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.

Cases Discussed

• UCO Bank v. Commissioner of Income Tax, (1999) 237 ITR 889 (SC) — Relied upon for the proposition that CBDT may tone down the rigour of law through circulars under Section 119, but a circular cannot impose a burden higher than that contemplated by the Act.
• Bengal Iron Corporation v. Commercial Tax Officer, 1994 Supp (1) SCC 310 — Relied upon for the proposition that circulars and executive clarifications cannot override the statute.
• Padinjarekara Agencies Ltd. v. State of Kerala, (2008) 3 SCC 597 — Relied upon for the proposition that executive instructions cannot override the statute.
• Commissioner of Central Excise v. Ratan Melting and Wire Industries, (2008) 13 SCC 1 — Relied upon for the proposition that circulars contrary to the statute are not binding on constitutional courts.
• Commissioner of Income Tax v. Shah Sadiq and Sons, (1987) 3 SCC 516 — Relied upon for the principle that retrospective operation will not be construed to divest an accrued right unless expressly provided.
• Independent Thought v. Union of India, (2017) 10 SCC 800 — Relied upon by the petitioners in support of construing the provision in a manner preserving fairness and equality.
• Jain Metal Rolling Mills v. Union of India & Ors., (2024) 461 ITR 423 (Mad) — Considered among the High Court decisions concerning the retrospective cut-off under Section 245C(5).
• Sar Senapati Santaji Ghorpade Sugar Factory Ltd. v. Assistant Commissioner of Income Tax & Ors., 2024 SCC OnLine Bom 981 — Followed; held that while CBDT could extend the time for filing settlement applications under Section 119, it could not impose an additional eligibility condition as on 31.01.2021 not contemplated by Section 245C. Also applied for the principle that Revenue cannot take advantage of its own delay where eligibility depends upon issuance of notice by Revenue.
• Vishwakarma Developers v. Central Board of Direct Taxes & Ors., 2024 SCC OnLine Bom 2507 — Considered among the High Court decisions concerning settlement applications and the cut-off introduced following the Finance Act, 2021.
• Vetrivel Infrastructure v. Deputy Commissioner of Income Tax, Central Circle-3 & Ors., (2024) 468 ITR 665 — Considered among the decisions dealing with settlement applications affected by the retrospective statutory cut-off.
• Shri Pradeep Kumar Naredi v. Union of India & Ors., 2024 SCC OnLine Cal 11543 — Considered among the High Court authorities placed before the Court concerning settlement applications following the Finance Act, 2021.
• New Hope Foundation v. Union of India & Ors., 2024 SCC OnLine Ker 5549 — Considered among the High Court authorities placed before the Court concerning the settlement regime and statutory/executive cut-off.
• Union of India v. Aayana Charitable Trust, 2025 SCC OnLine Ker 3967 — Followed; held that Section 245C prescribes no anterior eligibility date and that an assessee having a live and unadjudicated statutory notice on the date of filing was entitled to have the settlement application considered on merits.
• Friends SPS International India (P) Ltd. v. Assistant Commissioner of Income Tax / Deputy Commissioner of Income Tax, 2025: RJ-JP: 13797-DB — Coordinate Bench decision followed; settlement applications filed within the extended period were directed to be considered by the Interim Board in accordance with law.
• Gopal Goyal v. Deputy Commissioner of Income Tax, 2025: RJ-JP: 39395-DB — Coordinate Bench decision followed as having taken the same view regarding settlement applications filed within the extended period.
• Shayara Bano v. Union of India, (2017) 9 SCC 1 — Relied upon by the Revenue regarding the grounds on which legislation may be challenged, including manifest arbitrariness.
• Dharmendra Kirthal v. State of Uttar Pradesh, (2013) 8 SCC 368 — Relied upon by the Revenue regarding the presumption of constitutionality and the burden upon the challenger.
• Prashanti Medical Services and Research Foundation v. Union of India, (2020) 14 SCC 785 — Relied upon by the Revenue for the proposition that mere hardship is not a ground to strike down a valid provision.
• State of Himachal Pradesh v. Satpal Saini, (2017) 11 SCC 42 — Relied upon by the Revenue regarding the limits on courts directing the legislature or executive to amend a provision or executive instrument.

