settlement is made. In this regard, it is worth noting that as per the Supreme Court decision in Gojer Bros. (P.) Ltd. v. Ratan Lal Singh, AIR 1974 SC 1380 there cannot be, at one and the same time, more than one operative order, governing the same subject-matter. Chapter XIXA contains provisions giving rise to demand which is independent of and not in substitution of the demand raised by the Assessing Officer for the same assessment year. The demand referred to in this Chapter arises at two stages. Firstly, when the appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 245DD empower the Commission to only provisionally attach the property, should it consider it desirable to do so for protecting the interest of the Revenue. This provision even empowers the Settlement Commission to take action during the interregnum before passing the order under section 245D(1). According to him, the Special Bench in the case of Om Metals and Minerals (P.) Ltd. [1992] 193 ITR 57 (ITSC) was not right in holding that recovery proceedings pursuant to an assessment order could be continued even after the admission of the settlement application. We find force in the above arguments and hold that the demand raised by the Assessing Officer, in consequence of order passed prior to the submission of application, is not to be enforced, as the order, though subsisting in law, is not to be given effect to, till the order of settlement is passed by the Commission under section 245D(4) when the same becomes effective in the manner discussed later in this order. Since the additional income and tax thereon are computed in terms of sub-sections (1B) and (1C) of section 245C, with reference to the returned income and the tax thereon, some income may, in a large number of cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the period after admission. However, the provisions of section 245H make a distinction between persons in the two categories by denying the benefit of immunity from penalty and prosecution to those who fail to make a true and full disclosure of their income. For the reasons discussed above, our answer to question No. 1 is: (i) That the Special Bench in the case of Om Metals and Minerals (P.) Ltd. [1992] 193 ITR 57 (ITSC) was right in holding that the assessment orders passed by the Assessing Officer before the admission of the settlement application subsisted only in so far as such finding applies to the assessment orders passed before the date of filing of application under section 245C(1). (ii) The Special Bench of the Settlement Commission was not right in holding that the orders passed by the Assessing Officer subsisted in so far as the finding applies to the orders passed after the date of application but before the application is allowed to be proceeded with. (iii) The Special Bench was not right in holding that the recovery proceedings based on the order of assessment can be continued even after the admission of the said application. In our view, recovery proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... novo for determination of tax liability unhindered by the existence of any earlier order, covering all or some of the matters, because if it is restrained by the existence of such orders, it will not be able to deal with the case as a whole. Exercise of exclusive jurisdiction precludes the existence of any other jurisdiction. The Commission s order, according to them, is not an appellate order. It is an order encompassing all the aspects from the determination of the demand by way of tax, penalty or interest to the manner of realisation thereof and, therefore, it cannot be taken to be an order of adjudication. From the side of the Department, Additional Solicitor-General, Shri Chandrachud, drew our attention to the specific provisions contained in the proviso to section 220(2) which clearly shows that the order under section 245D(4) is an order which modifies the order of assessment. It may be of relevance to reproduce the provisions of section 220(2) : (2) If the amount specified in any notice of demand under section 156 is not paid within the period limited under sub-section (1), the assessee shall be liable to pay simple interest at one and one-half per cent. for every mont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Minerals (P.) Ltd. [1992] 193 ITR 57, in our view, was right in placing reliance on the proviso to section 220(2), which we hold neither redundant as pleaded by Shri Vinaykant C. Shah nor of an artificial restricted meaning as argued by S/ Shri Agarwalla and T. M. Manoharan. The total effect of the view taken by us will be that the assessment orders passed before the date of application subsist after the order of admission but such orders remain inoperative. The demand arising on the basis of such orders remains unenforceable, till an order of final settlement under section 245D(4) is passed by the Commission. The order of assessment which is modified to give effect to the Commission s order then merges with the latter. So far as the chargeability of interest under section 220(2) is concerned, the same remains chargeable up to the date of admission in accordance with the proviso to section 220(2) after which the interest ceases to be chargeable. After the Commission s order under section 245D(4), interest for late payment is chargeable not under section 220(2) but in terms of the specific provisions contained in sub-section (6A) of section 245D. In view of the above, our answer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1(1)(ii). As observed by the Supreme Court in Mahindra and Mahindra Ltd. v. Union of India [1979] 49 Comp Cas 419 (Page 444) : It must be remembered that this discretion being a judicial or, in any event a quasi-judicial discretion cannot be arbitrary, vague or fanciful , it must be guided by relevant considerations. Accordingly, the exercise of the power under section 220(2A) involves