Gujarat High Court
Vikas Shipping Corporation & vs Union Of India & 3 on 7 September, 2017
Author: Akil Kureshi
Bench: Akil Kureshi, Biren Vaishnav
C/SCA/6854/2008 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 6854 of 2008
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE BIREN VAISHNAV
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of
the judgment ?
4 Whether this case involves a substantial question of
law as to the interpretation of the Constitution of
India or any order made thereunder ?
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VIKAS SHIPPING CORPORATION & 1....Petitioner(s)
Versus
UNION OF INDIA & 3....Respondent(s)
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Appearance:
MR S M SOJATWALA, ADVOCATE for the Petitioner(s) No. 1 - 2
MR DEVANG VYAS, ADVOCATE for the Respondent(s) No. 1
MR NIKUNT K RAVAL, ADVOCATE for the Respondent(s) No. 1
MRS MAUNA M BHATT, ADVOCATE for the Respondent(s) No. 2 - 4
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE BIREN VAISHNAV
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HC-NIC Page 1 of 20 Created On Sat Sep 16 06:31:43 IST 2017
C/SCA/6854/2008 JUDGMENT
Date : 07/09/2017
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. The petitioner has challenged an order dated 11.12.2007 passed by the Settlement Commission ("the Commission"
for short). In the alternative, the petitioner has prayed for a relief that the incometax authorities be prevented from using the confidential information and report prepared by the petitioner and produced before the Settlement Commission.
2. Facts of the case are as under. The petitioner is a partnership firm. The petitioner had applied to the Commission for settlement of its disputed assessment proceedings for the assessment year 19971998, 1998 1999 and for the block period ending on 10.12.1997. It is undisputed that the hearing in the proceedings before the Settlement Commission was completed on 8.11.2006 and the proceedings were pending for final order to be passed by the Settlement Commission.
3. When the proceedings were thus pending before the Commission, certain amendments were made in Chapter Page 2 of 20 HC-NIC Page 2 of 20 Created On Sat Sep 16 06:31:43 IST 2017 C/SCA/6854/2008 JUDGMENT XIXA of the Act pertaining to settlement of cases. The amendments relevant for our purpose were that the assessee who had applied for settlement would pay the additional tax and interest on the income disclosed before the Settlement Commission on 31.7.2007. Instead of the assessee's responsibility to pay the same for which the statute did not provide any final time limit, the statute now provided for abatement of the settlement proceedings if such amount was not paid within the prescribed time. As per subsection(3) of section 245HA which was newly inserted, the material produced by the assessee before the Settlement Commission and that collected by the Settlement Commission through inquiries pending the settlement proceedings and the evidence brought on record could be utilised by the Assessing Officer or the incometax authority in proceeding further with the pending cases, once the proceedings before the Settlement Commission abates.
4. Since the settlement application of the petitioner was not disposed of by the time these statutory amendments were made, the Settlement Commission wrote a letter to the petitioner on 13.7.2007 in which it was stated as under :
"In connection with your above mentioned application under the provision of subsection(4) of section 245D of Page 3 of 20 HC-NIC Page 3 of 20 Created On Sat Sep 16 06:31:43 IST 2017 C/SCA/6854/2008 JUDGMENT Incometax Act, 1961, you are hereby given an opportunity to be heard by the Settlement Commission on 07.08.2007 at 11.00AM in the Court room of the Income Tax Settlement Commission, Additional Bench, Mumbai.
2) You may appear before the Income Tax Settlement Commission either in person or through a representative duly authorised in this behalf.
3) If the appellant or Commissioner of Incometax wish to rely on any evidence/documents/ paper etc. during the hearing, the same should be furnished to the Commission in the form of a paper book in six (6) copies duly indexed and page numbered at least one week before the date of hearing.
4) Please note that if you want to seek adjournment of the date of hearing, then application in this regard along with detailed reasons must be received in the Commission at least ten(10) days before the date of hearing and paper book, if any, must also be filed, failing which adjournment may not be allowed."
5. It can be seen from the footnote of this letter, a copy thereof was forwarded to the incometax authorities, in particular, the CIT, Ahmedabad, who was requested "to state the position of payment of taxes & interest as per the provision of section 245(2D) at the time of hearing before the Commissioner". The petitioner replied to the said letter on 13.7.2007 itself. As per its own letter dated 31.7.2007, in response to the notice issued by the Settlement Commission, the petitioner stated as under :
Page 4 of 20HC-NIC Page 4 of 20 Created On Sat Sep 16 06:31:43 IST 2017 C/SCA/6854/2008 JUDGMENT "1. A notice fixing the hearing in the aforesaid settlement application has been received by us on 13.07.2007 as per which the matter is fixed for hearing on 07.08.2007.
