Delhi High Court
Income-Tax Officer vs C. L. Verma. on 21 December, 1989
Equivalent citations: 1990 33 ITD 6 Delhi
ORDER
Per Agarwal, JM - These are appeals by the Revenue arising out of order dated 3-10-1986 passed by the Commissioner of Income-tax (A) setting aside the assessment orders passed on the assessed by the ITO for assessment years 1971-72 & 1972-73 and directing that fresh assessment orders will be passed in conformity with the final orders of the Settlement Commission.
2. We have heard the learned Departmental Representative and the learned counsel for the assessed.
3. Assessments under section 144 of the Income-tax Act, 1961 were framed against the assessed on total incomes of Rs. 1,48,360 and Rs. 1,19,336 respectively. The assessed preferred appeals to the CIT (A) and also moved a petition before the Settlement Commission under section 245C. The said petition pertaining, inter alia, to the years under consideration has been admitted by the Settlement Commission vide orders dated 2-6-1986.
4. The CIT (A) vide his order dated 3-10-1986 has set aside the assessment orders framed by the ITO by observing that the assesseds counsel requested that the assessment orders be set aside with the direction that they will be made afresh in accordance with the orders of the Settlement Commission and the learned Commissioner faithfully accepted the so-called request of the assesseds counsel without even attempting to mention the relevant provision of law.
5. Section 244F (2) provides that where an application made under section 245C has been allowed to be proceeded with under section 245D, the Settlement Commission shall, until an order is passed under sub-section (4) of section 245D, have, subject to the provisions of sub-section (3) of that section exclusive jurisdiction to exercise the powers and perform the functions of an income-tax authority under this Act in relation to the case. It is under this provision of law that the learned counsel for the assessed attempted to justify the order as passed by the learned Commissioner. A reading of sub-section (2) of section 245F clearly indicates that on the admission of the assesseds application for being proceeded with the income-tax authorities, which include the ITO as well as the CIT (A), ceased to have jurisdiction to exercise any powers under the Income-tax Act, 1961. Therefore, while it is correct that after the Settlement Commissions order dated 2-6-1986 the ITO could not take any action, the same was equally true of the CIT (A) and he could not dispose of the assesseds appeals in any manner whatsoever. The appeals became virtually ineffective and could neither be allowed nor dismissed and had to be consigned to the record room as such. The learned Commissioner has directed the ITO to pass fresh orders in conformity with the final orders of the Settlement Commission. The learned counsel for the assessed could not point out to us any provision of law that requires the ITO to pass any orders to make the orders of the Settlement Commission effective. Whatever orders are to be passed are to be made by the Commission itself under section 245D (4). Sub-section (6) of section 245D provides that every order passed by the Settlement Commission 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 Commission that it has been obtained by fraud or misrepresentation of facts. By setting aside the assessment orders the last contingency provided in subsection (6), which though is very remote, has been made ineffective. If a settlement is declared to be void because of fraud or misrepresentation, the assessment order made earlier would immediately became operative and the assesseds appeals may also have to be disposed of on merits. But by setting aside the assessment orders the CIT (A) has created a situation in which the assessments already made cannot be revived in spite of specific provisions in sub-section (6).
6. The learned counsel for the assessed referred to section 245C, which relates to the applications for settlement and to section 245BA, which defines the jurisdiction and powers of the Settlement Commission. There is nothing in either of these sections to show that on the acceptance of an application under section 245D (1) the assessment orders can be set aside by the CIT (A) or have to be made afresh in accordance with the directions of the Settlement Commission. In our view the provisions of section 244F (2) are quite clear to the effect that no income-tax authority is left with any jurisdiction to pass any order after an order under section 245D (1) by the Settlement Commission admitting the assesseds application for proceeding with Consequently, the Commissioner (A) too had no jurisdiction no proceed with the appeals and the order passed by him is, therefore, patently erroneous and unauthorised. We, therefore, allow these appeals and set aside the orders passed by the learned CIT (A).
