CBDT Cannot Add 31 January Eligibility Condition to Settlement Applications: Rajasthan HC

Vishnu Kumar Gupta Vs DCIT (Rajasthan High Court)

Summary: The Rajasthan High Court allowed a batch of writ petitions concerning settlement applications filed before the Interim Board for Settlement after searches conducted under Section 132 of the Income Tax Act, 1961. The petitioners had filed settlement applications on 28.09.2021 within the extended deadline of 30.09.2021, but the Interim Board rejected applications for assessment years where notices under Sections 153A or 143(2) had been issued after the stipulated cut-off date. The Court held that Chapter XIX-A requires a “case” to be pending on the date the settlement application is made and does not prescribe any anterior date on which the assessee must already have become eligible. Accordingly, the CBDT, while exercising its power under Section 119(2)(b) to extend the filing deadline, could not impose an additional condition requiring eligibility as on 31.01.2021. The Court observed that eligibility depended upon issuance of statutory notices, an act entirely within the Revenue’s control, and the Revenue could not take advantage of its own delay. It agreed with the reasoning adopted by the Bombay and Kerala High Courts, including Union of India v. Aayana Charitable Trust. The Court consequently read down paragraph 4(i) of the CBDT Order dated 28.09.2021 and the corresponding condition in the Press Release dated 07.09.2021. Applications backed by live and unadjudicated notices on the actual filing date, and filed by 30.09.2021, were directed to be treated as pending and decided on merits. Consequential assessment proceedings were made subject to the settlement proceedings. The constitutional challenge to Section 245C(5) was left open.