By TIOL News Service

AHMEDABAD, SEPT 20, 2017: THE issue before the Bench is - Whether the amended provisons mandate access to the Revenue to all the materials declared before the SETCOM, the HC can still prevent the Revenue from doing so. NO is the verdict.

Facts of the case

The Assessee-partnership firm filed an application u/s 245D(4) to the Commission for settlement of its block period assessments. The final order was reserved. During the pendency of the said proceeding, certain amendments were made in Chapter XIXA pertaining to settlement of cases. As per the amendments, the Assessee was required to pay additional tax and interest on the income disclosed before the Commission. However, the statute did not provide any final time limit for such payment, but, later it provided for abatement of the such settlement proceedings. Since, the settlement application was not disposed of before the amendments were made for abatement of pending proceedings, the Commission wrote a letter to the Assessee giving an opportunity to be heard. In reply, the Assessee requested the Commission to forward the orders passed in the settlement application u/s 245D(4).

The Settlement Commission passed an order by which it declared that the proceedings had abated due to non-compliance by the Assessee with the provisions of section 245D(2D) and directed the AO to dispose of the case in accordance with the provisions of sub-sections 2, 3 and 4 of section 245HA.

In Writ, the High Court held that,

++ the defence that the Assessee was not aware about the pendency of such proceeding ignores the documents on record. On 13.7.2007, the Settlement Commission had conveyed to the Assessee that there would be a further hearing on 7.8.2007. The footnote though was scored out in the copy forwarded to the Assessee obviously, because this did not concern the Assessee, did contain a reference to the CIT to state on the next date of hearing whether the requirement of payment of tax and interest as contained in section 245D(2D) has been fulfilled by the Assessee. As is evident from the Assessee's letter dated 31.7.2007 written to the Settlement Commission in response to the said communication, the Assessee received the same on 13.7.2017 itself;

++ well before the final date of 31.7.2017 for payment of additional tax and interest, the Assessee at any rate was aware that the proceedings before the Settlement Commission was not yet disposed of. The Assessee therefore had the responsibility to pay the tax and interest as provided in 245D(2D). The Assessee failed to comply with such requirement. In terms of section 245HA(1) therefore, the settlement proceeding would abate. This was automatic. The Settlement Commission by its judgment merely made a declaration of abatement which had even otherwise come about by virtue of operation of law. The Settlement Commission had no other alternative;

++ the alternative request of preventing the I-T authority from using the material on record before Settlement Commission cannot be accepted in terms of plain language used in section 245HA(3). As noted, the Assessee has not challenged the vires of this provision. In any case in an independent judgment we have upheld the same relevant provision, portion of which is noted in this judgment. In the result, petition is dismissed.

(See 2017-TIOL-1967-HC-AHM-IT)