CIT (Central) & Anr. Vs RNS Infrastructure Limited (Supreme Court of India)
The litigation arose from settlement proceedings initiated by RNS Infrastructure Limited, an infrastructure development and construction company, following a search under Section 132 of the Income-tax Act, 1961. The assessee had filed returns for assessment years 2006-07 to 2012-13 and, during pending assessment proceedings, approached the Income Tax Settlement Commission under Section 245C, offering additional income of Rs.16,80,07,102/- for assessment years 2008-09 to 2012-13.
Read HC Judgment in this Case: Karnataka HC Quashes Settlement Commission Order Passed Beyond Statutory Time Limit
The Settlement Commission allowed the application to proceed and subsequently declared it valid. Revenue challenged the validity order before the Karnataka High Court, but the writ petitions were dismissed on 18.01.2016 and the ensuing writ appeals were withdrawn on 28.09.2016. Meanwhile, the Settlement Commission passed its final order under Section 245D(4) on 27.05.2016 determining total income and tax liability. The assessee’s rectification application was rejected on 11.08.2016.
The assessee challenged the Settlement Commission’s orders before the Single Judge, who allowed the writ petitions and quashed the order dated 27.05.2016, the rectification order dated 11.08.2016 and consequential orders and demand notices. Revenue appealed under Section 4 of the Karnataka High Court Act, 1961.
The principal dispute concerned the statutory time limit under Section 245D(4A). The Karnataka High Court noted that the assessee’s application was filed on 06.02.2014 and, under Section 245D(4A)(iii), the Settlement Commission was required to pass the order within eighteen months from the end of the month in which the application was made. After accounting for the period during which the interim order operated in the earlier Revenue proceedings, the Court held that the last date for passing the order was 10.12.2015. The final order dated 27.05.2016 was therefore beyond the prescribed period.
Revenue contended that the limitation was directory and relied upon Star Television News Ltd. The Karnataka High Court distinguished that decision, holding that it concerned applications made before 01.06.2007, whereas the present application was made thereafter. The Court also considered the Gujarat High Court decisions in M. Kantilal and Co. vs. Income Tax Settlement Commission [(2018) 94 taxmann.com 293 (Gujarat)] and M. Kantilal and Exports vs. Income-tax Settlement Commission [(2018) 94 taxman.com 295 (Gujarat)], which likewise concerned applications filed before 01.06.2007.
The Karnataka High Court found no jurisdictional error in the Single Judge’s decision and dismissed the Revenue’s writ appeal.
The Revenue thereafter approached the Supreme Court. The Supreme Court recorded the respondent’s submission that an assessment order had been passed and challenged by the respondent in appeal. In view of that position, the Supreme Court stated that it was not inclined to interfere with the impugned judgment and dismissed the special leave petition.
Crucially, the Supreme Court expressly clarified that dismissal of the special leave petition would not be construed as an observation on the merits of the assessment order and the allegations. Pending applications, if any, were also disposed of.
Thus, the Supreme Court’s disposition was a dismissal of the special leave petition, without interference with the impugned judgment, coupled with an express reservation that the dismissal did not constitute an adjudication on the merits of the assessment order or allegations. The Supreme Court judgment therefore does not independently decide the underlying statutory controversy concerning the Settlement Commission’s time limit under Section 245D(4A), nor does it enlarge the Karnataka High Court’s reasoning into a Supreme Court determination on those merits.
Cases Discussed
- Star Television News Ltd. Vs Union of India (Bombay High Court), [(2009) 184 Taxman 400]
- M. Kantilal and Exports vs. Income-tax Settlement Commission (Gujarat High Court), [(2018) 94 taxman.com 295]
- M. Kantilal and Co. vs. Income Tax Settlement Commission (Gujarat High Court), [(2018) 94 taxmann.com 293]
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
It is pointed out by the learned counsel for the respondent – M/s. RNS Infrastructure Limited that assessment order has been passed and challenged in appeal by the respondent.
In view of the aforesaid position, we are not inclined to interfere with the impugned judgment and hence, the special leave petition is dismissed. We clarify that the dismissal of the special leave petition will not be construed as an observation on the merits of the assessment order and the allegations. Pending application(s), if any, shall stand disposed of.