the exercise of a judicial/quasi-judicial discretion and in no way amounts to the exercise of an administrative power. As per section 245D(4), the Commission may pass such order as it thinks fit on the matters covered by the application . Accordingly, if the applicant has prayed for the reduction or waiver of the interest under section 220(2), the Commission may pass such order as it thinks fit on this matter covered by the application. As specifically held by the Supreme Court in CIT v. Express Newspapers Ltd. [1994] 206 ITR 443, at page 456 : Sub-section (4) of section 245D provides for passing of final orders by the Commission. It is not necessary to refer to the other provisions in the Chapter except to mention that the Commission is empowered to direct the waiver of penalty as wel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities do not automatically stand set aside by the Commission s order under section 245D(4). The order of assessment stands modified to give effect to the order under section 245D(4) by the theory of merger applying to such order. (ii) In cases where assessment orders were passed before filing of application, the liability of interest under section 220(2), if any, will be up to the date of order under section 245D(1). There will be no liability for interest under section 220(2) thereafter. In cases where assessment orders were passed after filing of application, there will be no liability of interest under section 220(2). Question No. 3 : Yes. The Commission has the power to reduce/waive interest chargeable under section 220(2). We have answered the questions as set out in the reference, vide Chairman s order under section 245BA(5A), dated September 18, 1998. G. S. Sidhu (Vice-Chairman).-I agree with part (i) and part (ii) of the reply to question No. 1, part (i) and second half of part (ii) of the reply to question No. 2, and the reply to question No. 3. I do not fully agree with part (iii) of the reply to question No. 1 and first half of part (ii) of the reply to question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der ceases to exist and, thereafter, the question of recovery of demand and charging of interest under section 220(2) and its waiver/ reduction under section 220(2A), does not arise. The opposite view put forward by Shri D. Y. Chandrachud, the learned Additional Solicitor-General, is that an assessment order passed and the demand raised by the Assessing Officer at any point of time before passing of the admission order, subsists. The demand is modified on passing of order under section 245D(4). It is recoverable and, if not paid, interest under section 220(2) is chargeable till the date of order under section 245D(4). The third view is a middle path view expressed by Shri R. P. Agarwalla and Vinaykant C. Shah, with slight variations. The assessment order passed and the demand raised before the passing of admission order are valid but on the passing of admission order, the assessment order and the demand go into a state of suspended animation to be revived under certain situations, according to Shri R. P. Agarwalla. According to Shri Vinaykant C. Shah, both the assessment order and the demand though valid, are not enforceable after admission order under section 245D(1) is passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y issue directions under section 245F(4) staying the recovery proceedings. I shall advert to this sub-section later. Significantly, it is the unanimous view of this Special Bench that the orders of the lower authorities do not automatically stand set aside by the Commission s order under section 245D(4) , instead the order of assessment stands modified to give effect to the order under section 245D(4) by the theory of merger applying to such order [part (i) of reply to question No. 2] as the Commission s order under section 245D(4) partakes of the nature of an appellate order , in a case admitted at the appellate stage. To accept the view that demand raised by an assessment order which subsists and is not set aside, is not enforceable at all or is enforceable up to the date of admission order and not thereafter, is to contradict the above unanimous findings of the Special Bench. Valid regular demand raised by a competent authority can be erased to be raised afresh by setting aside the assessment order by an appellate/revisionary authority with the directions that assessment be done de novo. It can be erased by annulling or holding the assessment order void. If none of these c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions (2C) and (6A) providing for mandatory interest if the assessee delays payment of additional tax and finally settled tax liabilities under section 245D(4), are compensatory in nature. These provisions cannot be a substitute for the recovery provisions which come into play when the assessee is in default. In such a situation as provided by sub-section (2D) of section 245D and section 245J, recovery proceedings under Chapter XVII are applicable and the Assessing Officer, not the Settlement Commission, is in command. One of the points raised by Shri Vinaykant C. Shah, in support of his views, is based on time (35 days) allowed by sub-sections (2A) and (6A) of section 245D to pay additional tax and tax liabilities determined under section 245D(4) respectively. According to him, to hold that recovery of regular demand is enforceable is tantamount to denying the benefit of this statutory time-limit. He concludes from this and other points raised by him, that Chapter XIXA is a complete code for recovery of demand in a case admitted by the Commission. His views are not acceptable for reasons recorded here and elsewhere in this order : since an assessment order passed and demand rais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the Settlement Commission as indicated in a subsequent para. of this order. Section 245DD cannot be