TMI Blog2011 (5) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... mandatory to comply with the order of the High Court - Appeal is dismissed - D.B. CIVIL SPECIAL APPEAL (WRIT) NO. 989 OF 2009 & OTHERS - - - Dated:- 6-5-2011 - ARUN MISHRA, S.S. KOTHARI, JJ. J.K. Singhi, Anuroop Singhi, O.P. Pareek and Ramit Pareek for the Appellant. N.M. Ranka, J.K. Ranka, N.K. Jain, Gunjan Pathak, R.K. Agarwal, Alok Chaturvedi, Sandeep Pathak, Manoj Kumar Sharma, Anant Kasliwal, Vaibhav Kasliwal, Sanjay Jhanwar, Alok Garg, Ms. Sonal Singh, Naresh Gupta, Samit Bishnoi and Rajkumar Yadav for the Respondent. ORDER 1. The intra-court appeals have been preferred as against the common order dated 13-8-2009 passed by the Single Bench in Civil Writ Petition No. 12911/2008 whereby bunch of writ applications were decided. 117 writ applications were preferred by the revenue whereas 14 writ applications were preferred by the assessees. Applications for settlement were filed before the Settlement Commission on or before 1-6-2007. The orders were passed by the Settlement Commission under section 245D(4) of the Income-tax Act, 1961 (hereinafter referred to as the Act'). The revenue assailed the orders mainly on the ground that opportunity of hearing was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rate of 15 per cent per annum. In case of refund, interest is payable at the rate of 6 per cent per annum. 4. Learned counsel appearing on behalf of assessee have jointly submitted that considering the object for which Settlement Commission has been established, it is not necessary to pass reasoned orders. Learned counsel have placed reliance upon the decisions in CIT v. B.N. Bhattachargee [1979] 118 ITR 461 (SC) at 470 478, CIT v. Om Prakash Mittal [2005] 273 ITR 326/143 Taxman 373 (SC) at 335 and Star Television News Ltd. v. Union of India [2009] 317 ITR 66/184 Taxman 400 (Bom.). Learned counsel have also submitted that in 25 cases in which assessees have come up in the intra-court appeals in Para 6 of the orders, reasons have been given. It has also been submitted that the orders appear to have been passed on cyclostyle sheets as in para 5, it has been mentioned in mechanical manner that it was not possible for the Commission to examine the record and investigate the case for proper settlement. Even giving of adequate opportunity to the applicant and the department, as laid down in section 245D(4) of the Act was not practicable However, to comply with the directions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... afforded to the parties. Section 245D(4) of the Act is quoted below : "245D(4) After examination of the records and the report of the Commissioner, if any, received under (i) sub-section (2B) or sub-section (3), or (ii) the provisions of sub-section (1) as they stood immediately before their amendment by the Finance Act, 2007, and after giving an opportunity to the applicant and to the Commissioner to be heard, either in person or through a representative duly authorised in this behalf, and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission may, in accordance with the provisions of this Act, pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the Commissioner." It is apparent from the aforesaid provision that it is necessary to examine the record and report of the Commissioner, if any, received under sub-section (2B) or sub-section (3) or under the provisions of sub-section (1) as it stood immediately before their amendment by the Finance Act, 2007 with effect from 1-6-2007 and g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed of, the proceedings started after the order passed by the Appellate Assistant Commissioner could be described as during the course of the assessment proceedings, because the action would relate back to the time when the first notice was issued. In the instant case also, the matter will relate back to the time when the proceedings were initiated. Thus, there is no question of the Settlement Commission becoming functus officio after 31-3-2008. In Vatika Farms (P.) Ltd.'s case (supra) Delhi High Court has opined that even in case the amended provisions were applicable, it was not necessary to decide the pending application before the said date. The amendment could not be said to be reasonable as observed in Union of India v. Ram Kumar Arora [SLP (C) No. 16714 of 2009] and Union of India v. Vinod Kalra [SLP (C) No. 16722 of 2009] etc., raising the same question. The Apex Court also dismissed the special leave petition against the judgment dated 14-8-2008 passed by the Bombay High Court in Union of India v. Kunverji Vishram Co. [2010] 321 ITR (St.) 167 whereby the Bombay High Court issued rule in the writ petitions pending further orders, directed the Settlement Commission not to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iving an opportunity to the petitioner and pass a fresh order within two months. After a fresh enquiry the Income-tax Officer passed an order on June 5, 1972 holding that the silver bars belonged for P, the individual, and not the firm, P and Sons. Thereupon, the firm and P again filed a writ petition challenging the second order. The High Court held that the Income-tax Officer had no jurisdiction to pass that order beyond the period prescribed in section 132(5) and set aside the order and directed the return of the 114 bars of silver. This Court held, inter alia, that the order made in pursuance of a direction given - under section 132(12) or by a Court in writ proceedings, was not subject