JAGDISH TRANSPORT CORPORATION & ORS versus UNION OF INDIA AND ORS. on 28 April 2023

1. Feeling aggrieved and dissatisfied with the impugned judgmentand order dated 29.03.2017 passed by the High Court of Judicature atAllahabad, Lucknow Bench Lucknow, by which the Division Bench ofthe High Court has dismissed the Writ Petition No. 4858 of 2008 preferredby the appellants herein, the original writ petitioners have preferred theCpresent Appeals. The subsequent order passed by the High Courtdismissing the review application is also the subject-matter of the presentAppeals.

2. The facts leading to the present Appeals in a nut shell are asunder:-D

i)That a search was conducted under Section 132 of theIncome Tax, Act, 1961 (for short “the Act”) on the businesspremises as well as the residence of the partners.

ii)Notices under Section 153A were issued to all the appellantsEfor the Assessment Years 1998-1999 to 2004-2005.

iii)The return of income was filed by the appellants underSection 153A of the Act for the aforesaid AssessmentYears.

iv)An application under Section 245C(1) of the Act was filedFby the appellants before the Income Tax SettlementCommission (for short “the Settlement Commission”).

v)As per Section 245HA, inserted by the Finance Act, 2007,the application was to be decided by the SettlementCommission on or before 31.03.2008, failing which theGproceedings before the Settlement Commission shall standabated.

vi)The High Court, by way of an interim order, directed theSettlement Commission to dispose of the application underSection 245D of the Act by 31.03.2008.H

JAGDISH TRANSPORT CORPORATION & ORS. v. UNION OFINDIA AND ORS. [M. R. SHAH J.]

vii)By order dated 31.03.2008, the Settlement Commissiondisposed of the proceedings and settled the undisclosedincome at Rs. 59,00,000/-. The Settlement Commission alsopassed an order that the CIT/AO may take such action asappropriate in respect of the matters, not placed before theCommission by the applicant, as per the provisions of Section245F(4) of the Act. The Settlement Commission passedthe following order:- “In the abovementioned cases, the Hon’ble High Courtof Uttar Pradesh at Lucknow has passed orders dated19.03.2008 directing the Settlement Commission tocomplete the proceedings u/s 245D(4) by 31.03.2008.

2. The Rule 9 Report in this case has been received.

3. In all, the Principal Bench of the Commission has till26.3.2008 received more than 325 orders from variousHigh Courts in the month of March, 2008, directing thePrincipal Bench to complete the cases by 31.3.2008.

4. This would involve more than 1500 assessments. TheSettlement Commission deals only with the assessmentswhich involve complexity of investigation and theapplication is intended to proved quietus to litigation. Forexample, in one group of cases where 23 applications areinvolved, the paper book, which has been filed before theSettlement Commission runs into thirty thousand pages.It goes without saying that sufficient and properopportunity is required to be given both to the applicantand the Commissioner of Income Tax for arriving at aproper settlement.

5. At this juncture, it is not practicable for the commissionto examine the records and investigate the case for propersettlement. Even giving adequate opportunity to theapplicant and the department, as laid down in section245(D)(4) of Income Tax Act, 1961 is not practicable.However, to comply with the directions of the Hon’bleHigh Court, we hereby pass an order u/s 245D(4) ofIncome Tax Act, 1961, as under:

ABC

DEF

G

H

6. The undisclosed income is settled as under:

A

B

7. The CIT/AO may take such action as appropriate inrespect of the matters, not placed before the Commissionby the applicant, as per the provisions of section 245F(4)of IT Act ,1961.

C

8. Prayer for granting immunity from penalty andprosecution under all Central Acts. In view of thediscussions in preceding paras, we grant immunity fromprosecution and penalty under the Income Tax Act onlyas regards issues arising from the application and coveredby this Order.

D

9. Interest leviable, if any, shall be charged as per law.

E

10. It is settled that the amount of tax along with interestshall be paid by the applicants within 35 days from thedate of receipt of intimation from the Assessing Officer.

11. In view of the statutory time limit prescribed u/s 245D(4A)of the Act, the Settlement Commission directs theCommissioner of Income Tax to compute the totalincome, income tax, interest and penalty, if any, payableas per this order and communicate to the applicantimmediately along with the demand notice and challanunder intimation to this office.

F

G

12. In case of failure to adhere to the scheme of payment,the immunity granted under Section 245(H)(1) shall bewithdrawn in terms of sub-section (1A) of the saidsection.”

viii)That thereafter, in the light of the observations made inHpara 7 by the Settlement Commission, the A.O. issued the JAGDISH TRANSPORT CORPORATION & ORS. v. UNION OFINDIA AND ORS. [M. R. SHAH J.]

show cause notice for re-assessment on the varioustransactions which are detected but were not disclosed bythe appellants before the Settlement Commission.

ix)The show cause notice was the subject-matter of WritPetition before the High Court. However thereafter, duringthe pendency of the proceedings, the A.O. passed theAssessment Order, which was challenged before the HighCourt by way of an amendment.

x)By the impugned order, the Division Bench of the HighCourt has dismissed the writ petition on the ground that theorder passed by the Settlement Commission dated31.03.2008 was a nullity as the Settlement Commission itselfobserved that it was not practicable for the Commission toexamine the records and investigate the case for properSettlement and even giving adequate opportunity to theapplicant and the Department, as laid down in Section245D(4) of the Act is not practicable.

3. Having heard learned counsel appearing for the respectiveparties and considering the order passed by the Settlement Commissiondated 31.03.2008 and the manner in which the Settlement Commissiondisposed of the application under Section 245, as such, the High Court isabsolutely justified in observing that the order passed by the SettlementCommission is a nullity and cannot be said to be an order in the eye oflaw. It is required to be noted that, as such, the Settlement Commissionspecifically observed in para 5 of the order dated 31.03.2008 that it isnot practicable for the Commission to examine the records and investigatethe case for proper Settlement and that even giving adequate opportunityto the applicant and the Department, as laid down in section 245D(4) ofthe Act is not practicable. However thereafter, the SettlementCommission passed an order to comply with the directions of the HighCourt to dispose of the application on or before 31.03.2008. If that be so,the High Court in fact ought to have remitted the matter back to theSettlement Commission to pass a fresh order in accordance with lawand on merits after following due procedure as required under Section245D(4) of the Act.

4. In view of the above and for the reasons stated hereinabove,we set aside the impugned judgment and order passed by the High Court.

A

B

C

D

E

F

G

H

AWe set aside the subsequent assessment/re-assessment order passedby the A.O, which was the subject-matter of writ petition before theHigh Court. We also set aside the order passed by the SettlementCommission dated 31.03.2008 and remand the matter to the SettlementCommission for a fresh decision. It is reported that the SettlementCommission has been wound up and the matters pending before theBSettlement Commission are being adjudicated and decided by the interimBoard constituted under Section 245AA of the Act. In view of the aboveposition, the matter would be remitted to the interim Board with a requestthat the matter to be taken up expeditiously and would be preferablydecided within a period of six months from the date of first hearing andCa reasoned order would be passed.

5. In view of the above and for the reasons stated above, thepresent appeals are accordingly allowed. The matter is remitted to theSettlement Commission/interim Board for a fresh decision in accordancewith law and on its own merits and after following due procedure asDrequired under Section 245 of the Act. It will be open for the interimBoard to call for a fresh report under Rule 9 and thereafter to pass thefinal order on the application, after following due procedure as requiredunder Section 245D(4) of the Act.

The present Appeals are, accordingly, allowed to the aforesaidEextent. No costs.

Divya Pandey