FULL TEXT OF THE JUDGMENT/ORDER OF RAJASTHAN HIGH COURT

1.This batch of writ petitions raises a common question of law on a common set of facts. All the petitioners were covered by a single search under Section 132 of the Income Tax Act, 1961 (“the Act”). All of them filed settlement applications before the Interim Board for Settlement on 28.09.2021. All of those applications were rejected by a common order dated 31.08.2023. The petitions were therefore heard together and are being disposed of by this common order.

2.The reliefs claimed in each petition are substantially identical. Stripped of repetition, the petitioners seek three things. First, quashing of the order dated 31.08.2023 by which the Interim Board for Settlement rejected their settlement applications. Second, quashing of the eligibility condition contained in the Press Release dated 07.09.2021 and in paragraph 4(i) of the Order dated 28.09.2021, and of Section 245C(5) of the Act as ultra vires. Third, quashing of the consequential notices dated 12.09.2024 issued under Section 142(1) of the Act and a stay of the assessment proceedings founded upon them.

3.For convenience, the facts are drawn from D.B. Civil Writ Petition No. [15421]/2024, which concerns Assessment Year 2020-21. The chart set out below identifies each connected matter, the assessment year to which it relates and the date of the statutory notice for that year. The date of the notice is the fact on which the entire controversy turns, and it is therefore set out separately for each matter.

FACTS

4. The petitioners are members of a group engaged in the business of real estate. They are regularly assessed to tax under the Income Tax Act, 1961.

4.1 A search and survey action under Sections 132 and 133 of the Act was carried out at the business and residential premises of the group on 22.10.2019. Pursuant to that search, the Assessing Officer issued notices under Section 153A of the Act for Assessment Years 2012-13 to 2019-20 and a notice under Section 143(2) of the Act for Assessment Year 2020-21. The notices were not issued at one time. Notices for several years were issued on or before 31.01.2021. Notices for the remaining years, including the notice under Section 143(2) for Assessment Year 2020-21, were issued only after 01.04.2021. The notice for Assessment Year 2020-21 was issued on 20.06.2021, that is, 607 days after the search.

4.2 In the meantime, the Finance Act, 2021 abolished the Income Tax Settlement Commission. The Act received the assent of the President on 28.03.2021 and was notified with effect from 01.04.2021. The proviso inserted in Section 245B provided that the Settlement Commission shall cease to operate on or after 01.02.2021. Sub-section (5) inserted in Section 245C provided that no application shall be made under that section on or after 01.02.2021. Both provisions therefore operated from a date roughly two months before the statute itself came into existence.

4.3 By Notification dated 10.08.2021, the Central Government constituted the Interim Board for Settlement under Section 245A of the Act. Thereafter the Central Board of Direct Taxes issued a Press Release dated 07.09.2021 and an Order dated 28.09.2021 bearing F. No. 299/22/2021-Dir(Inv.III)/174. By that Order, made in exercise of power under Section 119(2)(b) of the Act, the last date for filing a settlement application before the Interim Board was extended to 30.09.2021. Paragraph 4(i) of the Order, however, confined the benefit of that extension to assessees who were eligible to file a settlement application as on 31.01.2021.

4.4 Acting on that extension, the petitioners filed their settlement applications before the Interim Board on 28.09.2021, that is, within the extended period.

4.5 By order dated 31.08.2023, the Interim Board took a divided view. It entertained the applications relating to those assessment years for which notices had been issued on or before the cut off date. It rejected the applications relating to the remaining years, including Assessment Year 2020-21, on the sole ground that no assessment proceeding was pending for those years as on the cut off date, and that the petitioners therefore did not answer the eligibility condition in paragraph 4(i) of the Order dated 28.09.2021.

4.6 The petitioners are aggrieved by that order and by the consequential notices dated 12.09.2024 issued under Section 142(1) of the Act. Hence these petitions.