to the limitation prescribed under section 132(5). At page 394 this Court has observed thus : 'Even if the period of time fixed under section 132(5) is held to be mandatory that was satisfied when the first order was made. Thereafter, if any direction is given under section 132(2) or by a Court in writ proceedings, as in this case, we do not think an order made in pursuance of such a direction would be subject to the limitations prescribed under section 132(5). Once the order has been made wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Antulay v. R.S. Nayak AIR 1988 SC 1531 and State Bank of India v. S.N. Goyal [2008] 8 SCC 92 to contend that the court cannot confer the jurisdiction. In Chiranjilal Shrilal Goenka's case (supra) question was that Court of probate has exclusive jurisdiction. The Apex Court has held that Civil court in original side or arbitrator, even on the consent of parties, has no jurisdiction to adjudicate upon proof or validity of will propounded by the executor. The decision is not at all applicable to facts in the instant case, as the Settlement Commission was having jurisdiction which is not disputed and the case is being remitted to the Settlement Commission only. In State Bank of lndia's case (supra), question came up for consideration before their Lordships of the Supreme Court was that once an order is passed the authority become functus offico. The Apex Court has laid down that once authority exercising quasi-judicial power takes a final decision, it cannot review its own decision unless the rules permit such review. But the question is as to at what stage an authority becomes functus officio in regard to an order made by him. P. Ramanatha Aiyar's Advanced Law Lexicon gives following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission, same is liable to be rejected for various reasons. Firstly, it was mandatory to deposit the tax determined by the Settlement Commission as per provisions of section 245D(6A) of the Act within 35 days of the order passed by the Settlement Commission. In our considered opinion, there is no estoppel against the revenue to claim tax which has been determined and to assail the legality of the order determining the tax at the same time. These are two different provisions. There is no estoppel against the statute. The assessees were liable to deposit tax as per mandate of section 245D(6A). Thus, no estoppel was created against the revenue to assail the validity of the order, in case, tax has been deposited so determined/demanded under the illegal orders. The decision relied on by assessees in Bhau Ram v. Baij Nath Singh AIR 1961 SC 1327 (V 48 C 244) is not attracted at all as benefit under the decree was obtained with respect to preemption and the pre-emption price was withdrawn after the grant of special leave. The Apex Court has laid down that the appellant was not precluded from continuing the appeal. Thus, decision otherwise also is against the submission raised by learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion to examine the records and investigate the case for proper settlement. Even giving adequate opportunity to the applicant and the department, as laid down in section 245D(4) of Income-tax Act, 1961 is not practicable. However, to comply with the directions of the Hon'ble High Court, we hereby pass an order under section 245D(4) of Income-tax Act, 1961, as under." On facts, it is not in dispute at Bar that opportunity of hearing was not afforded by Settlement Commission to either of the parties. Only the assessee submitted the written arguments, not the Revenue. Written submissions were not filed by the revenue. No time was granted by the Settlement Commission even to file the written submissions or for oral hearing due to paucity of time. As 31-3-2008 was the cut off date fixed, hence, it was observed that it was not possible for the Settlement Commission to provide opportunity of hearing to the parties. No doubt about it that in Para 6 of the orders there is reference of certain material and there is statement that additional amount has been paid. However, it is apparent from Para 5 of the order that Settlement Commission has observed that it was not practicable to examine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt has also observed that it is not inappropriate to state that the policy of the law as disclosed in Chapter-XIX-A is not to provide a rescue shelter for big tax-dodgers who indulge in criminal activities by approaching the Settlement Commission. The Settlement Commission will certainly take due note of the gravity of economic offences on the wealth of the nation which the Wanchoo Committee had emphasised and will exercise its power of immunisation against criminal prosecutions by using its power only sparingly and in deserving cases; otherwise such orders may become vulnerable if properly challenged. Learned counsel has also relied upon the decision in Om Prakash Mittal's case (supra) to contend that the Settlement Commission's power of settlement has to be exercised in accordance with the provisions of the Income-tax Act. Though the Settlement Commission has sufficient elbow room in assessing the income of the applicant, it cannot make any order with a term of settlement which would be in conflict with the mandatory provisions of the Act like the quantum and payment of tax and interest. The object of the Legislature in introducing section 254C is to see that protracted proceedi ..... 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