Mehta Stone Polishers Vs ACIT (Rajasthan High Court)
Rajasthan High Court has overturned an order by the Income Tax Settlement Commission that dismissed an application from Mehta Stone Polishers due to missing records. The High Court found that the Commission’s dismissal was invalid because the assessee was not involved in the reconstruction of the lost files, despite a prior court directive to decide the application on its merits.
The case originated from a writ petition filed by Mehta Stone Polishers challenging the validity of Section 245HA of the Income Tax Act, 1961. This provision, inserted by the Finance Act, 2007, stipulated automatic abatement of applications before the Settlement Commission if no final order was passed by March 31, 2008. The High Court had previously disposed of this writ petition on April 25, 2016, directing the Settlement Commission to reconsider the application in light of the Supreme Court’s judgment in Union of India Vs. Star Television News Ltd.: (2015) 12 SCC 665.
Judicial Precedent: Union of India Vs. Star Television News Ltd.
The Supreme Court in Union of India Vs. Star Television News Ltd. had approved the Bombay High Court’s ruling, which had read down Section 245HA(1)(iv). The Bombay High Court’s relevant observation, quoted in the Rajasthan High Court’s 2016 order, stated that the cut-off date of March 31, 2008, was arbitrary. It held that only proceedings where the delay was attributable to the applicant should abate. Consequently, the Apex Court affirmed that the Settlement Commission should determine if the delay was attributable to the applicant. If not, the Commission was to proceed with the application as if it had not abated. The Rajasthan High Court, following this precedent, had instructed the Settlement Commission to decide the issue of delay and complete the proceedings within six months if the delay was not attributable to the applicant.
