TMI Blog2020 (11) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... C and issue the show cause notice. One of the issue which was pending before the ITSC at that point of time against the Trust, was for violation of the conditions of Section 11/Section 10 (23C). While that being so, when the DGIT was clearly without jurisdiction to issue the SCN, there is no justification on his part to proceed further on the SCN and pass the impugned order. When the foundation to the entire proceedings culminating to the impugned order itself is illegal, the impugned order cannot be legally sustained. ITSC had dealt with the issues pertaining to suppression of income and anonymous donations, collection of unaccounted capitation fee, diversion of unaccounted capitation fee to relatives of founder and application of accounted income of trust to benefit the relatives of founder. When such issues have already been dealt and had become conclusive, Section 245I of the Act prohibits the DGIT to reopen the issues in any proceeding under the Act. On this ground also, the impugned order cannot be sustained. When the DGIT is wholly without jurisdiction to initiate proceedings for withdrawal of the approval under Section 10(23C) (iv) of the Act, the entire proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. On 07.02.2012, the ITSC rejected the said application under Section 245D(1) of the Act for non-payment of taxes on the additional income disclosed in the Settlement Application and did not allow the same to be proceeded with. Thereafter, on 30.04.2012, the Trust filed its returns of income for the AYs 2007-08 to 2011-12. 2.4) Subsequently, on 26.11.2012, the Trust filed another Settlement Application under Section 245C of the Act before the ITSC, disclosing an additional income of ₹ 9,65,10,102/- for the AYs 2007-08 to 2011-12. By an order dated 10.12.2012, the ITSC allowed the Settlement Application to be proceeded with under Section 245D(1) of the Act. The reports under Section 245D(2B) were then called for from the Department and on being satisfied with the conditions stipulated in Section 245D(2C) of the Act, the ITSC held that the Settlement Application covering AYs 2005-06 to 2011-12 cannot be said to be invalid. On receipt of the report under Rule 9 of the ITSC (Procedure Rules), the following issues were taken up by ITSC, for consideration: i) Suppression in income admitted before Settlement Commission; ii) Anonymous donations taxable u/s.115 BBC; ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the SCN was for the period from AYs 2006-07 to 2011-12, whereas the impugned order is for retrospective withdrawal from 2006-07 onwards, which is beyond the scope of the SCN and therefore the order is bad in law. d. Retrospective withdrawal of approval is impermissible and contrary to law. e. The DGIT has no suo-motu powers to initiate proceedings without intimation to the prescribed Authorities under Section 143(3) of the Act and therefore lacks jurisdiction per se. f. The conditions referred to in the SCN and the impugned order are not the conditions prescribed under Section 10(23C)(iv) of the Act and therefore the DGIT exceeded his jurisdiction while passing the impugned order. Even otherwise, all the issues raised therein have been dealt threadbare by the ITSC and the DGIT had no authority to reappraise these issues. 5. Per contra, Mr. A.P. Srinivas. learned Senior Standing Counsel representing the DGIT submitted that the issues raised in the SCN were not answered by ITSC in its final award and hence there is no illegality in passing the impugned order. He placed reliance a decision of the Hon ble Division Bench of this Court in Tax Case (Appeal) No. 674 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of settlement to be conclusive.- Every order of settlement passed under sub-section (4) of section 245D shall be conclusive as to the matter stated therein and no matter covered by such order shall, save as otherwise provided in this Chapter, be reopened in any proceeding under this Act or under any other law for the time being in force. 11. The DGIT is deemed to be an 'Income Tax Authority' under Section 116 (b) of the Act. When the application under Section 245C made by the Trust has been allowed to be proceeded with, the ITSC alone would have exclusive jurisdiction to perform the functions of the Income Tax Authority, as provided under Section 245F. 12. The Trust had filed an application under Section 245C of the Act on 26.11.2012 and the same was allowed to be proceeded with under Section 245D(1) of the Act through an order dated 10.12.2012. At this stage, the DGIT had issued the SCN on 22.04.2013 proposing for withdrawal of the approval granted under Section 10(23C)(iv) of the Act, for the period AYs 2006-07 to 2011- 12. By virtue of Section 245F(2), the DGIT was not empowered to steps into the shoes of the ITSC and issue the show cause notice. As a matter o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ality strikes at the root of the order. This position is akin to the legal maxim ' sublato fundamento cadit opus' , which implies that when the foundation is removed, the structure falls. 15. Thus, when the DGIT is wholly without jurisdiction to initiate proceedings for withdrawal of the approval under Section 10(23C) (iv) of the Act, the entire proceedings, culminating to the impugned order is illegal and therefore deserves to be quashed. Having found so, this Court is of the view that the other grounds raised by the Trust need not be addressed. 16. Apart from lacking jurisdiction, the DGIT had grossly exceeded his powers while passing the impugned order by overruling the findings of the ITSC and rendering his opinion based on the materials which were available before the ITSC. In other words, the DGIT had attempted to sit on appeal against the order of ITSC. While the DGIT is deemed to be an 'Income Tax Authority' for the purposes of the Act, by virtue of Section 116, the ITSC is a statutory body created under Section 245B of the Act. It is rather unfortunate that a high ranking official as that of DGIT, was ignorant to understand the basic powers vested ..... X X X X Extracts X X X X X X X X Extracts X X X X
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