Case Note & Summary
The petitioner, Mahesh Gupta, as Karta of Mahesh Gupta HUF, challenged an order dated 11 January 2008 passed by the Income Tax Settlement Commission (Respondent No.1) under Section 245HA of the Income Tax Act, 1961, which held that the petitioner's applications under Section 245-C of the Act for the Assessment Years 2002-03, 2003-04, and 2004-05 had abated. The petitioner had filed the settlement applications on 17 May 2006 disclosing additional income and tax thereon. A survey under Section 133-A had been conducted on 4 November 2004. The Commissioner of Income Tax forwarded a report on 17 July 2006. The Settlement Commission passed the impugned order on the ground that the final order was not passed within the time allowed under Section 245HA. The High Court examined the provisions of Section 245HA and noted that abatement is not automatic; the Commission must consider whether the delay in passing the final order was attributable to the applicant and whether the applicant had complied with all conditions and co-operated. The Court found that the impugned order did not record any such findings and was therefore unsustainable. The Court set aside the order and remitted the matter back to the Settlement Commission for fresh consideration in accordance with law, directing the Commission to pass a fresh order within six months. The petition was allowed.
Headnote
A) Income Tax - Settlement Commission - Abatement of Application - Section 245HA of Income Tax Act, 1961 - The Settlement Commission passed an order under Section 245HA holding that the applications filed by the petitioner under Section 245-C had abated on the ground that the final order was not passed within the time allowed. The High Court held that the Commission failed to consider whether the delay was attributable to the applicant and whether the applicant had complied with all conditions and co-operated. The order was set aside and the matter remitted back for fresh consideration. (Paras 1-14)
B) Income Tax - Settlement Commission - Powers - Section 245HA of Income Tax Act, 1961 - The provision for abatement under Section 245HA is not automatic; the Commission must examine the reasons for delay and the conduct of the applicant. The High Court held that the Commission's order was unsustainable as it did not record any finding that the petitioner had failed to co-operate or comply with conditions. (Paras 6-14)
Issue of Consideration
Whether the order of the Income Tax Settlement Commission holding that the petitioner's applications under Section 245-C of the Income Tax Act, 1961 had abated under Section 245HA of the Act is valid and sustainable in law.
Final Decision
The High Court allowed the writ petition, set aside the order dated 11 January 2008 passed by the Income Tax Settlement Commission under Section 245HA of the Income Tax Act, 1961, and remitted the matter back to the Settlement Commission for fresh consideration in accordance with law. The Commission was directed to pass a fresh order within six months from the date of the judgment.
Law Points
- Abatement of settlement applications under Section 245HA of Income Tax Act
- 1961
- cannot be automatic if delay in passing final order is not attributable to the applicant
- Settlement Commission must consider whether applicant has complied with conditions and co-operated
- Writ jurisdiction under Article 226 available against orders of Settlement Commission
Case Details
2023 LawText (BOM) (07) 126
Writ Petition No.947 of 2009
K. R. Shriram, Firdosh P. Pooniwalla
Mr. Ajay R. Singh with Mr. Akshay Pawar i/b. Mr. S. J. Mehta for Petitioner; Mr. Suresh Kumar for Respondents
Mahesh Gupta, Karta of Mahesh Gupta HUF
Income Tax Settlement Commission, Joint Commissioner of Income Tax, Union of India
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Nature of Litigation
Writ Petition under Article 226 of the Constitution of India challenging an order of the Income Tax Settlement Commission under Section 245HA of the Income Tax Act, 1961.
Remedy Sought
The petitioner sought quashing of the order dated 11 January 2008 passed by the Income Tax Settlement Commission holding that the petitioner's applications under Section 245-C of the Act had abated.
Filing Reason
The petitioner filed settlement applications under Section 245-C of the Income Tax Act, 1961 for Assessment Years 2002-03, 2003-04, and 2004-05, disclosing additional income. The Settlement Commission passed an order under Section 245HA holding that the applications had abated because the final order was not passed within the time allowed.
Previous Decisions
The Income Tax Settlement Commission passed an order dated 11 January 2008 under Section 245HA of the Income Tax Act, 1961, holding that the applications filed by the petitioner under Section 245-C had abated.
Issues
Whether the order of the Income Tax Settlement Commission under Section 245HA of the Income Tax Act, 1961, holding that the petitioner's settlement applications had abated, is valid and sustainable in law.
Submissions/Arguments
The petitioner argued that the Settlement Commission failed to consider that the delay in passing the final order was not attributable to the petitioner and that the petitioner had complied with all conditions and co-operated.
The respondents argued that the abatement was automatic under Section 245HA as the final order was not passed within the time allowed.
Ratio Decidendi
The abatement of settlement applications under Section 245HA of the Income Tax Act, 1961 is not automatic. The Settlement Commission must consider whether the delay in passing the final order was attributable to the applicant and whether the applicant has complied with all conditions and co-operated. An order under Section 245HA without such consideration is unsustainable.
Judgment Excerpts
The present Writ Petition challenges an Order dated 11th January, 2008 passed by Respondent No.1, under Section 245HA of the Income Tax Act, 1961 (the Act), holding that the Applications filed by the Petitioner under Section 245-C of the Act had abated.
The Petitioner is the Karta of Mahesh Gupta HUF.
A survey action under Section 133-A of the Act was conducted on 4th November 2004 at the office premises of the Petitioner at 18, Surti Chambers, in Mumbai, and also at Silvasa.
The Petitioner filed an Application dated 17th May, 2006, under Section 245-C of the Act, for the Assessment Years 2002-03, 2003-04 and 2004-05.
The Commissioner of Income Tax-XIV, Mumbai, forwarded his Report dated 17th July 2006 in the prescribed proforma under Section 245-C of the Act.
Procedural History
The petitioner filed settlement applications under Section 245-C of the Income Tax Act, 1961 on 17 May 2006. The Commissioner of Income Tax forwarded a report on 17 July 2006. The Income Tax Settlement Commission passed an order under Section 245HA on 11 January 2008 holding that the applications had abated. The petitioner filed the present writ petition in 2009 challenging that order. The High Court delivered judgment on 14 July 2023 allowing the petition.
Acts & Sections
- Income Tax Act, 1961: 245-C, 245HA, 133-A
