TMI Blog2012 (7) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... ttlement. It follows that the Assessing Officer had no jurisdiction to reopen the assessment for the assessment year by issuing a notice u/s 148 on the ground that the deduction was wrongly allowed - an assessment by way of a settlement order passed by the ITSC cannot be reopened by a different authority, viz., the Assessing Officer - in favour of assessee. - W.P. (C) No.7975/2011 - - - Dated:- 13-7-2012 - MR. JUSTICE S. RAVINDRA BHAT, MR. JUSTICE R.V. EASWAR, JJ. For Appellant: Mr. Ajay Vohra, Ms. Kavita Jha and Mr. Amit Sachdeva, Advocates. For Respondent: Mr. Abhishek Maratha, Sr. Standing Counsel with Ms. Anshul Sharma, Advocates. R.V. EASWAR, J.: 1. This writ petition under Article 226/ 227 of the Constitution of India has been filed by M/s. Omaxe Limited, the petitioner herein, with the prayer to quash the notice dated 30.06.2010 issued by the respondent No.1 who is the Assistant Commissioner of Income Tax, Central Circle-4, New Delhi, under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as the "Act‟) and the proceedings initiated pursuant to the notice including the order dated 03.10.2011 passed by him dismissing the petitioner&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s passed on 17.03.2008 under Section 245D (4) of the Act. In the final order the ITSC computed the total income of the petitioner as follows: - Sl. No. A.Ys Total Income 1 2000-01 2,06,67,415 2 2001-02 1,95,76,928 3 2002-03 2,06,07,002 4 2003-04 5,29,59,964 5 2004-05 14,66,44,760 6 2005-06 43,98,19,780 7 2006-07 89,38,76,630 TOTAL 159,41,52,479 5. On 30.06.2010 the Assessing Officer issued notice under Section 148 of the Act for the assessment year 2006-07 and called upon the petitioner to file its return of income. The notice was issued on the ground that income chargeable to tax had escaped assessment for the assessment year 2006-07. The reasons recorded for reopening the assessment have been filed before us in the amended writ petition. The reasons run into several pages and therefore we have not considered it necessary to reproduce the same verbatim herein. Suffice to note that the reasons recorded show that the Assessing Officer was of the opinion that the deduction under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t herein) primarily held that the order of the ITSC was conclusive only with regard to 7 issues on which the petitioner filed the application for settlement, that the claim of deduction under Section 80IB (10) did not form the subject matter of consideration by the ITSC in its order and therefore there was no bar in initiating and proceeding with the reassessment proceedings. Reference was also made by the first respondent to Section 245F (4) to observe that no finality is attached to any matter which was not before the ITSC. 8. The petitioner thereafter filed the writ petition before this Court seeking quashing of the notice issued under Section 148 of the Act as well as the order passed by the first respondent rejecting the objections filed by the petitioner against the assumption of jurisdiction to reopen the assessment. The writ petition came up for hearing before this Court on 14.11.2011 on which date this Court was informed by the petitioner that immediately after the first respondent passed the order on 03.10.2011 rejecting the objections of the petitioner, he had also passed the reassessment order under Section 147 read with Section 143(3) of the Act on 08.11.2011. A pray ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny proceeding under this Act for the assessment or reassessment of any person in respect of any year or years, or by way of any appeal or revision in connection with such assessment or reassessment, which may be pending before an income tax authority on the date on which an application under sub-section (1) of Section 245C is made . With effect from 01.06.2007 the Finance Act, 2007 amended the definition of the word case to mean any proceeding for assessment under this act, of any person in respect of any assessment year or assessment years which may be pending before an Assessing Officer on the date on which the application under sub-section (i) of Section 245C is made . On receipt of application, the ITSC has to issue a notice to the applicant requiring him to explain why the application be allowed to be proceeded with and after hearing the applicant an order shall be passed permitting or rejecting the application to be proceeded with. This has to be done within a time frame. This order is to be passed under Section 245D (1). Sub-section (4) of the Section provides as under: - (4) After examination of the records and the report of the Commissioner, if any, received under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the contrary nothing in this Chapter shall affect the operation of the provisions of this Act in so far as they relate to any matters other than those before the Settlement Commission . Section 245H empowers the ITSC to grant the assessee immunity from penalty and prosecution under the Act or under the IPC or any other Central Act in force. The immunity may be withdrawn if the assessee does not comply with the terms of the order of settlement or if it is shown that the assessee has conceded any particular material to the settlement or has given false evidence. Section 245I provides for the conclusiveness of the order of settlement. It says that every order of settlement passed under Section 245D (4) shall be conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwise provided in this Chapter be reopened in any proceeding under this Act or under any other law for the time being in force . 