After passing the order by the Settlement Commissioner, no power vests on the A.O. or any other authority – HC

High Court of Allahabad

CIT Vs Diksha Singh

IT Appeal Nos. 25 to 29 and 30 to 38 of 2011

Devi Prasad Singh and Satish Chandra, JJ

24 August 2011

JUDGEMENT

Devi Prasad Singh, J:-

1. I have been privileged to read the judgement prepared by brother Justice Dr. Satish Chandra. I agree with the final verdict in the present appeal but respectfully, I express my separate opinion.

We have heard Shri D.D. Chopra, learned counsel for the appellants.

2. After filing return in response to the notice issued under section 1 53A and 1 53C of the Income-tax Act (in short ‘the Act’) for the assessment years 2000-01 to 2006-07, the assessee moved an application before the Settlement Commission on 31-5-2007 in pursuance to the power conferred by section 245C of the Act. The Settlement Commission while allowing the application and settling the dispute for the assessment year in question under section 245D(4) by order dated 31-5-2008 with regard to undisclosed income of the assessee, made observation that the CIT/AO may take such action as appropriate in respect of the matter not placed before the Commission by the assessee in terms of provision contained in section 245F(4) of the Income-tax Act, 1961. The Tribunal relying upon a recent Division Bench judgement of this Court reported in Smt. Neeru Agarwal v. Union of India [2011] 330 ITR 422 (All.) held that the dispute adjudicated by the settlement commission shall be conclusive and final in terms of provision contained in section 245-I of the Act, hence Assessing Officer had committed substantial illegality by reopening the issue on the alleged ground that certain facts is not disclosed.

3. Section 245C of the Act empowers the assessee to move an application at any stage of a case relating to him that full and true disclosure of income, which has not been disclosed before the Assessing Officer subject to rider contained in section 245C of the Act. The Settlement Commission may allow or reject the application, but in any case in view of provision contained in section 245C of the Act, the application moved under sub-section (1) of the said section, cannot be allowed to be withdrawn by the applicant.

4. The application so moved under section 245C of the Act should be processed by the Settlement Commission in view of procedure prescribed in section 245D of the Act within the specified period provided therein. The provision contained in section 245D provides that the Settlement Commission shall give opportunity to the applicant and to the Settlement Commission, which includes personal hearing or hearing through representative and then pass such order as it thinks fit on the matters covered by the application, which includes any other matter relating to case not covered by the application but referred to in the report of Commissioner, Income-tax. Thus, it shall be obligatory on the part of the Commissioner, Income-tax while submitting its report to bring entire material facts before the Settlement Commission to avoid any multiplicity of litigation or concealment of facts by the assessee. This section further provides that the settlement shall be void if it is subsequently found by the Settlement Commission that it has been obtained by fraud or misrepresentation of facts. In the event of non-payment of tax, the settlement shall be void and assessee shall be liable to pay simple interest for every month or part of the month on the amount remaining unpaid from the date of expiry of 35 days. In case the settlement becomes void as provided under sub-section (6) of section 245D of the Act, then the proceedings with respect to the matters covered by the settlement shall be deemed to have been revived from the stage at which the application was allowed to be proceeded with by the Settlement Commission and the income-tax authority concerned, may, notwithstanding anything contained in any other provision contained in the Act, completes such proceedings at any time before the expiry of two years from the end of financial year in which the settlement became void. It shall be appropriate to re-produce 245D of the Act, which is as under:-

“Section 245D:-

(1) On receipt of an application under section 245C, the Settlement Commission, shall, within seven days from the date of receipt of the application, issue a notice to the applicant requiring him to explain as to why the application made by him be allowed to be proceeded with, and on hearing the applicant, the Settlement Commission shall, within a period of fourteen days from the date of the application, by an order in writing, reject the application or allow the application to be proceeded with:-

Provided that where no order has been passed within the aforesaid period by the Settlement Commission, the application shall be deemed to have been allowed to be proceeded with.