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2016 (7) TMI 319 - ITAT AHMEDABAD

2016 (7) TMI 319 - ITAT AHMEDABAD - TMI - Rectification of mistake - CIT(A) confirming the action of the AO in cancelling the registration of firm under provision of section 186(2) - application to Settlement Commission - Held that:- In the present case, there is no dispute that the ld.Settlement Commission has taken cognizance under section 245D in both these cases, and the applications of the assessees were proceed with. Clause 2(A) has been inserted with section 245D by Finance Act, 2007. Thi .....

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assed by the Settlement Commission, therefore, it is to be construed that the applications of the assessee have abated on 31.3.2008, i.e. the time limit provided in sub-section-4(A). In our opinion, this is the erroneous construction of provision at the end of the ld.CIT(A). Sub-clause 4(A) is applicable on those applications, where the taxes were paid by an assessee before 31.7.2007. In all these applications, the order ought to be passed by 31.3.2008. A perusal of the provisions extracted (sup .....

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ers are totally silent on this issue. If we arrive at a conclusion that the taxes were not paid by the assessee before 31.7.2007, then, the application before the Settlement Commissioner would abate on 31st July. But if it is established that tax liability was discharged in spite of that no specific order has been passed by the Settlement Commission, the application would be considered as abated on 31.3.2008. This situation would goad us to record a different finding on the limitation. If the ap .....

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th the assessees before 31st July, 2007. After conclusively arriving on the figures of both these aspects, she would decide whether the assessment orders should be termed as time barred or not. - Decided in favour of assessee for statistical purpose. - ITA.No.937/Ahd/2010, ITA.No.938 and 939/Ahd/2010, ITA.No.569/Ahd/2012 - Dated:- 1-6-2016 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER For The Revenue : Shri Narendra Singh, Sr.DR For The Assessee : Shri Bhavin Mar .....

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korbhai M. Patel in the Asstt.Year 1992-93 vide ITA No.569/Ahd/2012. The ITA No.938/Ahd/2010 is directed at the instance of the assessee against the order of the ld.CIT(A) dated 29.1.2010 passed for the Asstt.Year 1984-85. ITA No.939/Ahd/2010 is also filed by the assessee against the order of the ld.CIT(A) dated 27.1.2010 passed for the Asstt.Year 1984- 85. In this appeal, the issue involved is that the ld.CIT(A) has erred in confirming the action of the AO in cancelling the registration of firm .....

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and 186(2) of the Income Tax Act. If it is held that the assessment orders were time barred, then both the assessment orders would be quashed. Consequent thereupon, other two appeals would become redundant. Therefore, we first take ITA No.938/Ahd/2010 and 937/Ahd/2010. 2. In the case of Patel Land Corporation, the assessee has filed a list of events. It is pertinent to take note of certain dates and development taken place on these dates. They read as under: 04-8-1987 Return of Income was filed .....

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sed by the Assessing Officer u/s 144 of the Act and registration to the firm was refused on the basis of recorded statement of two partners against which an appeal was filed before the C.I.T. Baroda. 12-9-1995 The C.I.T. (Appeal) Baroda set-a-side the assessment to the Assessing Officer. 26-9-1995 Settlement Application u/s 245C was filed before the Settlement Commission, Mumbai. 21-5-1996 Date of Admission of Settlement Application u/s 245D(1) of the Act. 31-7-2007 As the Taxes and Interest pay .....

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r is not passed on or before 31.7.2008. 30-3-2009 The Assessing Officer has passed the Asstt.Order which is time barred, hit by limitation. 3. In the case of Jashwantibhai T. Patel, facts are that an assessment order was passed under section 144 of the Income tax on 31.3.1995. The AO has determined the taxable income of the assessee at ₹ 21,12,520/-. The assessee carried the matter in appeal, and the ld.CIT(A) has set aside the assessment order vide order dated 12.9.1995. The ld.CIT(A) rem .....

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o discharge its tax liability and additional taxes on the income disclosed on such application along with interest before 31.7.2007. In case an assessee fails, then, the application deemed to have been as not proceeded with. The contention of the assessee was that as per sub-clause (4) of section 245HA r.w.s section 245(2D), its application would be deemed to have been abated on 31.7.2007 on account of non-payment of taxes. The AO was required to pass the assessment order within a period of one .....