4.7 This Court admitted the petitions and, by order dated 04.02.2025, directed that any assessment order passed in the meanwhile shall abide by the final outcome of these petitions. The assessment orders thereafter passed carry that endorsement.

SUBMISSIONS ON BEHALF OF THE PETITIONERS

5. Learned counsel for the petitioners submitted that the entire controversy is the creation of the Revenue. The search took place on 22.10.2019. Every assessment year in question arises from that one search. The petitioners had no control over the date on which the Assessing Officer chose to issue notice. The petitioners cannot be made to bear the consequence of a delay that is entirely the Department’s own.

5.1 It was submitted that the classification worked by the impugned order is artificial. Some years arising out of a single search were settled. Other years arising out of the same search were shut out. The only difference between the two sets is the date on which the Revenue issued notice. Such a classification has no intelligible differentia and no rational nexus with any object of the amendment, and it therefore offends Article 14 of the Constitution.

5.2 On the statute, it was submitted that under Section 245A, a proceeding for assessment is deemed to commence on the date of issue of the notice initiating that proceeding, and that Section 245C requires only that a case be pending on the date on which the settlement application is made. Neither provision prescribes any anterior date on which an assessee must already have become eligible. The condition in paragraph 4(i) of the Order dated 28.09.2021 therefore introduces a requirement that is unknown to the Act.

5.3 It is further contended that the statutory requirement under Section 245C is only that assessment proceedings should be pending on the date of filing the settlement application. The impugned Press Release introduces an additional condition requiring eligibility as on 31.01.2021, which is neither contemplated by nor traceable to the provisions of the Act.

5.4 Learned counsel further submits that the Interim Board for settlement has been constituted only to discharge the functions earlier exercised by the Settlement Commission. Therefore, the Central Government could not have artificially restricted the jurisdiction of the Interim Board by executive instructions contrary to Section 245C of the Act.

5.5 It was further submitted that an order under Section 119(2)(b) is an instrument of relief. It may soften the rigour of a provision. It cannot create a fresh disqualification. Reliance was placed on UCO Bank v. Commissioner of Income Tax 1, Bengal Iron Corporation v. Commercial Tax Officer 2, Padinjarekara Agencies Ltd. v. State of Kerala 3, and Commissioner of Central Excise v. Ratan Melting and Wire Industries 4, for the proposition that circulars and executive clarifications cannot override the statute and are not binding on constitutional courts when they run contrary to it.

5.6 On the question of accrued rights, reliance was placed on Commissioner of Income Tax v. Shah Sadiq and Sons 5, and on Independent Thought v. Union of India 6, to submit that a vested statutory right is not defeated except by express legislative mandate, and that a provision should where possible be construed in a manner that preserves fairness and equality.

5.7 Learned counsel placed the following decisions before the Court, namely, Jain Metal Rolling Mills v. Union of India & Ors. 7; Sar Senapati Santaji Ghorpade Sugar Factory Ltd. v. Assistant Commissioner of Income Tax & Ors. 8; Vishwakarma Developers v. Central Board of Direct Taxes & Ors. 9; Vetrivel Infrastructure v. Deputy Commissioner of Income Tax, Central Circle-3 & Ors., 10 Shri Pradeep Kumar Naredi v. Union of India & Ors. 11; New Hope Foundation v. Union of India & Ors. 12; Union of India v. Aayana Charitable Trust 13; Friends SPS International India (P) Ltd. v. Assistant Commissioner of Income Tax / Deputy Commissioner of Income Tax 14; and Gopal Goyal v. Deputy Commissioner of Income Tax 15.

5.8 Finally, it was submitted that the notices dated 12.09.2024 issued under Section 142(1) proceed on the erroneous premise that the petitioners were never entitled to approach the Interim Board, and must fall with the order dated 31.08.2023.