12. A conjoint reading of the aforesaid provisions indicates that the ITSC is a high powered body vested with powers to settle the case of an assessee. The order of settlement is conclusive as expressly stated in Section 245I but the argument of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of Rs.78,99,00,509/- under Section 80IB (10). It is irrelevant that no undisclosed income was offered by the petitioner in regard to the housing project. Again a harmonious reading of the provisions of the statute would show that it does not postulate the existence of two orders, each of a different income tax authority, determining the total income of an assessee for the same assessment year. If the contention of the Revenue is accepted, not only will the finality of the order of settlement be disturbed, but it will also result in different orders relating to the same assessment year and relating to the same assessee being allowed to stand. We have grave doubts whether such a result, which is likely to create chaos and confusion in the tax administration could have been intended. The order of the ITSC can be reopened only in cases of fraud and misrepresentation and in no other case. 14. Moreover, as earlier pointed out, it is difficult to say that the deduction under Section 80IB (10) was not a matter covered by the order of the ITSC. In the return itself the assessee had claimed the deduction and it was also before the ITSC when the total income was determined by the ITSC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder has been obtained by fraud or misrepresentation of facts. The learned counsel for the petitioner has also drawn our attention to a judgment of the Allahabad High Court in Commissioner of Income Tax v. Smt. Diksha Singh, (2012) 247 CTR (All) 215. The High Court held that since the legislature in their wisdom had conferred powers on the ITSC to reopen the proceedings in certain circumstances and to deal with the situation in the event of commission of fraud or misrepresentation and has thus left it to the ITSC to deal with such contingencies, it cannot be postulated that the Assessing Officer or any other income tax authority will have jurisdiction to assess the tax for the same financial year despite the finality and conclusiveness of the order of settlement. It was further held that there cannot be piecemeal determination of the income of an assessee for the relevant period, one by the ITSC and another by the assessing authority, and to hold otherwise would be to frustrate the very purpose of filing an application before the ITSC for settlement. This judgment also supports the view canvassed by the assessee. 17. The learned standing counsel for the Revenue, however, relied o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority. The return filed is in respect of disclosed income. Similar is the position vis- -vis the appellate and the revisional authority. The petition before the Commission is in respect of undisclosed income, therefore, the situation is different till the Commission decides to proceed with the matter. That being the position, the income-tax authorities are free to proceed in the prescribed manner till the Commission decides to proceed with the petition. Thus if the observations made by the Court in the paragraph at page 484 of the report are read as a whole, it would be clear that the Court was dealing with a plea which attributed an active role as an income tax authority to the ITSC even during the pendency of the application till an order under Section 245D (1) was passed and thereafter once an order was passed allowing the application to be proceeded, a role combining the functions of both an assessing authority and an authority settling the case. The Court repelled the plea by clarifying certain observations made by the Supreme Court in CIT v. Express Newspapers Ltd., (1994) 206 ITR 443. What the learned standing counsel relied upon before us are observations of the Court cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... countenance a situation where it can be said that the assessee‟s claim for deduction under Section 80IB (10) was not the subject matter of the order passed by the ITSC under Section 245D (4). It is further necessary to keep in mind that Section 245B (3) requires that the ITSC shall be manned by persons of integrity and outstanding ability having special knowledge of, and, experience in, problems relating to direct taxes and business accounts . The provisions of Chapter XIX-A suggest that all matters in relation to the case of the assessee shall be dealt with by the ITSC just as an assessing authority would deal with them while completing an assessment under Section 143 (3) of the Act. If this is the position, it would be difficult to sustain the argument of the revenue that the matter relating to the deduction under Section 80IB (10) was not the subject matter of the final order of settlement. It follows that the Assessing Officer had no jurisdiction to reopen the assessment for the assessment year 2006-07 by issuing a notice under Section 148 of the Act on the ground that the deduction was wrongly allowed. 20. The issue can also be viewed from another angle. Barring the e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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