TMI Blog2018 (9) TMI 1697X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of the Department that the applications were preferred before the amendment, i.e. prior to 1st June, 2007, and the order under Section 245D(1) has not been made before the 1st day of June, 2007, and therefore, such applications shall be deemed to have been allowed to be proceeded further, is not required to be entertained. For the reasons stated hereinabove, it is the assessee who has approached the Settlement Commission by way of application can make a grievance that in view of the deemed allowing the application, his application ought to have been considered for all the years for which the application was submitted. Number of submissions have been made by learned counsel appearing on behalf of the Revenue on whether the order dated 04.12.2007 by which the Settlement Commission decided to proceed further with the settlement application for some of the years only was received by the Department or not. Considering the material on record, it can be said that there are disputed questions of fact on the aforesaid. However, considering the subsequent communication which as such was received in which it is specifically mentioned and the Report was called only for some of years fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner of Income tax (Central) (Circle-II), Ahmedabad, has prayed for an appropriate writ, direction or order to quash and set aside the impugned order(s) dated 04.12.2007 and 27.12.2012 insofar as it does not allow the Settlement Application preferred by respondent No.2 to be proceeded with for all Assessment Years as stated in the settlement application and to direct respondent No.1 Settlement Commission to pass final orders under Section 245D(4) with regard to the said remaining Assessment Years. The petitioner has also prayed to quash and set aside the order dated 19.06.2013 rendered under Section 154 read with Section 245D(6B) of the Act and to direct the Settlement Commission to allow the same and to hear the settlement application on merits insofar as the remaining assessment years are concerned. 3. The facts leading to the present Special Civil Application in nutshell are as under: For the sake of convenience, the facts in Special Civil Application No.17177/2013 are narrated and the said Special Civil Application is treated as lead matter. 3.1 That respondent No.2 assessee, part of the Comed Group, filed an application under Section 245C(1) of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 2004- 2005 08.12.200 6 3.2 Thus, in the case of Comed Chemicals Ltd., two settlement applications were made under Section 245C(1), one for A.Y. 1999-2000 to 2004-05 filed on 22.08.2006 and another for A.Y. 2005-06 filed on 08.12.2006. In the case of Jay Bee Distributors Pvt. Ltd. also, two settlement applications were made, one for A.Y. 1999-2000 to 2004-05 filed on 07.02.2007 and another for A.Y. 2005-06 filed on 30.03.2007. It appears that in the case of other two assesses, only one application for each of the assessee was filed for multiple assessment years as above. 3.3 It is the case on behalf of the petitioner that thereafter, respondent No.1 as learned Settlement Commission, Mumbai, passed an order under Section 245D(4) on 27.12.2012 in respect of the above applications and it was found that the said order has been passed considering only some of the assessment years incorporated in each of the applications whereas, the remaining assessment years of the respective applications have not been considered and decided in the said order passed under Section 245D(4) dated 27.12.2012. The assessment years for which such orders were passed in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1999-2000 to 2002-03 2004-05 5 Mrs.Satvinder Paul Kaur Sethi 1999-2000 to 2002-03 6 Mrs.Paramjit Kaur Mehta 1999-2000 to 2003-04 7 M/s.Comed Chemicals Ltd. 2001-02 to 2003-04 8 M/s.Comed Laboratories Ltd. 2001-2002 to 2003-04 3.5 It is the case on behalf of the petitioner that it was found by the Department thereafter that in respect of all the above eleven applications, orders were passed on 04.12.2007 allowing the applications to be proceeded with further under the provisions of pre-amended Section 245D(2A) and Section 245D(2C) of the Act in respect of some of the Assessment Years out of the Assessment Years for which the settlement applications were filed. 3.6 It is the case on behalf of the petitioner Department that as settlement applications were preferred under Section 245C of the Act before the first day of June 2007, but no order was passed under the pre-amended provisions of sub-section 91) of Section 245C, the applications have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 04.12.2007 and considering the settlement applications for some Assessment Years only is absolutely illegal and wholly without jurisdiction and contrary to the provisions of the Act. 4.2 It is vehemently submitted by Shri M.R.Bhatt, learned Senior Advocate appearing on behalf of the Revenue that clause (b) of Section 245A defines case to mean any proceedings under th Act, which may be pending before the Income Tax Authority on the date on which an application under Section 245C(1) is made. As per Section 245C, an assessee at any stage of a case relating to him may make an application containing a full and true disclosure of his income which has not been disclosed before the Assessing Officer. Section 245D(1) requires the application of mind by the Settlement Commission as to whether the application made by an assessee should be allowed to be proceeded with and an order in writing either rejecting the application or allowing the application to be proceeded with is required to be passed. However, in a case where application for settlement was made under Section 245C before the first day of June 2007, and an order under Section 245D(1) has not been made before the first day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e composite application for various Assessment Years was required to be deemed to have been proceeded further. 