9911796707
TMI Blog2014 (1) TMI 1090X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008-09 and 2009-10. 2) The relevant facts leading to this petition are : a) The petitioner is engaged in the fabrication of sheet metal canopies for diesel generating sets. b) On 6 November 2012 a Survey under Section 133A of the Act was conducted on the petitioner. During the course of the above survey certain papers, books of account and purchase bills were impounded. However, consequent to the above survey, no proceedings were taken either under Section 132(1) of the Act or under Section153A or 153C of the Act. c) On 7 March 2013, the petitioner filed an application for settlement under Section 245C of the Act before the Settlement Commission in the prescribed form being Form 34B for the assessment years 2007-08 to 2012-13. d) Thereafter, the Settlement Commission in terms of Section245D(1) of the Act issued a notice to the petitioner calling upon the petitioner to explain why the application for settlement dated 7 March 2013 relating to assessment years2007-08 to 2012-13 should be admitted. In response to the above notice, the petitioner appeared before the Settlement Commission. So far as Assessment Years 2007-08 to 2009-10 were concerned it was pointed out that the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment for a particular year that the assessment proceedings were excluded from the purview of pending proceedings for the purpose of case as provided under proviso to Section 245A(b) of the Act. Thus, the settlement application dated 7 March 2013 for the assessment years 2007-08 to 2009-10 could not have been rejected. b) The Settlement Commission itself by a Special bench decision in the matter of Rescuwear Corporation (supra) has held that the assessment would be deemed to be pending before an Assessing Officer for a particular assessment year upto the time the Assessing Officer has power to initiate proceedings under the Act. In this case it is still open to the Assessing Officer to issue notice for reassessment under Section 147/148 of the Act for the assessment years 2007-08 to 2009-10 and no such proceedings were initiated till 7 March 2013. c) The CBDT Circular No. 3/2008 dated 12 March 2008 while explaining the provisions of Finance Act 2007 specifically clarified that an assessment proceeding before the Assessing Officer would be considered pending proceedings even if the time limit to issue a notice under Section 143(2) of the Act for finalizing assessment under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008 dated 12/3/2008 issued by CBDT has no application to the present facts as it explains the situation in the context of regular pending assessment proceedings where the time to pass an assessment order has not expired. It does not cover situations where the time to make an assessment has already expired. In view of the above, it was submitted that there is no reason to interfere with the order dated 15 March 2013 of the Settlement Commission passed in respect of assessment years 2007-08 to 2009-10 and the consequent notices dated 30 March 2013 issued under Section 147/148 of the Act for the assessment years 2008-09 and 2009-10. 5) We have considered the submissions. It is an admitted position that in view of Section 153 of the Act the time to make an assessment for the return of income filed by the petitioner for assessment years 2007-08 to 2009-10 had already expired before 7 March 2013 when the settlement application was filed by the petitioner. It is relevant to note that prior to 1 June 2007 the definition of case as provided under Section 245A(b) of the Act meant any proceeding before any Income Tax Authority and was not restricted to assessment proceedings before an Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment proceedings are terminated. This termination can be either when the assessment is made or when the time to make the assessment comes to an end under Section 153 of the Act. Thus, in facts of this particular case, the period within which assessment could be made for assessment years 2007-08 to 2009-10 had admittedly expired under Section 153 of the Act. 7) In the present case, it is not disputed by the petitioner that the time limit to make an assessment order in regular proceedings for assessment years 2007-08 to 2009-10 had already long expired before 7 March 2013 when the application for settlement was made by the petitioner to the Settlement Commission. Therefore, on the date of filing of the application i.e. 7 March 2013 before the Settlement Commission there were no assessment proceedings pending with Assessing Officer as the same stood terminated by efflux of time. 8) In any case, where the proceedings have to be initiated for reassessment under Section 147/148 of the Act then the Assessing Officer has to come to reasonable belief before issuing the notice, that income chargeable to tax has escaped assessment. Therefore, there is a fresh application of mind to an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er either by an order under Section 143(3) of the Act or terminated by efflux of time under Section 153 of the Act. On issuing a notice under Section 148 of the Act the proceedings cease to be a case and an application for settlement will not lie. The likelihood of a future action, which may or may not take place and which action is solely dependent upon the Assessing officer cannot make a dead/terminated proceedings a pending proceedings. Thus, there was no assessment proceeding pending before the Assessing Officer on 7 March 2013 when the application for settlement was made by the petitioner. 11) The petitioner in support of its contention that the assessment proceedings for the assessment years 2007-08 to 2009-10 are pending proceedings before the Assessing Officer placed strong reliance upon the Circular No.3/2008 dated 12 March 2008 issued by the CBDT and particularly emphasized Para 6.2 thereof which reads as under: "Under the existing provisions, as assessee may maker on application to the Commission of any stage of the proceedings in his case pending before any income tax authority. After 31st May 2007 an assessee can make an application to the commission only during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Section 245A(b) of the Act nowhere provides that the period of limitation as provided under Section 153 of the Act gets extended till an order of assessment is made. The reasonable construction to be put on the explanation (iv) to Section 245A(b) of the Act would be the date of making an assessment before the expiry of the time limit provided under Section 153 of the Act. On the expiry of the time limit to make an assessment it would be impossible for the Assessing officer to make an assessment. Thus the words "concluded" on the date on which the assessment is made in Explanation (iv) to Section 245A(b) of the Act has to be read with conjunction with Section 153 of the Act i.e. the assessment has to be made prior to expiry of the time to make an assessment under the Act. 13) The petitioner also placed strong reliance upon the decision of the Special Bench of the Settlement Commission in Rescuwear Corporation (supra) to contend that an assessment can be said to be pending till such time the Assessing Officer can initiate action for assessment under the Act. In particular, reliance was placed upon the following observation in the order passed in Rescuewear Corporation (supra) as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered to be pending proceedings in view of the decision of the Special Bench of the Settlement Commission in the matter of Rescuwear Corporation (supra). This decision was challenged before the Gujarat High Court by the revenue. The Gujarat High Court upheld the challenge of the revenue while agreeing with the view taken by the Kolkatta High Court in the matter of Outotec (supra) that assessment could not be said to be pending before the Assessing Officer even where the time for making an assessment had expired, on the date the assessee filed its application for settlement before the Settlement Commission. In fact the Gujarat High Court while agreeing with the view of the Kolkatta High Court held as under : "19. We are in respectful agreement with the view expressed above. To our mind, accepting the proposition that even where by efflux of time , it is not open to the assessing Officer to pass an order of assessment, merely because the return was accepted under Section 143(1) of the Act, the case of the assessee should be deemed to be pending for assessment only because the final order of assessment under section 143 (3) was not passed, would run counter to the statutory ame ..... 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