Jagdish Transport Corporation vs Union Of India

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 2352-2353 OF 2019

JAGDISH TRANSPORT CORPORATION & ORS. Appellant(s)

VERSUS

UNION OF INDIA AND ORS. Respondent(s)

JUDGMENT

M.R. SHAH J.

1. Feeling aggrieved and dissatisfied with the impugned

judgment and order dated 29.03.2017 passed by the High Court

of Judicature at Allahabad, Lucknow Bench Lucknow, by which

the Division Bench of the High Court has dismissed the Writ

Petition No. 4858 of 2008 preferred by the appellants herein, the

original writ petitioners have preferred the present Appeals. The

subsequent order passed by the High Court dismissing the review

Signature Not Verified application is also the subject-matter of the present Appeals. Digitally signed by Neetu Sachdeva Date: 2023.04.28 16:27:30 IST Reason: Page 1 of 8

2. The facts leading to the present Appeals in a nut shell are

as under: -

i) That a search was conducted under Section 132 of the

Income Tax, Act, 1961 (for short “the Act”) on the business

premises as well as the residence of the partners.

ii) Notices under Section 153A were issued to all the

appellants for the Assessment Years 1998-1999 to 2004-2005.

iii) The return of income was filed by the appellants under

Section 153A of the Act for the aforesaid Assessment Years.

iv) An application under Section 245C(1) of the Act was filed by

the appellants before the Income Tax Settlement Commission (for

short “the Settlement Commission”).

v) As per Section 245HA, inserted by the Finance Act, 2007,

the application was to be decided by the Settlement Commission

on or before 31.03.2008, failing which the proceedings before the

Settlement Commission shall stand abated.

vi) The High Court, by way of an interim order, directed the

Settlement Commission to dispose of the application under

Section 245D of the Act by 31.03.2008.

Page 2 of 8 vii) By order dated 31.03.2008, the Settlement Commission

disposed of the proceedings and settled the undisclosed income

at Rs. 59,00,000/-. The Settlement Commission also passed an

order that the CIT/AO may take such action as appropriate in

respect of the matters, not placed before the Commission by the

applicant, as per the provisions of Section 245F(4) of the Act.

The Settlement Commission passed the following order:-

“In the abovementioned cases, the Hon’ble High Court of Uttar Pradesh at Lucknow has passed orders dated 19.03.2008 directing the Settlement Commission to complete the proceedings u/s 245D(4) by 31.03.2008.

2. The Rule 9 Report in this case has been received.

3. In all, the Principal Bench of the Commission has till 26.3.2008 received more than 325 orders from various High Courts in the month of March, 2008, directing the Principal Bench to complete the cases by 31.3.2008.

4. This would involve more than 1500 assessments. The Settlement Commission deals only with the assessments which involve complexity of investigation and the application is intended to proved quietus to litigation. For example, in one group of cases where 23 applications are involved, the paper book, which has been filed before the Settlement Commission runs into thirty thousand pages. It goes without saying that sufficient and proper opportunity is required to be given both to the applicant and the

Page 3 of 8 Commissioner of Income Tax for arriving at a proper settlement.

5. At this juncture, it is not practicable for the commission to examine the records and investigate the case for proper settlement. Even giving adequate opportunity to the applicant and the department, as laid down in section 245(D)(4) of Income Tax Act, 1961 is not practicable.

However, to comply with the directions of the Hon’ble High Court, we hereby pass an order u/s 245D(4) of Income Tax Act, 1961, as under:

6. The undisclosed income is settled as under:

Jagdish Transport Corporation Rs.32,00,000/-

Surendar Kr. Tandon Rs.6,00,000/- Sandhya Tandon Rs.6,00,000/- Kiran Tandon Rs.7,00,000/- Virender Kr. Tandon Rs.8,00,000/- Total Rs.59,00,000/- 7. The CIT/AO may take such action as

appropriate in respect of the matters, not placed before the Commission by the applicant, as per the provisions of section 245F(4) of IT Act ,1961.

