Simply because Settlement Commission’s order not liked by ITD, it would not invite action by High Court

Simply because order of Settlement Commission was not liked by department, it would not invite different opinion by the High Court unless order is questioned on merits or manner of discharge or on perversity

ABCAUS Case Law Citation:
ABCAUS 2830 (2019) (03) HC

In the instant case, the Income Tax Department (ITD) had filed a Writ Petition against the order passed by the Income Tax Settlement Commission (the Commission), in exercise of powers vested under section 245 D(4) of the Income Tax Act, 1961 (the Act) allowing the settlement application filed by the respondent.

Chapter XIX A of the Act provides for a special procedure for settlement of any dispute and inter alia enables any assessee, whose assessment proceeding is pending, a right to invoke the provisions by filing an appropriate application before ‘the Commission’ for settlement under section 245C.

The Commission after satisfying itself as to the validity of said application can allow it in exercise of powers vested under section 245D(1) of the Act and then call upon the Department through the Commissioner to submit its report under Rules 9 of the Income-Tax Settlement Commission (Procedure) Rules, 1997 (the Rules) under section 245D(2B) of the Act.

The Commission on consideration of the report may declare the application of the assessee ‘invalid’ or may allow it to proceed under section 245D(3) as ‘not invalid’ and in such case the Commission shall fix the date for hearing under section 245D(4).

On the date so fixed, the Commission after giving an opportunity of hearing to the assessee to disclose such income which he failed to disclose while filing the return and an equal opportunity to the Commission to rebut the same because a copy of such application disclosing full particulars of the income including those which the assessee failed to disclose in his returns had already been brought to the notice of the Commissioner to invite his report under Rules 9, pass appropriate orders.

The object behind the Scheme of settlement provided under Chapter XIXA is to bring about a settlement in the matter without relegating the parties to the normal chain of statutory procedure of appeal, revision etc.

In the instant case, an application under section 245C (1) was filed by the respondent which was accepted by the Commission as ‘valid’ by order passed under section 245D(1) of the Act.

The case of the ITD was that the assessee filed a bulky paper-book a day before the hearing took place without giving copy to the department for inviting their stand thereon and which default was overlooked by the Commission & has consequently prejudiced the case of the department in responding to the issues whatsoever raised in the paper book.

It was on this sole ground that the order passed by ‘the Commission’ was being questioned. It was argued that even though this paper-book was filed a day before the hearing took place but nowhere in the impugned order this position had been noted by the Commission.

The Hon’ble High Court observed that without any doubt it is a matter of settled procedure that any pleading filed before an authority performing quasi judicial functions, is to be served on the other side in advance. The rules framed for regulating discharge by any quasi judicial authority do have this mandatory condition and the proceedings before ‘the Commission’ is no exception.

The Hon’ble High Court further stated that In case a copy of such pleading is not served on the other side, the quasi judicial authority would be well within its jurisdiction to ignore the same and, perhaps, that was why the order of the Commission did not take notice of the bulky paper-book, if any, filed by the assessee, so complained of, by the department.

The Hon’ble High Court opined that this could not give a cause of action to the department to maintain the writ petition, even otherwise, there was nothing in the pleadings which would demonstrate that the report of the Commissioner filed under Rule 9 of the Rules was ignored by the Commission or the objections raised, had not been considered.

The Hon’ble High Court stated that simply because the order of the Commission was not to the liking of the department, it would not invite a different opinion by the Court because neither the order had been questioned on merits nor on manner of discharge or on perversity.

Accordingly the Hon’ble High Court dismissed the writ petition.

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