SUBMISSIONS ON BEHALF OF THE RESPONDENTS

6.Learned counsel for the Revenue submitted that a tax legislation can only be struck down for want of legislative competence or for violation of Part III or another constitutional provision, or for manifest arbitrariness, and that the petitioners have pleaded none of these. Reliance was placed on Shayara Bano v. Union of India 16. It was added that there is always a presumption in favour of constitutionality and that the burden lies on the challenger, for which reliance was placed on Dharmendra Kirthal v. State of Uttar Pradesh 17. 82024 SCC OnLine Bom 981 92024 SCC OnLine Bom 2507 10(2024) 468 ITR 665 112024 SCC OnLine Cal 11543 122024 SCC OnLine Ker 5549 132025 SCC OnLine Ker 3967 142025: RJ-JP: 13797-DB 152025: RJ-JP: 39395-DB 16(2017) 9 SCC 1 17(2013) 8 SCC 368

6.1On merits, it was submitted that the right to approach the Settlement Commission is not a vested right but a concession, that a concession may be withdrawn in public interest, and that the right to apply arose only if a proceeding was pending as on the cut off date. The extension of the last date to 30.09.2021 was itself a further concession, and the Central Board of Direct Taxes was entitled to attach to it the condition that the applicant’s right must already have crystallised.

6.2 It was submitted that mere hardship is not a ground to strike down a valid provision, for which reliance was placed on Prashanti Medical Services and Research Foundation v. Union of India 18. It was further submitted that the Court cannot direct the legislature or the executive to amend the Press Release or the Order, for which reliance was placed on State of Himachal Pradesh v. Satpal Saini 19.

6.3 It was also submitted that the challenge to the notices dated 12.09.2024 is premature, since a notice under Section 142(1) is only a step towards assessment and the Act contains a complete machinery of appeal against any determination that may follow.

THE QUESTION FOR DETERMINATION

7.Shorn of detail, really speaking, only one question arises. Whether an assessee who was searched under Section 132 of the Act before 01.02.2021, on whom the statutory notice under Section 153A or Section 143(2) was issued after 31.03.2021 but before 30.09.2021, and who filed his settlement application before the Interim Board on or before 30.09.2021, is entitled to have that application considered on merits.

DISCUSSION AND REASONS

8. At the outset, we are of the mind that answering the question, supra, does not require us adjudicate on the vires of Section 245C(5) of the Act. All that is required, is to examine the legality of the condition that the Central Board of Direct Taxes attached to its own extension of time. Section 245A to 245M of Chapter XIX-A of the Act permitted an assessee to apply for settlement at any stage of a case relating to him. Section 245A(b) defines a case as a proceeding for assessment pending before an Assessing Officer on the date on which the application is made. The Explanation to that clause fixes the point of commencement of such a proceeding by reference to the date on which the notice initiating it is issued. Section 245C then permits an application to be made at any stage of such a case. Relevant for the purpose of controversy in hand is extracted below:-

“Application for settlement of cases.

245C. (1) An assessee may, at any stage of a case relating to him, make an application in such form and in such manner as may be prescribed, and containing a full and true disclosure of his income which has not been disclosed before the Assessing Officer, the manner in which such income has been derived, the additional amount of income-tax payable on such income and such other particulars as may be prescribed, to the Settlement Commission to have the case settled and any such application shall be disposed of in the manner hereinafter provided: x-x-x-x-x-x-

x-x-x-x-x

(5) No application shall be made under this section on or after the 1st day of February, 2021.”

9. The scheme therefore recognises a single relevant date, namely, the date on which the application is made. On that date a case must be pending. The Act nowhere requires that the assessee should also have been eligible on some earlier date. Section 245C(5), as inserted by the Finance Act, 2021, adds an outer limit to the date of application. It does not add a date of eligibility.

10. The date on which an assessee becomes eligible and the date on which he applies are two distinct things. The Act legislates on the second. It is silent on the first. That silence is not an accident to be filled in by executive instruction.

11. The Order dated 28.09.2021 was issued under Section 119(2)(b) of the Act. That power exists to avoid genuine hardship. It is a power to relax, not a power to legislate. The Central Board of Direct Taxes was undoubtedly competent to extend the last date for filing an application to 30.09.2021. It was not competent, in the same breath, to introduce a condition of prior eligibility as on 31.01.2021, because no such concept is found anywhere in Chapter XIX-A.