2. We have to respectfully submit that the hearing u/s245D(4) in our aforesaid settlement application was concluded on 08.11.2006 at the Ahmedabad camp. At the conclusion of the hearing, the Hon'ble Members had announced that the hearing has been concluded and that the order u/s 245D(4) would be passed.
3. In the circumstances, we have been awaiting the order u/s245D(4). We request that the orders passed in the settlement application be forwarded to us at an early date.
4. In the circumstances, the present notice of hearing, it appears has been issued wrongly."
6. The Settlement Commission passed the impugned order dated 11.12.2007 by which the Commission declared that the proceedings had abated due to non compliance by the petitioner with the provisions of section 245D(2D) of the Act and the Assessing Officer would now dispose of the case in accordance with the provisions of subsections 2, 3 and 4 of section 245HA. It is in this background the petitioner has challenged the said order of Settlement Commission. In the alternative, the petitioner prayed that the material produced before the Commission should not be allowed to be used by the incometax authorities. We may notice that the petitioner has not challenged the vires of any of the statutory provisions contained in the Finance Page 5 of 20 HC-NIC Page 5 of 20 Created On Sat Sep 16 06:31:43 IST 2017 C/SCA/6854/2008 JUDGMENT Act, 2007. We had in a separate judgment passed today had an occasion to consider the vires of these very amendments applicable in the present case including sub section(3) of section 245HA. We had upheld the vires making the following observations :
"11. Prior to 1.6.2007 amendment, there was no requirement for an assessee to make payment of additional tax with interest along with the application filed under subsection(1) of section 245C of the Act, though sub sections (1B), (1C) and (1D) provided the manner in which such additional tax and interest would be computed. Under subsection (2A) of section 245D, the assessee within thirtyfive days of the receipt of a copy of the order under subsection(1) of section 245D allowing the application to be proceeded with, would have to pay the additional amount of incometax payable on the income disclosed in the application and furnish proof thereof to the Settlement Commission. Under subsection (2B) of section 245D, the Settlement Commission had the power to extend the time limit for payment of additional tax if it was satisfied that the assessee for good and sufficient reasons was unable to pay the same. The Commission could also grant installments. As per subsection(2C) of section 245D, whenever additional tax was not paid within the time prescribed under subsection(2A), irrespective of the fact whether the Settlement Commission had extended the time for payment, the assessee would be liable to simple interest at the prescribed rate on the amount which remained unpaid. After the expiry of the period specified in sub section(2A), under subsection(2D) of section 245D, the additional tax which remained unpaid within the time specified under section (2A) or within the extended time allowed by the Commission under subsection(2B), the Commission would direct that the amount remaining Page 6 of 20 HC-NIC Page 6 of 20 Created On Sat Sep 16 06:31:43 IST 2017 C/SCA/6854/2008 JUDGMENT unpaid with interest be recovered and it will also be open for the Commission to impose penalty for non payment of such amount. Neither section 245D nor any other provisions contained in Chapter XIXA provided for any further consequence of non payment of additional tax and at any rate the statute did not envisage that the settlement application would abate on account of nonpayment. We may notice that under subsection(1A) of section 245H, if the assessee fails to pay the sum specified by the Settlement Commission in its order under subsection(4) of section 245D within the specified or extended time, the immunity granted by the Commission from penalty or prosecution be withdrawn. Under section 245J, the amount ordered by the Settlement Commission to be paid under subsection(4) of section 245D could be recovered by the department in accordance with the provisions contained in Chapter XVII of the Act.
12. There were significant changes in these statutory provisions with effect from 1.6.2007. Under subsection(1) of section 245C, now the assessee applying for settlement of his case, would pay the additional tax and interest on the income disclosed in the application for settlement. Proof of payment would be attached with the application itself. Though certain changes have been introduced also in subsections 1A to 1D of section 245C pertaining to computation of additional tax and interest, we are not directly concerned with such changes. Requirement of payment of additional tax with interest within the prescribed time, failure of which would result into abatement of the proceedings before the Settlement Commission, was introduced by way of the newly inserted subsection(2A) of section 245D of the Act read with clause(ii) of subsection(1) of section 245HA of the Act. Under subsection(3) of section 245HA, upon abatement of the proceedings before the Settlement Commission when the Assessing Officer proceeds to dispose of the pending cases, the Assessing Officer or other incometax authority Page 7 of 20 HC-NIC Page 7 of 20 Created On Sat Sep 16 06:31:43 IST 2017 C/SCA/6854/2008 JUDGMENT would be entitled to use material and other information produced by the assessee before the Settlement Commission, as if such material had been produced before the Assessing Officer or the authority as the case may be. We may reproduce these relevant provisions :
"245D xxx (2A) Where an application was made under section 245C before the 1st day of June, 2007, but an order under the provisions of subsection (1) of this section, as they stood immediately before their amendment by the Finance Act, 2007, has not been made before the 1st day of June, 2007, such application shall be deemed to have been allowed to be proceeded with if the additional tax on the income disclosed in such application and the interest thereon is paid on or before the 31st day of July, 2007.