4.5 It is submitted by Shri M.R.Bhatt, learned Senior Advocate appearing on behalf of the Revenue that in the light of the above, any intimation under Section 245D(2A) noting that only for some years, the application was allowed to be proceeded further, whether received by the petitioner or not, would pale into insignificance. 4.6 It is submitted by Shri M.R.Bhatt, learned Senior Advocate appearing on behalf of the Revenue that what was served on the petitioner Department was the communication dated 04.12.2007 (at Annexure-A to the affidavit-in-rejoinder). It is submitted that this communication clearly mentions that application under reference was deemed to have been allowed to be proceeded with under Section 245D(2A). It is further submitted by learned Senior Advocate that in Paragraph-2 of the said communication, the Commissioner was requested to furnish a report on the matter(s) covered by the application . In Paragraph-4 of the said communication, it is also noted that in relation to the assessment years covered by the settlement application in view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct that the applications were allowed to be proceeded with only for some assessment years was brought to the notice of the petitioner, detailed submissions were made and even written arguments were filed. 4.11 Shri M.R.Bhatt, learned Senior Advocate appearing on behalf of the Revenue has further submitted that the fact that the Department specifically argued the said issue is also noted by the Settlement Commission in the order passed under Section 245D(4) of the Act. It is further submitted that even after the order passed under Section 245D(4), despite rectification application having been filed, the Settlement Commission has refused to rectify this error apparent on the record. 4.12 It is further submitted by Shri M.R.Bhatt, learned Senior Advocate appearing on behalf of the Revenue that it is a settled position of law that there cannot be any estoppel against the statutory provisions. It is submitted that therefore, reliance placed on the part of the assess on the decision of the Hon ble Supreme Court in the case of Dilboo (Smt.)(Dead) by LRs. And Others v. Dhanraji (Smt.) (Dead) And Others reported in (2000)7 SCC 702 is therefore not correct and as such, the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttlement Commission itself in the case of other assessees has held that such deduction is not allowable. 4.16 It is further submitted by Shri M.R.Bhatt, learned Senior Advocate appearing on behalf of the Revenue that the assessee s reliance on the decision of this Court in the case of CIT v. Suman Paper Board Limited (2009) 314 ITR 119 is misplaced. It is submitted that in the said decision, a categorical finding was recorded that the undisclosed income was under the head of business income from industrial undertaking as the only activity of the assessee whereas in the instant case, there is no such finding. It is submitted that in view of the above, even on merits also, the order passed under Section 245D(4) of the Act deserves to be quashed and set aside. 4.17 It is further submitted by Shri M.R.Bhatt, learned Senior Advocate appearing on behalf of the Revenue that the orders passed under Section 245D(4) in the case of assessee Kuldipsingh Mehta and Satvinder Paul Kaur Sethi (Special Civil Applications No.17181/2013 and 17185/2013) are also erroneous and the same deserve to be quashed and set aside. 4.18 It is further submitted by Shri M.R.Bhatt, learned Senior A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore in fact, the petition at the instance of the Department is not maintainable at all. 5.1 It is further submitted by Shri Mihir Joshi, learned Senior Advocate appearing on behalf of the respondentassessee that even otherwise, the petition filed on 30.10.2013 challenging the order dated 04.12.2007 is grossly barred by principles of delay, latches, acquiescence and waiver. 5.2 It is further submitted by Shri Mihir Joshi, learned Senior Advocate appearing on behalf of the respondentassessee that the orders dated 19.11.2007 and 04.12.2007 cannot be held to be invalid on the ground that the same are not envisaged to be passed under the provisions of the Act. Though Section 245D(2A) of the Act provides for a deeming fiction by which the settlement application is deemed to be allowed to be proceeded with without the requirement of any order under Section 245D(1) of the Act, such deeming fiction is not absolute and will operate only if the additional tax on the income disclosed in such application and interest thereon is paid on or before 31.07.2007. Section 245D(2B) of the Act provides that the Settlement Commission should call for a report from the Commissioner in respect of a su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2017)86 taxmann.com 124 (Paragraph No.26). 