12. The vice is not merely one of excess of power. It is one of internal contradiction. The extension of time to 30.09.2021 was granted for the express purpose of relieving hardship caused by the retrospective bar. The class most obviously in need of that relief was the class of assessees whose statutory notices had not yet issued when the bar fell. Paragraph 4(i) withdraws the benefit of the extension precisely from that class. An order that professes to relieve hardship and then excludes the persons suffering the hardship achieves nothing. It cannot be sustained as an exercise of the power under Section 119(2)(b).

13. On this point the Revenue’s own pleading is decisive against it. The counter affidavit accepts that a circular under Section 119 cannot add any new condition or anything contrary to the statute and shall not impose any new burden on the assessee. Paragraph 4(i) of the Order dated 28.09.2021 does both. It adds a condition of eligibility on a date which the statute does not mention. It imposes on a defined class of assessees the burden of forfeiting a remedy that the statute made available to them. The Revenue’s own statement of the law disposes of the Revenue’s own defence.

14. Furthermore, eligibility here depended on an act of the Revenue, and the Revenue cannot profit from its own delay. The point may be tested in this way. What made an assessee eligible was the pendency of a case. What made a case pend was the issue of a notice. The issue of a notice was the exclusive act of the Assessing Officer. The assessee could neither compel it nor accelerate it.

15. The search here was on 22.10.2019. The Revenue had every material in its possession from that date. Notices for several assessment years were issued on or before 31.01.2021. The notice under Section 143(2) for Assessment Year 2020-21 was issued only on 20.06.2021, that is, 607 days after the search. No explanation for that delay is offered in the counter affidavit.

16. Had that notice been issued within a reasonable time of the search, the petitioner would have held a pending case well before any cut off date and would have been indisputably eligible. The Revenue’s answer is that the petitioner was ineligible. But the petitioner was ineligible only because the Revenue was late. A party cannot be permitted to take advantage of its own default and then to plead the consequence of that default as an answer to the other side. That principle was applied in materially identical circumstances by the Bombay High Court in Sar Senapati Santaji Ghorpade Sugar Factory Ltd (supra) and it applies here with equal force.

17. One search was conducted on one date at the premises of one group. Every assessment year now in question flows from that search. The petitioners filed a single combined settlement application on 28.09.2021 covering all those years. The Interim Board settled some of those years and rejected others.

18. The only feature distinguishing the settled years from the rejected years is the date on which the Assessing Officer chose to issue notice. That is a circumstance internal to the Department. It has nothing to do with the assessee, with the nature of the disclosure, with the quantum of undisclosed income, or with the object of Chapter XIX-A. A classification founded upon the administrative convenience of one party, applied to the detriment of the other, has no intelligible differentia. It bears no rational nexus with the object of the Finance Act, 2021, which was to wind up pending settlement work through an Interim Board. Article 14 is not satisfied.

19. There is yet another aspect of the matter i.e. retrospective operation cannot undo what was validly done. The Finance Act, 2021 received assent on 28.03.2021 and was notified on 01.04.2021. Section 245C(5) purported to bar applications from 01.02.2021. For roughly two months, therefore, assessees acted under a law that permitted them to apply, and the bar was later projected backwards over that period.

20. It is settled that Parliament may legislate retrospectively. It is equally settled that a retrospective provision will not be construed to divest an accrued right unless it says so in terms. This principle is stated in Commissioner of Income Tax, U.P. v. Shah Sadiq and Sons 20. Applying it, the several High Courts named below have read the cut off in Section 245C(5) and in paragraph 4(i) of the Order dated 28.09.2021 as 31.03.2021 rather than 01.02.2021, so that the bar operates only from the date on which the Finance Act, 2021 actually entered the statute book.

