TMI Blog2017 (9) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of section 245D has been fulfilled by the petitioner. As is evident from the petitioner's letter dated 31.7.2007 written to the Settlement Commission in response to the said communication, the petitioner received the same on 13.7.2017 itself. Well before the final date of 31.7.2017 for payment of additional tax and interest, the petitioner at any rate was aware that the proceedings before the Settlement Commission was not yet disposed of. The petitioner therefore had the responsibility to pay the tax and interest as provided in section (2D) of section 245D of the Act. The petitioner failed to comply with such requirement. In terms of subsection( 1) of section 245HA therefore, the settlement proceeding would abate. This was automatic. The Settlement Commission by the impugned judgment merely made a declaration of abatement which had even otherwise come about by virtue of operation of law. The Settlement Commission had no other alternative. The alternative request of preventing the income-tax authority from using the material on record before Settlement Commission cannot be accepted in terms of plain language used in subsection( 3) of section 245HA of the Act. As noted, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatutory amendments were made, the Settlement Commission wrote a letter to the petitioner on 13.7.2007 in which it was stated as under : In connection with your above mentioned application under the provision of subsection( 4) of section 245D of Incometax Act, 1961, you are hereby given an opportunity to be heard by the Settlement Commission on 07.08.2007 at 11.00AM in the Court room of the Income Tax Settlement Commission, Additional Bench, Mumbai. 2) You may appear before the Income Tax Settlement Commission either in person or through a representative duly authorised in this behalf. 3) If the appellant or Commissioner of Incometax wish to rely on any evidence/documents/ paper etc. during the hearing, the same should be furnished to the Commission in the form of a paper book in six (6) copies duly indexed and page numbered at least one week before the date of hearing. 4) Please note that if you want to seek adjournment of the date of hearing, then application in this regard along with detailed reasons must be received in the Commission at least ten(10) days before the date of hearing and paper book, if any, must also be filed, failing which adjournment ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with interest along with the application filed under subsection( 1) of section 245C of the Act, though subsections (1B), (1C) and (1D) provided the manner in which such additional tax and interest would be computed. Under subsection (2A) of section 245D, the assessee within thirtyfive days of the receipt of a copy of the order under subsection( 1) of section 245D allowing the application to be proceeded with, would have to pay the additional amount of incometax payable on the income disclosed in the application and furnish proof thereof to the Settlement Commission. Under subsection (2B) of section 245D, the Settlement Commission had the power to extend the time limit for payment of additional tax if it was satisfied that the assessee for good and sufficient reasons was unable to pay the same. The Commission could also grant installments. As per subsection( 2C) of section 245D, whenever additional tax was not paid within the time prescribed under subsection( 2A), irrespective of the fact whether the Settlement Commission had extended the time for payment, the assessee would be liable to simple interest at the prescribed rate on the amount which remained unpaid. After the expiry of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee before the Settlement Commission, as if such material had been produced before the Assessing Officer or the authority as the case may be. We may reproduce these relevant provisions : 245D xxx ( 2A) Where an application was made under section 245C before the 1st day of June, 2007, but an order under the provisions of subsection (1) of this section, as they stood immediately before their amendment by the Finance Act, 2007, has not been made before the 1st day of June, 2007, such application shall be deemed to have been allowed to be proceeded with if the additional tax on the income disclosed in such application and the interest thereon is paid on or before the 31st day of July, 2007. Explanation.-In respect of the applications referred to in this subsection, the 31st day of July, 2007 shall be deemed to be the date of the order of rejection or allowing the application to be proceeded with under subsection (1). 245HA. Abatement of proceeding before Settlement Commission. ( 1) Where- xxx ( ii) an application made under section 245C has not been allowed to be proceeded with under subsection (2A) or further proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax or interest nor would the Settlement Commission refuse to dispose of the application on the ground of non payment thereof. The fall out of non payment of the tax and interest could be traced to Subsection( 1A) of section 245H as per which the immunity granted by the Settlement Commission to any person would stand withdrawn if he failed to pay the sum specified under the order of settlement passed under subsection( 4) of section 245D. This would be independent of the recovery that the department may carry out of such sum in terms of section 245J of the Act. 14. It can thus be seen that even in the provisions contained prior to amendment