5.4 Now so far as the submission on behalf of the petitioner that the Settlement Commission has erred in not permitting the petitioner to seek reconsideration of the orders dated 04.12.2007 and in rejecting the rectification application filed by the petitioner by incorrectly holding that the petitioner had received the orders dated 04.12.2007 and could not be permitted to indirectly seek a review thereof in the course of final hearing of the subject applications, since the said orders had not been served on the petitioner in the manner contemplated under the Act, and has not been received by the petitioner and therefore the Settlement Commission ought to have reconsidered the orders dated 04.12.2007 at the stage of passing the final order on 27.12.2012, it is vehemently submitted on behalf of the respondent assessee that the Settlement Commission had no power or jurisdiction to reconsider the order passed under Section 245D(2C) read with Section 245D(2A) of the Act dated 19.11.2007 and 04.12.2007. It is submitted that as such, the proceedings relating to the applications in respect of the assessment orders stood concluded by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Paragraph-20). 5.6 Now so far as the submission on behalf of the petitioner on the legality and validity of the order(s) passed by the Settlement Commission under Section 245D(4) with respect to some of the orders (Special Civil Applications No.17177/2013, 17181/2013 and 17185/2013) is concerned, it is vehemently submitted by Shri Mihir Joshi, learned Senior Advocate appearing on behalf of the respondent-assessee that as such in absence of any specific prayer to quash and set aside the same, this Court may not entertain and/or consider such submissions. It is submitted that even such grounds are taken only in amendment. 5.7 It is further submitted by Shri Mihir Joshi, learned Senior Advocate appearing on behalf of the respondentassessee that even on merits also, the challenge to the order(s) under Section 245D(4) on merits is not sustainable. It is submitted that the disclosure of the assessee who is a part of the Comed group should be considered in the context of the additional income offered to tax by the Comed Group as a whole and in such context the amount of additional income is a fraction of the additional income disclosed by the group and offered in a spirit of settle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs for which the assessee filed/ submitted the settlement application. Therefore, the first and foremost question which is required to be considered is the locus of the Department to challenge the order passed by the Settlement Commission in considering the application submitted by the assessee only for some of the years and not for all the years for which the assessee had submitted the application. Therefore, the question which is posed for consideration of this Court is whether the Department/ Revenue can be said to be an aggrieved person / aggrieved party against the decision of the Settlement Commission to not consider the settlement application for all the years for which the application was submitted by the assessee? 7.1 Considering Section 245 of the Income Tax Act, it provides remedy to the assessee to approach the Settlement Commission and pray for settlement by offering undisclosed income and offering to pay the tax on the same. Therefore, it is the assessee who approaches the learned Settlement Commission for settlement as per Section 245 of the Act. Therefore, if at all anybody who can be said to be aggrieved by the rejection of the application by the Settlement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication made under section 245C has been declared as invalid under sub-section (2C) of section 245D; or ( iiia) in respect of any application made under section 245C, an order under sub-section (4) of section 245D has been passed not providing for the terms of settlement; or ( iv) in respect of any other application made under section 245C, an order under sub-section (4) of section 245D has not been passed within the time or period specified under sub-section (4A) of section 245D, the proceedings before the Settlement Commission shall abate on the specified date. Explanation: - For the purposes of this sub-section, specified date means-- ( a) in respect of an application referred to in clause (i) , the day on which the application was rejected; ( b) in respect of an application referred to in clause (ii), the 31st day of July, 2007; ( c) in respect of an application referred to in clause (iii), the last day of the month in which the application was declared invalid; ( ca) in respect of an application referred to clause (iiia), the day on which the order under sub-section (4) of section 245D was passed not providing for the te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment Commission not considering the settlement application for all the years for which the application was submitted is not required to be considered further on merits as the petitioner-Department cannot be said to be aggrieved by such an order. 7.2 For the reasons stated hereinabove therefore, even the submission on behalf of the Department at the instance of the Department that the applications were preferred before the amendment, i.e. prior to 1st June, 2007, and the order under Section 245D(1) has not been made before the 1st day of June, 2007, and therefore, such applications shall be deemed to have been allowed to be proceeded further, is not required to be entertained. For the reasons stated hereinabove, it is the assessee who has approached the Settlement Commission by way of application can make a grievance that in view of the deemed allowing the application, his application ought to have been considered for all the years for which the application was submitted. 8. Number of submissions have been made by learned counsel appearing on behalf of the Revenue on whether the order dated 04.12.2007 by which the Settlement Commission decided to proceed further with the settl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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