21. Adverting now to the case law. What is the relevant cut off date has to be discerned from the statute which to us also appears to be the date of the application. This is the view of the Division Bench of the Kerala High Court as well in Union of India v. Aayana Charitable Trust (supra), which in turn also relies upon the similar view taken by the Bombay High Court. The Division Bench held that the statute prescribes no anterior date of eligibility, that the only statutory requirement is a pending case at the time of filing, and that an assessee holding a live and unadjudicated notice on the date of filing was entitled to have his application considered on merits. It further held that an order under Section 119(2)(b), issued to relax the rigour of a provision, could not extend the time for filing while denying the benefit of that very extension to a class of assessees. For ready reference relevant paras of the aforesaid judgement is reproduced hereinbelow:-

14.In our view, the only question that arises for consideration in these cases is whether the assessees who received their notices under Sections 153A/153C after 31.03.2021, but before 30.09.2021, can maintain their applications for settlement of cases before the Interim Board for Settlement ? Although this aspect was raised by the assessees in the writ petitions, it was not considered by the learned Single Judge in the impugned judgment. To resolve that issue, we need only consider the legality of the conditions imposed by the CBDT while extending the last date for filing applications for settlement to 30.09.2021. It is significant, in this context, that a Division Bench of the Bombay High Court in Sar Senapati Santaji Ghorpade Sugar Factory Ltd. v. Asst. Commissioner of Income Tax – [(2024) 161 Taxmann.com 166 (Bombay)] held as follows in a writ petition that was filed challenging the provisions of the said CBDT order, to the extent it laid down an additional condition that the assessee should satisfy the eligibility requirements as on 31.01.2021, as ultra vires its power under Section 119(2)(b) of the I.T. Act;

“24. As regards the notification dated 28thSeptember 2021 issued by the CBDT under Section 119(2)(b) of the Act, the date for making application has been extended by the said notification to 30thSeptember 2021, which is clearly within the scope of the powers of the CBDT under Section 119 of the Act. Section 119 of the Act provides that the Board may from time to time, issue such orders, instructions and directions to other Income Tax Authorities as it may be deemed fit for proper administration of this Act. The provisions of the section have been interpreted by the Hon’ble Apex Court in UCO Bank (supra) to mean that the Board is entitled to tone down the rigours of law by issuing circulars under Section 119 of the Act and such circulars would be binding on Income Tax Authorities. A circular, however, cannot impose on a taxpayer a burden higher than what the Act itself, on a true interpretation, envisages. Therefore, the Board had power to extend the time limit for making an application to 30thSeptember 2021.

However, to the extent it lays down an additional condition, i.e., assessee should be eligible to file an application for settlement on 31st January 2021 in paragraphs 2 and 4(i) of the impugned notification, in our view, is beyond the scope of the power of CBDT as per Section 119 of the Act. There is no provision in the Act providing a cut off date with respect to an assessee being eligible to make an application under Section 245C of the Act. Hence, such a condition in the impugned notification is clearly invalid and bad in law.

The date on which an assessee becomes eligible to make an application and the date on which the assessee makes an application are two different things and the Act only provides a cut off date for the latter and not the former. Section 245C of the Act as amended by the Finance Act, 2021, provides that an application shall not be made after 1stFebruary 2021, i.e., cut off date for making an application. However, there is no provision in the Act with respect to the cut off date for an assessee to be eligible to make an application. Further, there is no amendment to the definition of “case” in Section 245A(b) read with the Explanation, which would affect the eligibility of petitioner to file an application before the Settlement Commission between the period 1stFebruary 2021 and 31stMarch 2021. Hence, the impugned notification, to that extent, is invalid and bad in law.”

15. We find ourselves in complete agreement with the said view taken by the Bombay High Court. When Section 245C does not prescribe any prior cut-off date for an assessee to satisfy the requirements for filing an application before the Interim Board for Settlement, and the only statutory requirement is that the assessee should have a pending ‘case’ at the time of filing the application for settlement, then so long as the assessee had a ‘live and un-adjudicated’ notice under Sections 153A/153C as on the date of filing the application, the application had to be considered on merits by the Board. The CBDT order issued under Section 119(2)(b), purportedly to relax the rigours of a statutory provision, could not have merely extended the time limit for filing an application while, simultaneously, denying the benefit of such extension to a class of assessees. The said clause in the CBDT order has to be seen as invalid, and bad in law, as declared by the Bombay High Court in the decision referred above.”

