TMI Blog2017 (5) TMI 988X X X X Extracts X X X X X X X X Extracts X X X X ..... oreclosed. The net result is that notwithstanding that the AO in the present case may have passed assessment orders on 28th March 1995, in relation to the aforementioned AYs in respect of which a demand notice has been served on the Petitioner, the proceedings before the AO should be held to have revived on the date of the abatement of the Petitioner’s application before the ITSC, i.e., 31st March, 2008. As rightly pointed out by the Petitioner the AO is bound thereafter to pass fresh orders disposing of the assessment proceedings in accordance with the law. For the reasons best known to the AO, such order was passed only in respect of one AY, i.e. 1993-94 and for the other AYs a demand notice was served by treating the assessment orders dated 28th March, 1995 as still being valid. That was plainly a mistake and was impermissible in terms of Section 245 HA (2) of the Act. Thus the Court has no hesitation in setting aside the assessment orders dated 28th March 1995 passed in respect of the AYs 1986-87; 1989-90 & 1992-93 and the proceedings for recovery of demand raised on the basis of such assessment orders. - W.P.(C) 5134/2015 - - - Dated:- 17-5-2017 - S. MURALIDHAR C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ITSC allowed the Assessee s applications to be proceeded with by passing an order under Section 245D (1) on 28th November, 1995. Thereafter the Petitioner deposited the tax in respect of the income disclosed by him before the ITSC. Thereby the Petitioner discharged his tax liability for AYs 1986-87 to 1993-94. 6. For reasons that are not clear, the Petitioner's application was pending before the ITSC. An amendment was made to the Act by the Finance Act, 2007 whereby sub-section 4A was inserted in Section 245D of the Act. A distinction was drawn by the said provision between those applications filed before the ITSC prior to 1st June, 2007 and those that had been filed thereafter. Under Section 245HA(1)(iv) of the Act if a final order under Section 245D(4) was not passed by the ITSC within the period prescribed under Section 245D(4A) of the Act then the settlement application would abate. The date by which the ITSC was to pass the final order in respect of an application that was filed prior to 1st June, 2007 was 31st March, 2008. Section 245HA deals with abatement of proceedings before the ITSC. 7. Since in the present case, a final order was not passed by the ITSC prio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand being raised in terms thereof after the abatement of the application before the ITSC. 12. Mr. Raghvendra Singh, learned counsel appearing for the Revenue, submitted that once the application before the ITSC was allowed to be proceeded with under Section 245D, the ITSC had all the powers of the AO. However, till such date, i.e., 28th November 1995, the power of the AO over the assessment was neither taken away nor disturbed. Therefore, the AO had validly passed the assessment orders dated 28th March, 1995. According to Mr. Singh, the abatement of the Petitioner s applications before the ITSC on a subsequent date would not affect the finality of the assessment orders dated 28th March, 1995. He relied on the decision in Commissioner of Income Tax v. Damani Brothers (2003) 259 ITR 475 (SC) and Brij Lal v. CIT (2010) 328 ITR 477 (SC) which clarified that the income tax authorities were free to proceed in the prescribed manner till the ITSC decides to proceed with the petition. He also relied on the decision in Union of India v. Star Television News Limited Ors. (2015) 373 ITR 528 (SC) and Shankar Lahiri v. CIT (1995) 78 Taxman 364 (Cal). He further submitted that Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Commission in the course of the proceedings before it, as if such material, information, inquiry and evidence had been produced before the Assessing Officer or other income-tax authority or held or recorded by him in the course of the proceedings before him. 14. A careful reading of the above provision makes the legislative intent clear. The applications made under Section 245C of the Act before the ITSC prior to 1st June 2007 and in respect of which no final order has been passed under Section 245D(4) of the Act by 31st March, 2008 shall abate on the specified date. This specified date in terms of Explanation (d) is 31st March, 2008. 15. Under Section 245 HA (2) of the Act once the application before the ITSC has abated, the proceedings that were pending on the date of making of the application revive. Section 245HA(2) of the Act states that the authority before whom the proceedings were pending at the time of making of the application - and this could be the AO or the CIT(A) or the ITAT - shall dispose of the case. This means that the said authority has to proceed to dispose of those pending proceedings by treating them as still pending. This is also plain from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n order has already been passed by the authority before whom the proceedings were pending on the date of the making of the application before the ITSC and a situation where no such order has been passed. It does not state, that the revival of the proceedings by assuming that no application had been filed under Section 245C of the Act as a result of the abatement of such application, would take place only where no order had already been passed by the income tax authorities before whom such proceedings were pending. The expression 'shall be disposed of' in Section 245 HA (2), when viewed in the context of the entire provision together with Section 245 HA (3), cannot but be interpreted to mean a futuristic action. The option available to the AO or other authority to look into materials, by reviving the proceedings that were pending, that were not earlier available but emerged during the proceedings before the ITSC cannot be foreclosed. 19. The net result is that notwithstanding that the AO in the present case may have passed assessment orders on 28th March 1995, in relation to the aforementioned AYs in respect of which a demand notice has been served on the Petitioner, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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