Case Law Details

Case Name : Commissioner of Income Tax Vs M/s Sai Prasad Properties Limited (Bombay High Court at Goa)
Appeal Number : Writ Petition No.605 of 2014
Date of Judgement/Order : 07/05/2015
Related Assessment Year :
Courts : All High Courts (4314) Bombay High Court (778)
Shivali Bardoliya

Shivali Bardoliya

Brief of the Case:

It was held by Hon’ble High Court of Bombay and Goa in the case of CIT V/s M/s Sai Prasad Properties Limited that an application under section 245D(2C) of the Act has to be disposed of after considering the objections raised by CIT and supported by valid reasons for not accepting the objection raised by CIT in its report.

Facts of the Case:

This petition challenges the order dated 19/05/2014 passed under section 245D(2C) of the Income Tax Act by Income Tax Settlement Commission dated 19/05/2014 mentioning therein the application filed by the respondent for assessment years 2011-12 to 2013-14 not to be invalid and is allowed to be proceeded further in accordance with law.

In response of the settlement application filed by the respondent-assessee on 27/03/2014, the petitioner-revenue furnished a report on 29/04/2014 praying the application as invalid on the grounds of jurisdiction including the failure to disclose truly and fully all facts before the settlement commission and also no additional income has been declared in the application. Further, for AY 2011-12, no assessment proceedings were pending before AO on the date of application and thus there was failure on the part of applicant to make true and full disclosure in its application.

Question of Law:

Whether application U/s 245D(2C) is allowed to be proceeded with without giving due consideration to the objections raised by the CIT in his report?

Contention of the Revenue:

It was contended by the Revenue that no reasons are indicated as to why the objections raised by CIT are not acceptable to the Settlement Commission in its report U/s 245D(2C). It was also held in the case of Commissioner of Income Tax V/s. ITSC reported in 365 ITR 87 that an application under section 245D(2C) of the Act has to be disposed of after considering the objections raised by revenue supported by some modicum of reasons. In the absence of some consideration of objections, the entire exercise under section 245D(2C) of the Act would render the provisions reluctant.

Contention of the Assessee:

The ld. Counsel for assessee fairly submits that he has no objection if the impugned order is set aside and the issue is restored to the Settlement Commission for fresh disposal. However, he points out that the CIT has issued notice under section 271D of the Act seeking to impose penalty. It was submitted by the assessee that when an application under section 245C of the Act has been allowed to be proceeded under section 245D(1) of the Act then all the powers and functions of authorities under the Act are vested in the Settlement Commission. The authorities under the Income Tax Act have no jurisdiction to issue any notice under the Act for assessment/penalty till it either rejects the application or dispose of the application.

Held by High Court:

It was held by High Court that the petition is disposed of by setting aside the impugned order dated 19/05/2014 and restoring the application dated 27/03/2014 before settlement commission for fresh disposal under section 245D(2C) of the Act in accordance with the principle of natural justice. The High court also states that no further proceedings would be taken in respect of penalty notices already issued and no further penalty notices would be issued to the petitioner and this position will continue till the Settlement Commission either reject the application or dispose it off. No order as to cost.

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