Explanation.--In respect of the applications referred to in this subsection, the 31st day of July, 2007 shall be deemed to be the date of the order of rejection or allowing the application to be proceeded with under sub section (1).
245HA. Abatement of proceeding before Settlement Commission. (1) Where--
xxx
(ii) an application made under section 245C has not been allowed to be proceeded with under subsection (2A) or further proceeded with under subsection (2D) of section 245D; or xxx the proceedings before the Settlement Commission shall Page 8 of 20 HC-NIC Page 8 of 20 Created On Sat Sep 16 06:31:43 IST 2017 C/SCA/6854/2008 JUDGMENT abate on the specified date.
Explanation.--For the purposes of this subsection, "specified date" means--
xxx
(b) in respect of an application referred to in clause (ii), the 31st day of July, 2007;
xxx (2) Where a proceeding before the Settlement Commission abates, the Assessing Officer, or, as the case may be, any other incometax authority before whom the proceeding at the time of making the application was pending, shall dispose of the case in accordance with the provisions of this Act as if no application under section 245C had been made.
(3) For the purposes of subsection (2), the Assessing Officer, or, as the case may be, other incometax authority, shall be entitled to use all the material and other information produced by the assessee before the Settlement Commission or the results of the inquiry held or evidence recorded by the Settlement Commission in the course of the proceedings before it, as if such material, information, inquiry and evidence had been produced before the Assessing Officer or other incometax authority or held or recorded by him in the course of the proceedings before him."
13. The comparison of the statutory provisions before and after amendment with effect from 1.6.2007 would show that even earlier the assessee always had a liability to pay the tax on additional income disclosed in the application for settlement filed before the Commission. Such liability would be discharged within thirtyfive days of the receipt of a copy of the order under subsection(1) of section 245D. It Page 9 of 20 HC-NIC Page 9 of 20 Created On Sat Sep 16 06:31:43 IST 2017 C/SCA/6854/2008 JUDGMENT was ofcourse open for the assessee to apply to the Settlement Commission for extension of time or installments by making out good or sufficient reasons for being unable to pay the same within the prescribed time. Whether such extension was granted or not, in terms of subsection(2C) of section 245D, the assessee would be liable to pay interest on the amount of tax which remained unpaid after completion of prescribed period. The Settlement Commission could also direct payment of tax with interest or even impose penalty on the assessee not paying the same. The statutory provisions however, did not provide for abatement of proceedings if the assessee failed to make payment of tax or interest nor would the Settlement Commission refuse to dispose of the application on the ground of non payment thereof. The fall out of non payment of the tax and interest could be traced to Sub section(1A) of section 245H as per which the immunity granted by the Settlement Commission to any person would stand withdrawn if he failed to pay the sum specified under the order of settlement passed under subsection(4) of section 245D. This would be independent of the recovery that the department may carry out of such sum in terms of section 245J of the Act.
14. It can thus be seen that even in the provisions contained prior to amendment of 1.6.2007, the assessee always had the liability to pay additional tax on the income disclosed before the Settlement Commission. The result of non payment would be two fold. One, the immunity from penalty and prosecution if granted by the Settlement Commission would stand withdrawn and two, the department would recover the unpaid dues in accordance with the provisions of Chapter XVII of the Act.
15. Amending such statutory provisions, now after 1.6.2007, the statute requires an assessee applying for settlement to make payment of additional tax with interest while making application for settlement itself. In fact, sub Page 10 of 20 HC-NIC Page 10 of 20 Created On Sat Sep 16 06:31:43 IST 2017 C/SCA/6854/2008 JUDGMENT section(1) of section 245C now requires that the applicant would produce the proof of the payment along with the application. For those applications which were made before 1.6.2007, a special provision was made under sub section(2A) of section 245D granting time upto 31.7.2007 in cases where no order under subsection(1) of section 245D was passed before 1.6.2007 by providing that if the additional tax on the income disclosed in the application with interest is paid before 31.7.2007, such application shall be deemed to have been allowed to be proceeded further. Newly inserted section 245HA provides for abatement of proceeding before the Settlement Commission. Under clause (ii) of subsection (1) of section 245HA, an application made under section 245C which has not been allowed to be proceeded further under sub section (2A) or further proceeded with under subsection (2D) of section 245D, the proceedings before the Settlement Commission shall abate on the specified date. As per the explanation of the said subsection, specified date in such a case would mean 31st July, 2007.
