30. Pr.
CIT vs. IT Settlement Commission; [2019]
418 ITR 339 (Bom.) Date
of order: 28th February, 2019 A.Ys.:
2008-09 to 2013-14
Settlement
of cases – Sections 245C, 245D(2C) and 245D(4) of ITA, 1961 – Settlement Commission
– Jurisdiction – Applications filed for settlement of cases for several
assessment years allowed to be proceeded with – Order directing that
application for years in which nil or no disclosure of additional income or
loss was declared not to be proceeded with – Order giving retrospective effect
on request of Department – Settlement Commission has no jurisdiction to
pre-date its order
The assessee applied to the Settlement Commission for
settlement of its cases u/s 245C of the Income-tax Act, 1961 for the A.Ys.
2008-09 to 2013-14 and did not disclose an additional income in some of the
years. The Settlement Commission passed an order dated 29th January,
2015 u/s 245D(2C) wherein it held that the five applicants had made a true and
full disclosure, that there were no technical objections from the Department,
that the five applicants had complied with the basic requirement u/s 245C(1)
and that all the applications were valid and allowed them to be proceeded with.
Thereafter, the Department contended before the Settlement Commission that the
settlement applications for the assessment years in which no additional income
was disclosed by the assessee should be treated as invalid u/s 245D(2C). The
Settlement Commission thereupon passed an order on 31st May, 2016
u/s 245D(4) of the Act excluding from the purview of the settlement those
assessment years where ‘nil’ or ‘no disclosure of additional income’ was made
u/s 245C(1) or where the disclosure was a loss, and directing that the
settlement applications for those assessment years were not to be proceeded
from the stage of section 245D(2C) and that such declaration was effective from
29th January, 2015. The Income Tax Department filed a writ petition
and challenged this order.
The
Bombay High Court allowed the writ petition and held as under:
‘i) Once the Settlement Commission had passed an
order u/s 245D(2C), whether legally permissible or not, it had no authority or
jurisdiction to pre-date such an order. While giving retrospective effect to
its order of invalidation it had acted without jurisdiction.
ii) Under no circumstances could it have made a
declaration of invalidity on 31st May, 2016 giving it a retrospective
effect of 29th January, 2015. The portion of the order giving
retrospective effect to the declaration of invalidity of the settlement
application was severable from the main order of invalidation. While therefore,
striking down the severable portion of the order as illegal, the principal
declaration made by the Commission was not disturbed.
iii) The direction giving retrospective effect to
the order was set aside and the order passed by the Settlement Commission on 31st
May, 2016 would take effect from such date.’
