Allahabad High Court
Sanjay Singh And Others vs Union Of India Thru' Secy., ... on 6 August, 2014
Bench: Tarun Agarwala, Satish Chandra
HIGH COURT OF JUDICATURE AT ALLAHABAD
AFR
Court No. 33
Writ Tax No. 303 of 2013
Sanjay Singh and others, .......... Petitioners
Versus
Union of India and another .......... Respondents.
Hon.Tarun Agarwala,J.
Hon. Dr. Satish Chandra,J.
(Per: Tarun Agarwala,J.)
Search & seizure operations under Section 132 of the Income Tax Act, 1961 (hereinafter referred to as the Act) was carried out on 04.04.1995 by the income tax authorities. During the course of search & seizure operations Fixed Deposit Receipts worth about Rs. 14.00 lakhs, cash amounting to to Rs. 11.00 lakhs and stocks of sugar were seized apart from incriminating documents. Notice under Section 148 of the Act was issued to the petitioners for the assessment years 1991-92, 1992-93, 1993-94 and 1994-95 and, during its pendency, the petitioners approached the Settlement Commission by filing a settlement application under Section 245C (1) of the Act on 23.03.1998.
It transpires that the Settlement Commission passed an order under Section 245D (1) of the Act on 24.03.1999. Since this order contained certain errors, the same was recalled which led to various litigations. Through various orders passed by the writ Court, the proceedings before the Settlement Commission was stayed and eventually, the Settlement Commission passed a fresh order under Section 245D (4) of the Act on 27.03.2012. Based on the said order, a demand notice under Section 156 of the Act dated 23.11.2012 was issued. The petitioner, being aggrieved by the issuance of the demand notice, has filed the present writ petition.
We have heard Sri Kaushalendra Nath Singh & Sri Kartikeya Saran, the learned counsels for the petitioners and Sri R.K.Upadhyaya, the learned counsel for the Income Tax Department.
The learned counsel for the petitioners contended that the Settlement Commission committed an error in not considering the circular issued by the Central Board of Direct Taxes (CBDT) with regard to waiving of the interest and, consequently, a writ of mandamus should be issued directing the respondents to reassess the interest chargeable after considering the circulars issued by the department. The learned counsel further contended that no detail of the rate of interest charged nor the period was specified in the notice of demand and consequently the notice of demand should be quashed. The learned counsel further submitted that since the notice for demand contained apparent errors, a rectification application was filed under Section 154 of the Act, which was pending. The learned counsel contended that insistence by the respondents to pay the amount pursuant to the demand notice pending disposal of the rectification application was wholly arbitrary.
Having heard the learned counsel for the petitioners and having perused the counter affidavit, one finds that the circular issued by the CBDT is not applicable. In any case, from a perusal of the order of Settlement Commission we find that the request of the petitioners for waiving the interest under Sections 234A, 234B and 234C was not accepted and the Settlement Commission directed that interest under Sections 234A and 234C, wherever applicable was to be charged as per law and interest chargeable under Section 234B would be charged upto the date of order passed under Section 245D(1) and that interest under Section 220(2), applicable on the sustained demand outstanding as on various dates would be charged upto the date of the order passed by the Settlement Commission. In the light of the said direction of the Settlement Commission, the notice of demand under Section 156 of the Act was issued.
We also find that the rectification application filed by the petitioners was duly considered and rejected by the order dated 17.04.2013. Consequently, the contention that there was an error apparent in calculating the interest or that no detail of interest was indicated with regard to the period or the rate stands automatically disposed of as the same was considered by the authority while disposing of the application under Section 154 of the Act.
Section 245D(6) of the Act reads as under :
"Every order passed under sub-section (4) shall provide for the terms of settlement including any demand by way of tax, penalty or interest, the manner in which any sum due under the settlement shall be paid and all other matters to make the settlement effective and shall also provide that the settlement shall be void if it is subsequently found by the Settlement Commission that it has been obtained by fraud or misrepresentation of facts."
The aforesaid provisions came up for consideration before the Supreme court, though in a slightly different context in CIT Vs. Anjum M.H. Ghaswala (2001) 252 ITR 1. In this case the Supreme court was considering the ambit and scope of power of the Settlement Commission to order waiver of statutory interest. In that connection, the Supreme court interpreted sub-sections (4) and 6 of section 245D. Emphasis was laid on the phrases "in accordance with the provisions of the Act" used in sub-section(4) of section 245D and "terms of settlement" used in sub-section (6) thereof. On examination of scheme as provided under section 245D of the Act, the Supreme court held that the Settlement Commission has to settle the dispute in accordance with the provisions of the Income-tax Act and the expression "terms" used in sub-section (6) does not refer to the power of the Commission to waive or reduce the tax, penalty etc. The Supreme Court held:
"...........Therefore, all that the expression 'term' in section 245D(6) means is that the Commission can stipulate the conditions of payment like instalments, last date for payment etc. Beyond that, in our opinion, sub-section (6) does not authorise the waiver or reduction of tax, penalty or interest settled under sub-section (4) of section 245D"
In the light of the aforesaid, we find that the Settlement Commission having considered the request for waiver of the interest and having rejected it requires no interference by this Court. We further find that the object of notice under Section 245C under the Act was to ensure that no protracted proceedings takes place before the authorities or in courts and in order to avoid lengthy proceedings, a provision was made for settlement of cases to ensure that a finality is arrived at.
In Smt. Neeru Agarwal Vs. Union of India (2011) 330 ITR 422(All) a Division Bench of this Court held that the provision of Section 245D read with Section 245 indicates that the order passed by the Settlement Commission has to be treated as conclusive unless it was obtained by fraud or misrepresentation. Similar view was reiterated in Commissioner of Income-tax-I, Lucknow Vs. Smt. Diksha Singh, (2011) 201 Taxman 378.
In the light of the aforesaid, we do not find any justification to interfere in the notice of demand that was issued pursuant to the order of Settlement Commission. The writ petition fails and is dismissed.
Dated: 06.08.2014
MAA/-
(Dr.Satish Chandra,J.) (Tarun Agarwala,J.)
