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TMI Blog2012 (11) TMI 846X X X X Extracts X X X X X X X X Extracts X X X X ..... nature ? 4. Whether the Tribunal was right in law in sustaining the interest levied under Section 158BFA(1) of the Act especially when the delay is due to the delay in supply of the seized materials ? 2. As regards the third question of law, learned counsel appearing for the assessees placed the order of this court in T.C.(A) Nos. 246, 247 and 248 of 2008 ,in respect of three of the partners of the assessee's firm AND contended that this court had already considered the issue as regards the surcharge levied and the effect of introduction of proviso to Section 113 with effect from 1.6.2002 and held the same against the assessee. Thus, this court by order dated 19.8.2011 in T.C.(A) Nos. 246, 247 and 248 of 2008 in the case of three of the partners of assessee viz., S.V.Rajamanickam , V.Subramaniam and V.Bhoopala Shanmugam following the decision of the Apex Court reported in (2009) 310 ITR 105 (Commissioner of Income Tax Vs. Rajiv Bhatara) held that even without the proviso to Section 113 of the Income Tax Act in the case of block assessment in search cases, the Finance Act 2001 was applicable in relation to the search initiated in 2000. Thus, the question of law No.3 stands ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the language of the Explanation substituted with effect from 1.6.2002 under the Finance Act 2002, pointed out that the insertion of the clause (iv) in Explanation 1 to Section 158BE covers the cases of applications made after 1.6.2002 alone and cannot have any relevance to the applications made prior to that date. In this connection, he placed reliance on the decision of the Apex Court reported in (2008) 297 ITR 322(SC) (Commissioner of Income Tax Vs. Suresh N.Gupta) ; and the Kerala High Court decision reported in (1971) 81 ITR 423 (Ker) (Hajee K.Assainar Vs. Commissioner of Income Tax) and submitted that when the insertion of the Explanation affects the rights of the parties , the insertion of an Explanation has to be read as prospective one. 5. On the contrary, learned Standing Counsel appearing for the Revenue supported the order of the Tribunal and contended that given the fact the Settlement Commission has exclusive jurisdiction to deal with an assessment, the provisions which were available for exclusion of the time limit in respect of the proceedings pending before the Settlement Commission under Section 245HA which was omitted by Finance Act 2002 with effect fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commission under Section 245C is rejected by it or is not allowed to be proceeded with by it, the period commencing on the date on which such application is made and ending with the date on which the order under sub-section (1) of Section 245D is received by the Commissioner under sub-section (2) of that section. 8. Chapter XIX-A of the Income Tax Act provides for settlement of cases meaning thereby proceeding for settling the assessment under the Act in respect of any assessment year or assessment years pending before the Assessing Officer as on the date on which the application is made under Section 245 C(1). Section 245F specifies the powers and procedure of the Settlement Commission. Section 245F states that in addition to the powers conferred on the Settlement Commission under Chapter XIX-A, it shall have all the powers which are vested in an income tax authority under the Act. Section 245 HA deals with abatement of the proceedings before the Settlement Commission and the effect of the abatement. In this it also provides for exclusion of the time during which the application was pending before the Settlement Commission for the purpose of calculating the time limit unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in providing the time limit for completion of the block assessment, the said section also makes the procedure for computing the period of limitation. Explanation 1 provides for exclusion of time. The said Explanation contains four clauses. Explanation 1 clause (iv) with which we are concerned, in computing the period of limitation deals with the the applications made before Settlement Commission under Section 245C. A plain reading of the Explanation 1(iv) to Section 158BE reveals that in a case where an application made before the Settlement Commission under Section 245C is rejected by it or is not allowed to be proceeded with by it, then the period commencing on the date on which the application is made and ending with the date on which an order under sub-section (1) of Section 245D is received by the Commissioner would stand excluded in the matter of computing the limitation under Section 158BE. 11. Learned counsel for the assessee placed emphasis on the phrase in Clause (iv) of Explanation 1 particularly, " the period commencing on the date on which such application is made", to contend that the provision is prospective in nature that applications which are filed on an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Finance Act 2002 does is to bring in is what was contemplated under Section 245HA since omitted with effect from 1.6.2002 under the Finance Act 2002. In other words what was provided for under Section 245HA is now brought in by way of Explanation 1(iv) under the Finance Act 2002 which by deleting 245HA substitutes Exp. 1 to 158 BE . 14. As already pointed out the provisions contained in Chapter XIX-A for settlement of cases is more of a facility offered to the assessee desirous of going before the Settlement Commission to settle the cases by making full and true disclosure of the income which has not been offered or disclosed before the assessing officer. Given the fact that filing of such an application is more in the nature of offer to settle the liability, once an assessee makes an application under Section 245C before the Settlement Commission processed under Section 245D, the Settlement Commission is vested with the exclusive jurisdiction to exercise the authorities of an Income Tax Assessment Officer under the Act which means to the exclusion of all other authorities under the Act, the one and only authority who can deal with the assessment of an assessee is the Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chapter XIV-B and the normal computation machinery under Chapter IV. The Apex Court pointed out that this is the importance behind enactment of Section 158BH which inter alia states that if there is no conflict between the provisions of Chapter XIV-B and any other provisions of the 1961 Act, then the latter will operate. Thus, by considering the provision as to whether the surcharge could be levied in respect of a demand made as per Section 113, the Apex Court held that the concept of a charge on the "total income" of the previous year under the 1961 Act is retained even under Chapter XIV-B. Therefore Section 158BB which deals with the computation of undisclosed income of the block period has to be read with computation of total income under Chapter IV of the 1961 Act. 16. While dealing with the issue as regards the levy of surcharge, the Apex Court also observed as to the applicability of all other provisions of the Act as given under Section 158BH. Thus the view of the Apex Court strengthens our view that even without an Explanation, clause (iv) in Section 158BE the provisions contained in respect of exclusion of time limit to matters which were pending before the Settlement Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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