of 1.6.2007, the assessee always had the liability to pay additional tax on the income disclosed before the Settlement Commission. The result of non payment would be two fold. One, the immunity from penalty and prosecution if granted by the Settlement Commission would stand withdrawn and two, the department would recover the unpaid dues in accordance with the provisions of Chapter XVII of the Act. 15. Amending such statutory provisions, now after 1.6.2007, the statute requires an assessee applying for settlement to make payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceeded further. Thus, the first threshold examination of the application under subsection (1) of section 245D would come within a summary time frame permitting no flexibility. If for some reason the Settlement Commission is unable to pass an order allowing or not allowing the application to be proceeded further, the deeming fiction would apply and the application would be deemed to have been allowed to be proceeded with. Subsection (4A) was added to section 245D requiring the Settlement Commission to pass an order under subsection (4) within a time frame. The applications pending at the time of statutory changes shall be decided before 31st March, 2008, those made on or after 1st June 2007 but before 1st June 2010, would be decided within twelve months from the end of the month in which the application was made. In cases of application made after 1st June 2010, the same would be decided within eighteen months from the end of the month in which the application was made. In terms of clause (iv) of subsection (1) of section 245HA, in case the Settlement Commission does not pass order under subsection (4) of section 245D within the time prescribed under subsection (4A), the proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent or the State legislature cannot be put in a golden scale. If the legislature in its wisdom applying its mind, which is a presumption, to all relevant aspects of the matter, framed a certain legislative policy by enacting a law, the Court would certainly not substitute its individual judgement or opinion for that of the competent legislative body. 19. In case of the State of Jammu Kashmir v. Triloki Nath Khosa and others reported in AIR 1974 Supreme Court 1, the respondents had successfully challenged before the High Court the validity of a service rule framed by Jammu and Kashmir Government which permitted a classification of Assistant Engineer between Diploma holder and Degree holder for promotion as Executive Engineer. The Constitution Bench of the Supreme Court observed that in order to establish that the protection of the equal opportunity clause has been denied to them, it is not enough for the respondents to say that they have been treated differently from others, not even enough that a differential treatment has been accorded to them in comparison to others similarly circumstanced. Discrimination is the essence of classification and does violence to the constit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be in default in paying the tax on admitted income. What the statute perhaps cannot take away is a vested right and not a perceived right in which the assessee had no vested interest. 22. We may recall subsection( 1) of section 245HA provides for abatement of proceedings before the Settlement Commission under certain circumstances. As per subsection( 2) of section 245HA, where the proceedings so abate, the Assessing Officer or the incometax authorities before whom the proceedings at the time of making of the application was pending, would proceed to dispose of the same in accordance with the provisions of the Act as if no application for settlement was made. While doing so, under subsection( 3), such authority would be entitled to use all the material and other information provided by the assessee before the Commission or the results of the inquiry held or evidence recorded by the Commission in the course of such proceedings, as if such material, information, inquiry and evidence had been produced before the Assessing Officer or the authority. The effect of subsection( 3) of section 245HA is to enable the incometax authority, be it Assessing Officer or some other authority, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2007. He therefore, could not be blamed for not fulfilling the requirement of payment of additional tax before 31.7.2007. 8. Neither of these contentions can be accepted. Firstly, there was no time limit within which once the proceedings were finally heard and reserved for order, the Settlement commission had to dispose of the same by a final order. No malafides are attributed to the members of the Settlement Commission to suggest that there was deliberate delay on their part. If therefore, when the settlement proceeding was still pending, amendments were made in the statute which applied to such pending proceeding, same had to be applied with full force. The statute does not make any distinction whether the proceedings were pending before the Settlement Commission at prehearing stage or at the stage where the hearing was over and the case was pending for disposal by the Settlement Commission. 9. The defence that the petitioner was not aware about the pendency of such proceeding ignores the documents on record. On 13.7.2007, the Settlement Commission had conveyed to the petitioner that there would be a further hearing on 7.8.2007. The footnote though was scored out in the co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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