I-T - Settlement Commission cannot apply provision for abatement on assessee's applications without recording reasons attributable for such delay: HC
By TIOL News Service
AHMEDABAD, MAY 09, 2018: THE ISSUE IS - Whether the Settlement Commission can apply the provision for abatement on assessee's applications without even recording any reasons attributable to the assessee for such delay. NO IS THE VERDICT.
Facts of the case:
The assessee company, involved in manufacturing and exporting of diamonds. The assessee had filed applications for settlement for the block period in the year 2003 which remained pending before the Commission. During the pendency, certain amendments were made in the chapter pertaining to settlement of cases by virtue of which a settlement application would abate if not disposed of within the prescribed time. Accordingly, the assessee had preferred various petitions before the High Court by stating that by virtue of operation of the statutory provisions, their settlement applications were likely to abate shortly. The assessee had also submitted that they had not attributed to any delay in disposal of the settlement applications. The Court stated that it was a statutory duty of the Settlement Commission to dispose of an application which was filed before it. Further, the Court also declared that unless due to any reasons attributable to the assessee, the Settlement Commission was prevented from fulfilling the said duty and only in such a case the proceedings would abate on the date specified u/s 245HA(1)(iv). Accordingly, the Court had passed interim order staying the provisions for abatement of proceedings for the assessee's settlement.
After the Court's order was passed, two important developments took place. Firstly, the Apex Court disposed of the case of Prabhu Dayal without a decision on the controversy at hand. Secondly, the Bombay High Court in case of Star Television News Ltd. considered a similar challenge to the same statutory provisions providing for abatement of settlement proceedings. The said judgment of the Bombay High Court was carried by the Revenue to the Supreme Court wherein, the HC's order was approved. Thereafter, the Settlement Commission stated that the assessee had earlier approached the HC and agreed to abide by the judgment of the Apex Court in case of Prabhu Dayal wherein, no relief was granted. Hence, the Commission declared that all the proceedings of the assessee had abated.
High Court held that,
++ the Settlement Commission has committed an error in disposing of the proceedings as having abated. It is true that the assessee had earlier approached this Court on the issue of applicability of the abatement provisions and such petition was disposed of, the assessee to abide by the judgment of the Supreme Court in case of Prabhu Dayal. However, the Supreme Court did not have occasion to decide the case of Prabhu Dayal on merits. By virtue of interim order passed by the Apex Court in the said case or for any other reason, it appears that, by the time the Supreme Court took up the case for final hearing, the issues were no longer alive. Therefore, Prabhu Dayal withdrew his case. This disposal of the proceedings before the Supreme Court without expression of the opinion on merits, cannot be allowed to extinguish the assessee's rights and contentions;
++ from the outset, the assessee had taken a stand that the abatement proceedings are not valid and cannot apply so harshly as to terminate their proceedings for no fault of theirs. By the time the Commission took up the applications for settlement for further hearing, the law was made sufficiently clear by virtue of declaration by Bombay High Court in case of Star Television and approval of such view of High Court by the Supreme Court. When the Settlement Commission was therefore taking up the applications for settlement for further hearing, it was obliged to apply such law. If the proceedings were delayed due to the reasons attributable to the assessee, the provision for abatement would apply but not otherwise. The Settlement Commission has not recorded any such finding. The Department has not brought any facts to our notice to permit any further inquiry in this respect by the Settlement Commission. In plain terms therefore there is no material before us to hold that the application for settlement of the present assessee were belated due to the reasons attributable to the assessee. The proceedings are revived and placed back before the Settlement Commission for disposal in accordance with law.
(See 2018-TIOL-861-HC-AHM-IT)
