Case Note & Summary
The Commissioner of Income Tax filed a writ petition under Article 226 of the Constitution challenging an order dated 31 December 2012 passed by the Income Tax Settlement Commission under Section 245D(2C) of the Income Tax Act, 1961. The Settlement Commission had rejected the revenue's prayer to declare the settlement application filed by the respondent-assessee, M/s. Chirag Construction RMC, as invalid. The assessee had filed its return for Assessment Year 2010-11 on 26 September 2010. The time to issue a notice under Section 143(2) expired on 30 September 2011, and no such notice was issued. On 14 November 2012, the assessee filed a settlement application for Assessment Years 2010-11, 2011-12, and 2012-13. The Settlement Commission allowed the application to proceed on 19 November 2012. The Commissioner objected, arguing that for Assessment Year 2010-11, no assessment was pending as the time to issue notice under Section 143(2) had expired. The Settlement Commission rejected this objection. The revenue contended that the term 'pending' in Section 245A(b) requires a live assessment proceeding, and since no notice under Section 143(2) was issued, there was no pending assessment. The assessee argued that the return itself constitutes a pending proceeding until the assessment is completed or time-barred. The Court analyzed Section 245A(b) and held that the definition of 'case' includes any proceeding for assessment pending before an Assessing Officer. The Court noted that the assessment for 2010-11 was still pending as the time for completion under Section 153 had not expired (expiring on 31 May 2013). The Court distinguished between the initiation of assessment (by notice under Section 143(2)) and the pendency of assessment. It held that once a return is filed, the assessment proceeding is pending until it is completed or becomes time-barred. The Court also referred to the object of the settlement provisions to reduce litigation and held that the Settlement Commission had correctly exercised its jurisdiction. The petition was dismissed.
Headnote
A) Income Tax - Settlement Commission - Jurisdiction - Pending Assessment - Section 245A(b), 245C, 245D(2C) Income Tax Act, 1961 - The issue was whether the Settlement Commission could entertain a settlement application for an assessment year where the time to issue a notice under Section 143(2) had expired, resulting in no pending assessment. The Court held that the term 'pending' in Section 245A(b) includes cases where the return has been filed and the period for completion of assessment has not expired, and that the Settlement Commission has jurisdiction to proceed with the application. (Paras 1-18)
Issue of Consideration
Whether the Settlement Commission has jurisdiction to entertain a settlement application under Section 245C of the Income Tax Act, 1961, when the time for issuing a notice under Section 143(2) has expired and no assessment is pending before the Assessing Officer.
Final Decision
The High Court dismissed the writ petition, upholding the order of the Settlement Commission dated 31 December 2012. The Court held that the Settlement Commission had jurisdiction to entertain the settlement application for Assessment Year 2010-11 as the assessment was pending within the meaning of Section 245A(b) of the Income Tax Act, 1961.
Law Points
- Settlement Commission jurisdiction
- pending assessment
- Section 245A(b) Income Tax Act
- 1961
- Section 143(2) notice expiry
- Section 245D(2C) order
Case Details
2013 LawText (BOM) (08) 53
WRIT PETITION NO.1266 OF 2013
MOHIT S. SHAH, C.J., M.S. SANKLECHA, J.
Mr. A. R. Malhotra with Mr. N. A. Kazi, for the Petitioner. Mr. R. A. Dada, Sr. Advocate with Mr. Sashi Tulsiyani and P. C. Tripathi, for Respondent No.2.
The Commissioner of Income Tax City-15
1. Income Tax Settlement Commission, Additional Bench, 2. M/s. Chirag Construction RMC
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Nature of Litigation
Writ petition under Article 226 of the Constitution challenging an order of the Income Tax Settlement Commission rejecting the revenue's objection to the validity of a settlement application.
Remedy Sought
The revenue sought to quash the order dated 31 December 2012 passed by the Settlement Commission under Section 245D(2C) and to declare the settlement application filed by the assessee as invalid.
Filing Reason
The revenue contended that the Settlement Commission lacked jurisdiction to entertain the settlement application for Assessment Year 2010-11 because no assessment was pending as the time to issue notice under Section 143(2) had expired.
Previous Decisions
The Settlement Commission had passed an order under Section 245D(1) on 19 November 2012 allowing the settlement application to proceed, and later rejected the revenue's objection by order dated 31 December 2012 under Section 245D(2C).
Issues
Whether the Settlement Commission has jurisdiction to entertain a settlement application under Section 245C of the Income Tax Act, 1961, when the time for issuing a notice under Section 143(2) has expired and no assessment is pending before the Assessing Officer.
Submissions/Arguments
Revenue: The term 'pending' in Section 245A(b) requires a live assessment proceeding. Since no notice under Section 143(2) was issued, there was no pending assessment for AY 2010-11. The settlement application for that year was invalid.
Assessee: The return filed constitutes a pending proceeding until the assessment is completed or time-barred. The assessment for AY 2010-11 was still pending as the time for completion under Section 153 had not expired. The Settlement Commission correctly assumed jurisdiction.
Ratio Decidendi
The term 'pending' in Section 245A(b) of the Income Tax Act, 1961, includes cases where a return has been filed and the period for completion of assessment under Section 153 has not expired, even if no notice under Section 143(2) has been issued. The Settlement Commission has jurisdiction to entertain a settlement application in such cases.
Judgment Excerpts
By this Petition under Article 226 of the Constitution of India, the revenue challenges the order dated 31 December 2012 passed by respondent No.1 Settlement Commission under Section 245D(2C) of the Income Tax Act, 1961 rejecting the petitioner's prayer to declare the Settlement Application filed by respondent No.2 applicant on 14 November 2012 for Assessment Year 2010-11 as invalid.
The time/period to issue a notice under Section 143(2) of the Act for Assessment Year 2010-11 expired on 30 September 2011. Admittedly, no notice under Section 143(2) of the Act has been issued till 30 September 2011 or even thereafter.
Procedural History
The assessee filed its return for AY 2010-11 on 26 September 2010. No notice under Section 143(2) was issued by the expiry date of 30 September 2011. On 14 November 2012, the assessee filed a settlement application for AYs 2010-11, 2011-12, and 2012-13. The Settlement Commission passed an order under Section 245D(1) on 19 November 2012 allowing the application to proceed. The Commissioner submitted a report under Section 245D(2B) on 24 December 2012 objecting to jurisdiction for AY 2010-11. The Settlement Commission rejected the objection by order dated 31 December 2012 under Section 245D(2C). The revenue filed the present writ petition on 8 February 2013.
Acts & Sections
- Income Tax Act, 1961: 245A(b), 245C, 245D(1), 245D(2B), 245D(2C), 143(2), 143(3), 153
- Constitution of India: Article 226