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ation as well as the provision of section 245(HA) along with its Explanation would indicate that if an application has been proceeded with under section 245(D)(1) then, according to the newly inserted provision, the assessee was required to make payment of taxes along with additional taxes before 31.7.2007. In case the assessee fails, then, the application would not be proceeded with any more. In other words, it will be deemed to have been dismissed on 31.7.2007. In the present cases, both the a .....

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ssessee in compliance to section 245(2D), and if this time limit is being considered, then, the assessment order passed on 31.3.2009 are within a limitation. The ld.counsel for the assessee placed on record copy of the ITAT (Amristar) Bench decision rendered in the case of Gurmeet Singh Vs. DCIT, 49 taxmann.com 431 wherein exact situation has been considered. 6. We have considered rival contentions and gone through the record carefully. Few provisions have direct bearing on the controversy on ha .....

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1st day of June, 2007, but an order under the provisions of subsection (4), as they stood immediately before their amendment by the Finance Act, 2007, was not passed before the 1st day of June, 2007, such application shall not be allowed to be further proceeded with unless the additional tax on the income disclosed in such application and the interest thereon, is, notwithstanding any extension of time already granted by the Settlement Commission, paid on or before the 31st day of July, 2007. Ex .....

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he 1st day of June, 2007 has been rejected under sub-section (1) of section 245D; or (ii) an application made under section 245C has not been allowed to be proceeded with under sub-section (2A) or further proceeded with under sub-section (2D) of section 245D; or (iii) an application made under section 245C has been declared as invalid under sub-section (2C) of section 245D; or (iv) in respect of any other application made under section 245C, an order under sub-section (4) of section 245D has not .....

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n clause (iii), the last day of the month in which the application was declared invalid; (d) in respect of an application referred to in clause (iv), on the date on which the time or period specified in sub-section (4A) of section 245D expires. 8. Sub-clause (4) of section 245(HA) provide the time limit to pass assessment order along with 2nd proviso to section 153(4) are also relevant in order to construe the time limit for an Assessing Officer to pass the assessment order, on abatement of Sett .....

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n 245C and ending with "specified date" referred to in sub-section (1) shall be excluded; and where the assessee is a firm, for the purposes of the time-limit for cancellation of registration of the firm under subsection (1) of section 186, the period aforesaid shall, likewise, be excluded. …. Provided further that where a proceeding before the Settlement Commission abates under section 245HA, the period of limitation available under this section to the Assessing Officer for mak .....

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case may be, section 244A, this proviso shall also apply accordingly. 9. It is an admitted position that the ld.Settlement Commission has not passed any order on the applications of the assessees after the amendment carried out by way of Finance Act, 2007. The area of dispute between both the parties relates to very narrow compass. As per Revenue, the Settlement Commission was to pass an order under subsection 4 on or before 31.3.2008. However, since the requisite order was not passed by the ld. .....

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the above provisions would indicate that, if the an assessee files an application under section 245C of the Income Tax Act before Settlement Commission, then, as per section 245D(1), the ld.Settlement Commissioner shall, within seven days from the date of receipt of application, issue a notice to the applicant requiring him to explain as to why the application made by him be allowed to be proceeded with. In the present case, there is no dispute that the ld.Settlement Commission has taken cogniz .....

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the additional taxes on the income-tax disclosed in such application ought to have been paid before 31st day of July, 2007. Similarly, the clause 2(D) as extracted above has been inserted with section 245D by Finance Act, 2007. This clause deal with the applications where the action under section 245D(1) on the application moved under section 245C(1) was already taken. In other words, where the Settlement Commission has proceed with an application moved under section 245C, this clause is releva .....

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rsy, the ld.Revenue authorities have drawn support from sub-section 4(A) of clause (2). According to the CIT(A), this clause authorizes the Settlement Commission to decide application of the assessee which have been proceeded with as per section 245D of sub-section (1) of Section 245D2D. Such application should have been decided by 31.3.2008. In the present case, since no order has been passed by the Settlement Commission, therefore, it is to be construed that the applications of the assessee ha .....

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have been abated on this date. The order of the ITAT (Amristar) Bench) has also given this interpretation in the case of Gurmeet Singh (supra). 11. In order to find out whether the assessees have paid taxes before 31st July, 2007 or not, we have directed the ld.counsel to demonstrate this fact. The ld.counsel for the assessee for the applicants before the Settlement Commissioner try to demonstrate the tax liability and the amounts paid by both these assessees. However, we find that both the ord .....

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