Delhi High Court
Oriental Chemical Industries vs Income Tax Settlement Commission & Anr. on 16 September, 1997
Equivalent citations: (1998)145CTR(DEL)529
ORDER
BY THE COURT :
Counter is being filed today. Copy has been delivered to counsel for the petitioner. On a prayer made by Mr. Jolly, the counter is permitted to be filed in the Court and is taken on record. With the consent of the learned counsel for the parties, the petition is heard finally. Rule D.B.
2. On 3rd September, 1994, the petitioner-assessee made an application for settlement of cases in the Settlement Commission under s. 245C of the IT Act, 1961. The Settlement Commission called for the report of the CIT. After the filing of the application by the assessee-petitioner the first date of hearing appointed by the Settlement Commission was 4th April, 1996. On a prayer made by counsel on behalf of petitioner, the hearing was adjourned to 12th April, 1996. In between the petitioner-assessee was provided with a copy of objections of the CIT on 9th April, 1996. The objections filed by the CIT ran into about 54 pages. On 11th April, 1996, an application for adjournment (Annexure P.18) was filed on behalf of assessee. We cannot appreciate the propriety of ground Nos. (ii) and (iii) set out in the application in support of prayer for adjournment. However, what has appealed to us as of some substance is ground (iv) set out in the application. It appears that the petitioner-assessee had sought for inspection/copies of books of accounts seized and impounded by the AO in the year 1993 itself being allowed to the petitioner so as to enable meeting of the objections filed by the CIT and supporting the application for settlement filed by the assessee. As the AO had not till then acceded to the prayer, accommodation was sought for in the date of hearing before the Settlement Commission. The prayer has been declined by the Settlement Commission forming an opinion that the assessee was not co-operating with the Settlement Commission.
3. The learned counsel for the petitioner has submitted, placing reliance on the law laid down by the Supreme Court in the case of R. B. Shreeman Durgaprasad & Fateh Chand Narsinghdas vs. Settlement Commission (1989) 176 ITR 169 (SC) that right of hearing before the Settlement Commission is valuable right of a petitioner flowing from the tenets of natural justice and requires an assessed-petitioner being afforded an adequate opportunity of hearing by the Settlement Commission. One of the requirements of opportunity of hearing is that the assessee should be allowed a reasonable and fair opportunity of meeting the CITs objections. In the present case, copy of report-cum-objections submitted by the CIT having been made available to the petitioner-assessee only on 9th April, 1996, the petitioner did not have enough opportunity available at his disposal for meeting the same on 12th April, 1996, more so when the petitioner was yet to have the inspection and obtain copies of books of accounts from the AO. We are satisfied in the facts and circumstances of the case that closure of hearing by the Settlement Commission on 12th April, 1996, has resulted in denial of opportunity of hearing to the petitioner and it has been prejudiced.
4. The learned senior standing counsel for the respondent tried to support the impugned order by submitting that even otherwise the application filed by the petitioner was not entertainable by the Settlement Commission and, therefore, did not deserve being admitted and so also the impugned order does not deserve to be interfered with by this Court in exercise of its writ jurisdiction. We are not impressed. The Settlement Commission had no occasion to apply its mind to the plea of entertainability and maintainability of the application before it. We do not, therefore, have the benefit of the opinion of the Commission having been formed and expressed on this aspect after hearing the petitioner-assessee. In our opinion, the ends of justice would be satisfied if the petitioner is afforded an opportunity of hearing before the Settlement Commission which may also take into consideration the challenge laid by the respondents to the maintainability of the application before it.
For the foregoing reasons, the application is allowed. The impugned order dt. 18th April, 1996 passed by the Settlement Commission under s. 245D(1) of the IT Act, 1961, is hereby quashed and set aside. The application filed by the petitioner shall be deemed to be pending before the Settlement Commission. The Settlement Commission shall afford the petitioner-assessee an opportunity of hearing and then decide the application under s. 245C(1) in accordance with law.
The petitioner-assessee is directed through its counsel to appear before the Settlement Commission on 23rd October, 1997, on 11 A.M. Petition stands disposed of accordingly.