8. Prayer for granting immunity from penalty and prosecution under all Central Acts. In view of the discussions in preceding paras, we grant immunity from prosecution and penalty under the Income Tax Act only as regards issues arising from the application and covered by this Order.

9. Interest leviable, if any, shall be charged as per law.

10. It is settled that the amount of tax along with interest shall be paid by the applicants within 35 days from the date of receipt of intimation from the Assessing Officer.

Page 4 of 8 11. In view of the statutory time limit prescribed u/s 245 D(4A)of the Act, the Settlement Commission directs the Commissioner of Income Tax to compute the total income, income tax, interest and penalty, if any, payable as per this order and communicate to the applicant immediately along with the demand notice and challan under intimation to this office.

12. In case of failure to adhere to the scheme of payment, the immunity granted under Section 245(H)(1) shall be withdrawn in terms of sub-

section (1A) of the said section.”

viii) That thereafter, in the light of the observations made in para

7 by the Settlement Commission, the A.O. issued the show cause

notice for re-assessment on the various transactions which are

detected but were not disclosed by the appellants before the

Settlement Commission.

ix) The show cause notice was the subject-matter of Writ

Petition before the High Court. However thereafter, during the

pendency of the proceedings, the A.O. passed the Assessment

Order, which was challenged before the High Court by way of an

amendment.

x) By the impugned order, the Division Bench of the High Court

has dismissed the writ petition on the ground that the order

passed by the Settlement Commission dated 31.03.2008 was a

Page 5 of 8 nullity as the Settlement Commission itself observed that it was

not practicable for the Commission to examine the records and

investigate the case for proper Settlement and even giving

adequate opportunity to the applicant and the Department, as laid

down in Section 245D(4) of the Act is not practicable.

3. Having heard learned counsel appearing for the respective

parties and considering the order passed by the Settlement

Commission dated 31.03.2008 and the manner in which the

Settlement Commission disposed of the application under Section

245, as such, the High Court is absolutely justified in observing

that the order passed by the Settlement Commission is a nullity

and cannot be said to be an order in the eye of law. It is required

to be noted that, as such, the Settlement Commission specifically

observed in para 5 of the order dated 31.03.2008 that it is not

practicable for the Commission to examine the records and

investigate the case for proper Settlement and that even giving

adequate opportunity to the applicant and the Department, as laid

down in section 245D(4) of the Act is not practicable. However

thereafter, the Settlement Commission passed an order to comply

with the directions of the High Court to dispose of the application

on or before 31.03.2008. If that be so, the High Court in fact

Page 6 of 8 ought to have remitted the matter back to the Settlement

Commission to pass a fresh order in accordance with law and on

merits after following due procedure as required under Section

245D(4) of the Act.

4. In view of the above and for the reasons stated

hereinabove, we set aside the impugned judgment and order

passed by the High Court. We set aside the subsequent

assessment/re-assessment order passed by the A.O, which was

the subject-matter of writ petition before the High Court. We also

set aside the order passed by the Settlement Commission dated

31.03.2008 and remand the matter to the Settlement Commission

for a fresh decision. It is reported that the Settlement Commission

has been wound up and the matters pending before the

Settlement Commission are being adjudicated and decided by the

interim Board constituted under Section 245AA of the Act. In view

of the above position, the matter would be remitted to the interim

Board with a request that the matter to be taken up expeditiously

and would be preferably decided within a period of six months

from the date of first hearing and a reasoned order would be

passed.

Page 7 of 8

5. In view of the above and for the reasons stated above, the

present appeals are accordingly allowed. The matter is remitted

to the Settlement Commission/interim Board for a fresh decision in

accordance with law and on its own merits and after following due

procedure as required under Section 245 of the Act. It will be

open for the interim Board to call for a fresh report under Rule 9

and thereafter to pass the final order on the application, after

following due procedure as required under Section 245D(4) of the

Act.

The present Appeals are, accordingly, allowed to the

aforesaid extent. No costs.

…............................J. (M.R. SHAH)

…............................J. (C.T. RAVIKUMAR) New Delhi;

April 28, 2023

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