TMI Blog2018 (5) TMI 1549X X X X Extracts X X X X X X X X Extracts X X X X ..... he High Court in case of Shalibhadra Developers (2016 (10) TMI 778 - GUJARAT HIGH COURT). Decided in favor of revenue. - SPECIAL CIVIL APPLICATION NO. 5940 of 2018 - - - Dated:- 16-4-2018 - MR. AKIL KURESHI AND MR. B.N. KARIA, JJ. For The Petitioner : Mr.Varun K.Patel(3802) For The Respondent : Mr R K Patel For Mr Darshan R Patel(8486) JUDGMENT ( PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Heard learned counsel Mr. Varun Patel for the petitioner- Income Tax department and Mr. R.K.Patel appearing for respondent No.1-assessee on caveat for final disposal of the petition. Respondent No. 2 being a quasi judicial authority, it is not necessary to hear it. 2. This petition is filed by the department challenging order of the Income Tax Settlement Commission ['Settlement Commission' for short] dated 24.02.2018 passed under section 245D (2C) of the Income Tax Act, 1961 ['the Act' for short]. On 27.12.2017, respondent No.3 filed an application for settlement of its proceedings concerning assessment years 2010-11 to 2014-15 contending that till then, the assessments were pending. The department appeared before the Settlement Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the Settlement Commission and other Revenue authorities, the assessee had contended as under: 4. During the course of reassessment proceedings, the Assessing Officer was informed by the official of VPL that it intended to file a Settlement Application before the Hon'ble ITSC, Additional Bench, Mumbai. Looking to the time barring limit for completing the reassessment proceedings, the Assessing Officer had orally told the accountant of the VPL that he will not be in a position to wait beyond 29th December, 2017. Therefore VPL paid the additional tax and interest payable under the Act for filing the Settlement Application and filed the same on 27th December 2017 at about 4.00 pm. As promised by the assessing officer, VPL was under the impression that he will wait up to 29th of December 2017. Before that date, VPL has filed the petition before the Hon'ble ITSC, Additional Bench, Mumbai. 5. VPL has filed a settlement petition before the Hon'ble ITSC, Additional Bench, Mumbai on 27.12.2017. All of a sudden, on 29.12.2017, VPL received an envelope containing assessment orders for A.Ys 2010-11 to 2014-15 stated to have been passed on 26.12.2017. 6. As pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as perfectly justified in overruling the department's objection to the maintainability of the application for settlement. However, without doing so, the Settlement Commission held that the settlement application was maintainable which was opposed to the judgement of this Court in case of Shalibhadra Developers (supra). 7. In Shalibhadra Developers (supra) the assessee had applied for settlement to the Settlement Commission on 16.03.2016. According to the department, the assessment for the assessment year in question had already been completed when the Assessing Officer passed the order of assessment on 15.03.2016. According to the department, such order of assessment was also sought to be served on the representative of the assessee through hand delivery. The partners of the assessee firm, however, refused to accept the order upon which, the same were dispatched through post and duly served on the assessee on 21.03.2016. 8. The assessee, in the said case, had principally raised three contentions. Firstly, that no order of assessment, as alleged by the department, was passed on 15.03.2016. Secondly, that in any case, the same was not tendered for service on 15.03.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intaining an application under sub section (1) of section 245C of the Act. Upon an application for settlement being filed, the same would pass through various stages envisaged in section 245D of the Act. Under sub section (2) of section 245F, where an application made under section 245C has been allowed to be proceeded with under section 245D, the Settlement Commission shall, until an order is passed under subsection (4) of section 245D, have exclusive jurisdiction to exercise the powers and perform the functions of an income tax authority under the Ac in relation to the cases. Proviso to sub section (2) provides that where an application has been made under section 245C on or after the 1st day of June, 2007, the Settlement Commission shall have such exclusive jurisdiction from the date on which the application was made. Thus, upon making of an application before the Settlement Commission, the Assessing Officer would be, divested of his jurisdiction over the case which would vest exclusively in the Settlement Commission. Sub section (7) of section 245D however provides that where a settlement becomes void, proceedings with respect to the matters covered by the settlement shall be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt would remain on record in respect of same period for which the Settlement Commission would pass a settlement order. 