22. We are in respectful agreement with what has already been opined and held by both the High Courts, as above, Kerala as well as Bombay. The distinction is not academic. It is decisive on these facts. The notice for Assessment Year 2020-21 in the lead matter issued on 20.06.2021, which is after 31.03.2021. Reading the cut off down to 31.03.2021 and no further would not assist these petitioners at all. Relief in this batch is available only on the reasoning of the second strand, namely, that what matters is whether the assessee held a live and unadjudicated notice, and hence a pending case, on the date on which he applied. On 28.09.2021 each petitioner held such a notice. Each petitioner therefore had a pending case. Each application was accordingly required to be considered on merits.

23. The two strands are not in conflict. They rest on the same principle, namely, that the Act fixes a last date for applying and fixes no date of eligibility. The first strand corrects the retrospective reach of the statutory bar. The second strand corrects the eligibility condition that the executive superadded. Paragraph 27 of Sar Senapati (supra) supplies the equitable link between the two, by holding that where eligibility depends on an act of the Revenue, the Revenue cannot profit from delay in performing that act.

24. We may also observed here we are not writing on a clean slate. Similar view has already been taken by co-orinate benches of this court. In Friends SPS International India (supra), a coordinate Bench of this Court disposed of a batch of writ petitions with a direction to the Interim Board to consider the applications in accordance with law, taking into account the circular dated 28.09.2021, having noted that the time for making an application had been extended to 30.09.2021 and that the petitioners had applied within that period. The same view was taken by another coordinate Bench in Gopal Goyal (supra). CONCLUSION

25. For the reasons recorded above, these writ petitions are allowed in the following terms.

(i) Paragraph 4(i) of the Order dated 28.09.2021 bearing F. No. 299/22/2021-Dir(Inv.III)/174, and the corresponding condition in the Press Release dated 07.09.2021, are read down. The requirement that an assessee must have been eligible to file a settlement application as on 31.01.2021 shall not operate against an assessee who held a live and unadjudicated notice under Section 153A or Section 143(2) of the Act on the date on which he filed his application provided the application was filed on or before 30.09.2021.

(ii) The order dated 31.08.2023 passed by the Interim Board for Settlement is quashed to the extent that it rejects the settlement applications of the petitioners for the assessment years in question.

(iii) The settlement applications of the petitioners for those assessment years shall be treated as pending applications before the Interim Board for Settlement. The Interim Board shall decide them on merits and in accordance with law, after affording the petitioners an opportunity of hearing.

(iv) The notices dated 12.09.2024 issued under Section 142(1) of the Act, and any assessment order passed pursuant thereto, shall not be given effect to and shall abide by the outcome of the proceedings before the Interim Board. This is in continuation of the interim protection already granted by this Court on 04.02.2025.

(v) It is clarified that this Court has expressed no opinion on the merits of the settlement applications or on the correctness of any disclosure made therein. All contentions on merits are left open to both sides before the Interim Board.

(vi) In view of the relief granted on the construction of the Order dated 28.09.2021, it is not necessary to examine the challenge to the constitutional validity of Section 245C(5) of the Act. That question is left open.

26.There shall be no order as to costs. All pending applications stand disposed of.

Notes:

¹ (1999) 237 ITR 889 (SC)

² 1994 Supp (1) SCC 310

³ (2008) 3 SCC 597

⁴ (2008) 13 SCC 1

⁵ (1987) 3 SCC 516

⁶ (2017) 10 SCC 800

⁷ (2024) 461 ITR 423 (Mad)

⁸ 2024 SCC OnLine Bom 981

⁹ 2024 SCC OnLine Bom 2507

¹⁰ (2024) 468 ITR 665

¹¹ 2024 SCC OnLine Cal 11543

¹² 2024 SCC OnLine Ker 5549

¹³ 2025 SCC OnLine Ker 3967

¹⁴ 2025: RJ-JP: 13797-DB

¹⁵ 2025: RJ-JP: 39395-DB

¹⁶ (2017) 9 SCC 1

¹⁷ (2013) 8 SCC 368

¹⁸ (2020) 14 SCC 785

¹⁹ (2017) 11 SCC 42

²⁰ (1987) 3 SCC 516