INCOME TAX ACT, 1961

Section 245D

Settlement Commission - Scope of power of settlement commission - Whether to take a decision on issues raised before Settlement Commission, an adjudication process was required to be adopted and therefore, application filed by assessee could not be thrown out at the stage of 245D(2C) -

Revenue was aggrieved by order of Single Judge, wherein writ petition filed by assessee seeking to quash order passed by Income Tax Settlement Commission and to direct Settlement Commission to pass a fresh order under section 245D(2C), by admitting application filed by assessee, was allowed. Held: To take a decision on issues raised before Settlement Commission, an adjudication process was required to be adopted and the application filed by assessee could not be thrown out at the stage of 245D(2C). Further, by referring to the factual details, there was no failure on part of assessee to disclose fully and truly any of facts or particulars of the income and the application ought to be allowed to be proceeded under section 245D(2C). In terms of sub-section (4) of section 245D, Commission is entitled to adjudicate the matter and pass orders as it deems fit on the matters covered in the application. Thus, Single Bench rightly considered the scheme of section 245D and allowed the writ petition. The argument of Revenue that the Writ Court has re-written the statutory provision was an incorrect submission. The marked distinction with regard to the exercise of power of the Settlement Commission at the (2C) stage and (4) stage is amply clear from the wordings in the statute. The Commission can declare an application to be invalid at the (2C) stage. Such invalidation cannot be by a long drawn reasoning akin to a decision to be taken at the stage of section 245D(4). This is so because, sub-section (4) of section 245D gives ample power to the Commission to examine the records, the report of CIT received under sub-section (2B) or sub-section (3) or the provisions of sub-section (1), as they stood immediately before their amendments by Finance Act, 2007.

REFERRED : CIT v. Express Newspapers Ltd. (1994) 206 ITR 443 (SC) : 1994 TaxPub(DT) 944 (SC), Hitachi Power Europe GmbH v. ITSC 2020 TaxPub(DT) 1449 (Mad-HC), Abdul Rahim v. ITSC (2018) 96 Taxmann.com 571 (Mad) : 2018 TaxPub(DT) 5555 (Mad-HC), Omaxe Ltd. v. Asstt. CIT & Anr. (2012) 25 Taxmann.com 190 (Del) : 2012 TaxPub(DT) 2799 (Del-HC) and Hassan Ali Khan v. Settlement Commission & Ors. (2008) 299 ITR 127 (Bombay) : 2008 TaxPub(DT) 1536 (Bom-HC).

FAVOUR : In assessee's favour.

A.Y. :

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