33. We are conscious that the situation has been viewed somewhat differently by some of the High Courts. The Bombay High Court in case of Income Tax Settlement Commission (supra) considered a situation where the order of assessment was signed on 18.3.2013 and was also dispatched to the assessee on the same day in the morning. Such post returned as unserved as refused. However, such refusal was after the date on which the application for settlement was presented before the Commission. In such background, the Court upheld the view of the Settlement Commission that the word issued should be interpreted as served and that delivery of envelop to the postal authority on 18.3.2013 canot be termed as service to the applicant. One of the factors which weighed with the Bombay High Court in the said decision was a circular of CBDT dated 12.08.2008 in which it was clarified that the assessment shall be deemed to have been completed only on the date of service of assessment order to the applicant. We may record that subsequently the circular was superseded by a circular o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee for settlement as not maintainable since such application was filed on 27.12.2017 and if the department was right, the orders of assessment were passed on 26.12.2017. The knowledge of the order of assessment of the assessee or its service on him were wholly inconsequential. The Settlement Commission committed a grave error in law disregarding the dictum of the High Court and instead, entertaining the application for settlement which was passed on 27.12.2017 i.e. after purportedly the order of assessment was made on 26.12.2017. In the process, the Commission without so saying, declared that the judgement of the High Court in case of Shalibhadra Developers (supra) was wrong. We may note the Commission's observations and conclusions in its own language. Relevant portion of the impugned order reads thus: 9.1 After careful examination of the facts of the case relied upon by the PCIT, we observe that the Hon'ble Gujarat High Court, while delivering its order in the case of Shalibhadra Developers vs. Secretary (supra) have not considered the fundamental law laid down by the Hon'ble Supreme Court in the case of B.J.Shelat vs. State of Gujarat (supra) wherein it ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... containing the order itself reached the applicant on 29.12.2017 and it was duly accepted by it. Hence, it cannot be said that the applicant got communicated about passing of the order on 27.12.2017. Under the circumstances, it would be unfair to hold that the applicant's right to approach the Commission got extinguished before 29.12.2017. 9.4 Further, the Hon'ble Bombay High Court in the case of Yashovardhan Birla (supra) held that the assessment order for the purpose of Chapter XIX A of the Act can be said to have been made when it is served upon the assessee concerned. While commenting on the binding nature of the circular of the CBDT the Hon'ble Court have stated that, firstly, a CBDT circular cannot orverrule a decision of a Court of law and secondly, this circular was available when this court rendered the decision in CIT vs. ITSC, Additional Bench, M/s. Rasiklal Kantilal Co. (supra) and yet it does not seem to have replied upon. This is possibly for the reason that a CBDT Circular intepreting a statutory provision is binding upon the officers of the Revenue. The subject can rely on the Circular issued by CBDT only when it is beneficial to the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.11.2014, the Revenue contended that earlier decision in case of Income Tax Settlement Commission (supra), would not hold good. Such contention was rejected by the Bombay High Court inter-alia on the premise that the Board circular cannot overrule the High Court judgement. It was also observed that the decision of the Court did not rest on the circular dated 12.8.2008. 14. One more reason which prompted the Commission to disregard the judgement of the High Court strangely was that the approach of the Settlement Commission should be on a different plank and that the opportunity to approach the Settlement Commission should not be denied on mere technical ground. We fail to understand what the Commission sought to convey by these observations. 15. The Settlement Commission also recorded that the judgement in case of Shalibhadra Developers (supra) was rendered without noticing a judgement of the Supreme Court in case of B.J.Shelat vs. State of Gujarat and ors reported in AIR 1978 SC 1109. In the said case, the issue was with respect to a Government employee's right to seek voluntary retirement after completion of certain number of years of service. Referring to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the basic principles in the administration of justice based as it is in this country on the hierarchy of courts. The facts of the present case are more or less similar and we would have allowed the matter to rest at that but unfortunately the judgment of the High Court directing the issue of a writ of mandamus for the grant of a liquor licence to respondents Nos. 1 and 2 cannot be sustained. 17. To conclude this issue, we record our displeasure about the manner in which, the Settlement Commission has disregarded a binding judgement of the High Court seeking to distinguish when facts simply did not permit any such distinction. As an authority subordinate to the High Court the duty of the Commission would always be to apply the law as is laid down by the High Court. We expect that the Commission in future would bear in mind these words. 18. Coming to the factual dispute about the orders of assessment being actually passed on 26.12.2017 itself or not, the Commission has given no finding. We cannot leave the assessee without remedy merely because the Commission chose not to examine such an issue though raised by the assessee. Learned advocate Mr. Varun Patel was not correc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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