read independent of section 281B. Its provisions are relevant for a case in which assessment order has been passed after the filing of the application under section 245C. In other words, the case which has been admitted at the assessment stage. Its provisions are irrelevant for a case in which assessment order has been passed before the filing of application under section 245C. In other words, the case which has been admitted at appeal/revision stage. In a case falling in latter category need for provisional attachment of assets by the Commission shall not arise as the assessee makes full and true disclosure of his income not known to the Assessing Officer, and the Assessing Officer on regular assessments, adds to the returned income what is known to him about the assessees undisclosed income. The interests of the Revenue in respect of regular demand can be effectively protected under Chapter XVII which, inter alia, provides for attachment of assets by the Assessing Officer. The interests of the Revenue in respect of additional tax can be protected by invoking the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and in a case where the interest is reduced the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying the amount of the excess interest paid and requiring him to pay such amount and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly . Just as sub-section (4) of sections 234A and 234B mandate the survival of assessment orders passed before filing of application under section 245C, sub-section (3) of section 244A and section 240 mandate the survival of recovery of regular demand after the admission order. What is sauce for the goose should be sauce for the gander. The order passed under section 245D(1) is neither an assessment order nor a demand notice. It is a formal order allowing the application filed under section 245C to be proceeded with or rejecting it. Its effect is limited to transferring the jurisdiction over a case from the income-tax authority to the Commission. The additional tax payable after the application is allowed to be proceeded with, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mand. Therefore, there is no double jeopardy if regular demand is recovered along with additional tax. It is wrong to allege that income disclosed in the application filed under section 245C is a full and true disclosure of the total taxable income of the assessee and, therefore, he is exposed to double jeopardy when asked to pay regular demand raised before the filing of application along with additional tax. Legally speaking any income which is already known to the Assessing Officer and has been added to his taxable income cannot be said to be forming part of the additional income disclosed in the application. There may be a case admitted by the Commission where an assessee may have included in the additional income such income that has been added to his returned income by the Assessing Officer at the time of regular assessment. But such income cannot be treated as income not disclosed before the Assessing Officer . If such declaration passes muster and the application is allowed to be proceeded with, the assessee may be subjected to double payment of tax on a part of the disclosed additional income . But it does not justify a drastic decision holding that valid regular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of admitted and undisputed demand shall be stalled till the passing of order under section 245D(4) without any penal action visiting an assessee in default which shall be jeopardizing the interests of the Revenue. Debarring the Assessing Officer from enforcing recovery of even undisputed demand shall unjustifiably harm the interests of the Revenue in certain cases. Some instances are given below : On regular assessment under section 143(3)/144, self-assessment tax merges into regular demand communicated to the assessee through notice of demand issued under section 156. Any amount paid under self-assessment shall be deemed to have been paid towards regular assessment [section 140A(2)]. The unpaid amount, stands reflected in the regular demand. It can be recovered through different measures provided in Chapter XVII which include charging of interest under section 220(2). Although in part (iii) of the reply to question No. 1 an exception has been made in the matter of self-assessment tax, but it covers only half of the way. When selfassessment tax payable under section 140A(1), merges into regular demand sub-section (3) of section 140A ceases to be applicable giving way to section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court in Mahindra and Mahindra Ltd. v. Union of India [1979] 49 Comp Cas 419, quoted in para. 34 (page 66) of the majority decision may be referred to. To hold that a validly raised demand is not enforceable and as a corollary to this decision, grant blanket waiver of interest chargeable under section 220(2) from the date of admission order onwards, will not be in accordance with law. A disturbing effect of this decision shall be that even non-payment of admitted/accepted tax liability shall not be visited by any reprisal by way of recovery proceedings or penal interest. To hold that regular demand is not enforceable and interest under section 220(2) is not chargeable after admission order, is to discriminate against an assessee who moves the Commission at the assessment stage and favours one who moves the Commission at the appeal/revision or reassessment stage when driven to the wall. The decision also discriminates against an assessee who genuinely makes a full and true disclosure of his income under section 245C. This discrimination cannot be justified on the ground that section 245H discriminates between one assessee and another. There is no comparison between for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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