TMI Blog2013 (9) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... within the period of time provided under Section 153 of the Act. Binding Nature of Circular - Held that:- as the Circulars issued by the CBDT are binding upon the authorities under the Act, we see no reason to interfere with the order of Settlement Commission as the Apex Court has taken a view in respect of Income Tax matters in Catholic Syrian Bank Ltd. v/s. CIT [2012 (2) TMI 262 - SUPREME COURT OF INDIA] that Circulars issued by the CBDT which are beneficial to the assessee must be applied Binding nature of the Circular which is contrary to the statutory provisions of the Act - Applicability of decision of Apex Court in the matter of Commissioner of Central Excise v/s. Ratan Melting & Wire Industries [2008 (10) TMI 5 - SUPREME COURT OF INDIA] - Held that:- In the aforesaid decision, the Constitutional Bench of the Apex Court was considering the binding nature of a circular issued under the Central Excise Act, 1944 which were contrary to decisions rendered by the Supreme Court. The above decisions are not applicable to the facts of the present case inasmuch as our attention has not been invited to any decision of the Apex Court or of any High Court which has taken a view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income Tax forwarded his report in terms of Section 245D(2B) of the Act. The Commissioner of the Income Tax in his report challenges the jurisdiction of the respondent No.1Settlement Commission to settle the application of respondent No.2applicant for the Assessment Years 201011 and 201213. This was on the ground that on the date of the application, there was no pending assessment before the Assessing Officer. It was pointed out that so far as Assessment Year 201011 was concerned, the time to issue notice/initiate proceedings under Section 143(2) of the Act had expired, consequently assessment under Section 143(3) of the Act was not possible. So far as Assessment Year 201213 is concerned, it was submitted that no proceedings are pending with the Income Tax Department on the date the application was filed with respondent No.1Settlement Commission. (f) On 31 December 2012, the respondent No.1Settlement Commission by an order passed under Section 245D( 2C) of the Act found no merits in the objections raised by the Commissioner of Income Tax. Consequently, the settlement application filed by respondent No.2applicant for Assessment Years 201011, 201112 and 201213 was d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Assessment Year 201011 has been made till the filing of the application on 14 November 2012 with the respondent No.1Settlement Commission. Therefore, the assessment continues to be pending in this case till the filing of the application by respondent no.2applicant. In support he states that even a notice of intimation issued under Section 143(1) of the Act is not an assessment and notwithstanding the issue of notice of intimation, the assessment continuous to be pending. In support of the aforesaid, reliance was placed upon the decision of the Apex Court in the matter of Assistant Commissioner of Income Tax v/s. Rajesh Jhaveri Stock Brokers P. Ltd. [2007] 291 ITR 500 (SC); (b) Explanation (iv) of the proviso to Section 245A( b) of the said Act provides that for the purposes of Settlement proceedings under the Act, an assessment was deemed to have been commenced from the first day of the Assessment Year and concluded on the day on which the assessment is made. In this case, no assessment is admittedly made till the filing of the Settlement Application on 14 November 2012. Thus, the assessment continuous to be pending before the Assessing Officer; and (c) The above view i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns any proceeding for assessment under this Act, of any person in respect of any assessment year or assessment year's which may be pending before an Assessing Officer on the date on which an application under subsection (1) of section 245C is made: Provided that (i) a proceeding for assessment or reassessment or recomputation under section 147; (ii) [***] (iii) [***] (iv) [***] Explanation. For the purposes of this clause (i) a proceeding for assessment or reassessment or recomputation referred to in clause (i) of the proviso shall be deemed to have commenced from the date on which a notice under section 148 is issued; (ii) [***] (iii)[***] (iiia)[***] (iv) a proceeding for assessment for any assessment year, other than the proceedings of assessment or reassessment referred to in clause (i) or [clause (iv) of the proviso or clause (iiia) of the Explanation], shall be deemed to have commenced from the 1st day of the assessment year and concluded on the date on which the assessment is made. Section 119 (1) reads as under: The Board may, from time to time, issue such orders, instructions and directions to other income tax authorities as it may deem fit f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial Bench decision dated 13 June 2008 in the matter of Rescuwear Corporation. In the matter of Rescuwear Corporation (supra), the Settlement Commission, inter alia, posed the following question as question (ii) for itself: For the years for which returns have been processed under Section 143(1) of the Act but now no time is left for issue of notices under Section 143(2) of the Act, whether proceedings for the Assessment Years are pending or not? The Settlement Commission answered the above question in the affirmative. To reach the above conclusion, reliance was placed upon the Circular No.3/2008 dated 12 March 2008 issued by the Central Board of Direct Taxes (CBDT). 8 Mr. Malhotra, on behalf of the revenue submits that the reliance by the Settlement Commission on its Special Bench decision in the matter of Rescuwear Corporation (supra) was incorrect, as the same is no longer good law in view of the decision of the Gujarat High Court in the matter of Commissioner of Income Tax v/s. Income Tax Settlement Commission and Amrish Shukla (Special Civil Application No.859 of 2012) dated 15 September 2012, wherein the Gujarat High Court has considered the decision of Special Bench of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nge the order of the Settlement Commission, admitting the application for the Assessment Year 201011 before the Gujarat High Court. Therefore, the decision rendered by the Special Bench of the Settlement Commission in the matter of Rescuwear Corporation (supra) nor the CBDT circular No.3/2008 dated 12 March 2008 has not been declared bad by the Gujarat High Court so far as fact situation in the present proceedings are concerned. The context in which the Gujarat High Court rendered its decision in the matter of Amrish Shukla (supra) was completely different and distinct from the issue arising in this case. 9 In the case before us, the period to complete the Assessment under Section 153 of the said Act has not yet expired, the period to issue notice under Section 143(2) of the Act had expired just as in the case of Settlement Commission before Gujarat High Court in the matter of Amrish Shukla (supra), for the Assessment year 201011. The revenue before the Gujarat High Court in the matter of Amrish Shukla (supra) had not challenged the admission for Assessment Year 201011, according to Mr. Dada, in view of the binding Circular No.3/2008 dated 12 March 2008 issued by the CBDT, and pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as binding upon the department. The Court observed as under: The two circulars of the CBDT to which we have just referred are legally binding on the revenue and this binding character attaches to the two circulars even if they be found not in accordance with the correct interpretation of subSection 2 and they depart or deviate from such instruction. It is not well settled as a result of two decisions of this Court, one in Navnit Lal C. J haveri v/s. K. K. Sen AAC (1965) 56 ITR and the other in Ellerman Lines Ltd. v/s. CIT(1971) 82 ITR 913 that circulars issued by the CBDT under Section 119 of the Act are binding on all officers and persons employed in the execution of the Act even if they deviate from the provisions of the Act. Reliance was also placed upon the decision of the Supreme Court in the matter of Commissioner of Wealth Tax v/s. Vasudeo V. Dempo 196 ITR page 216 and the decision of our Court in the matter of Unit Trust of India and another v/s. P. K. Unny and Others, 249 ITR page 612, wherein it has been held that the circulars issued by the CBDT are binding on the department. Moreover, it was held that the revenue is estopped from raising any arguments contrary to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome Tax Authorities, though they cannot be enforced adversely against the assessee. Normally, these Circulars cannot be ignored. 24. A Circular may not override or detract from the provisions of the Act but it can seek to mitigate the rigour of a particular provision for the benefit of the assessee in certain specified circumstances. So long as the circular is in force, it aids the uniform and proper administration and application of the provisions of the Act. Thus, we find merit in the submission of Mr. Dada that though respondent No.1Settlement Commission may not be specified as Income Tax Authority under Section 116 of the Act, yet the petitioner cannot urge a view contrary to the Circular for the purpose of challenging the impugned order dated 31 December 2012. 12 Before parting, we would like to deal with the decision of the Apex Court in the matter of Commissioner of Central Excise v/s. Ratan Melting Wire Industries 231 ELT page 22. In the aforesaid decision, the Constitutional Bench of the Apex Court was considering the binding nature of a circular issued under the Central Excise Act, 1944 which were contrary to decisions rendered by the Supreme Court. The Apex Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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