16. It is not difficult to appreciate that these provisions were brought into the statute to bring in a greater seriousness and in order to ensure that the applications for settlement are pursued with due care and promptness. In this context, we may also notice some of the other changes simultaneously made in the said chapter. For example, in the substituted subsection (1) of section 245D, the legislature introduced the concept of extremely short time limits for crossing the first stage of allowing or not allowing an application for settlement to be proceeded further. Under this provision, on receipt of an application under section 245C, the Settlement Commission within seven days from the date of receipt of the application, shall issue a notice to the applicant requiring him to explain why the application should be allowed to be proceeded with. After hearing the applicant, the Settlement Commission would within fourteen days from the date of the application, Page 11 of 20 HC-NIC Page 11 of 20 Created On Sat Sep 16 06:31:43 IST 2017 C/SCA/6854/2008 JUDGMENT either reject or allow the application to be proceeded with. As per proviso to subsection (1) if no order has been passed within the said period by the Settlement Commission, the application shall be deemed to have been allowed to be proceeded further. Thus, the first threshold examination of the application under subsection (1) of section 245D would come within a summary time frame permitting no flexibility. If for some reason the Settlement Commission is unable to pass an order allowing or not allowing the application to be proceeded further, the deeming fiction would apply and the application would be deemed to have been allowed to be proceeded with. Sub section (4A) was added to section 245D requiring the Settlement Commission to pass an order under subsection (4) within a time frame. The applications pending at the time of statutory changes shall be decided before 31st March, 2008, those made on or after 1st June 2007 but before 1st June 2010, would be decided within twelve months from the end of the month in which the application was made. In cases of application made after 1st June 2010, the same would be decided within eighteen months from the end of the month in which the application was made. In terms of clause (iv) of subsection (1) of section 245HA, in case the Settlement Commission does not pass order under subsection (4) of section 245D within the time prescribed under subsection (4A), the proceedings before the Settlement Commission would abate.
17. We are conscious that the said time limit provisions contained in the amended section 245D of the Act have been explained by the Bombay High Court in case of Star Television News Ltd. (supra) reading down the rigid requirement holding that if the assessee is not responsible for causing delay in disposal of the case, the same would not abate for the Settlement Commission not being able to dispose of the same within the prescribed time. Nevertheless, the legislative intent of bringing a degree of seriousness and promptness in pursuing the settlement Page 12 of 20 HC-NIC Page 12 of 20 Created On Sat Sep 16 06:31:43 IST 2017 C/SCA/6854/2008 JUDGMENT cases, would not escape our notice. This is even otherwise an understandable anxiety of the legislature since during the pendency of settlement proceedings, the ordinary assessment would be kept in abeyance. Thus, by mere pendency of an application for settlement before the Commission, the normal assessment mechanism would be kept at bay. The Revenue therefore, would certainly be interested in knowing the outcome of settlement proceedings so that if a case is settled, the ordinary assessment proceedings would be rendered inconsequential. If on the other side, for whatever reason, the application for settlement were to fail, the pending assessment would revive and be continued from whatever stage it was pending. The statutory provisions under challenge before us therefore, must be seen in light of the over all relevant changes made by the legislature and the ultimate effect of such changes in the settlement proceedings.
18. The parameters for testing the constitutionality of the legislation made by the parliament or the State legislature are well laid down in series of judgments of the Supreme Court and this Court. Two of the grounds on which such legislation can be called in question are that the legislature lacks the competence to frame the law or that the statutory provision is opposed to the fundamental rights enshrined under the Constitution or any other constitutional provision. It is in fact, within these two grounds of challenge to a statute, the Supreme Court in case of Shayara Bano (supra) has expanded to a limited extent the scope of examination, propounding that the legislation can also be struck down on the ground of arbitrariness. Nevertheless, the concept of arbitrariness in context of testing a statutory provision made by the parliament or the State legislature cannot be put in a golden scale. If the legislature in its wisdom applying its mind, which is a presumption, to all relevant aspects of the matter, framed a certain legislative policy by enacting a law, the Court would Page 13 of 20 HC-NIC Page 13 of 20 Created On Sat Sep 16 06:31:43 IST 2017 C/SCA/6854/2008 JUDGMENT certainly not substitute its individual judgement or opinion for that of the competent legislative body.
19. In case of the State of Jammu & Kashmir v. Triloki Nath Khosa and others reported in AIR 1974 Supreme Court 1, the respondents had successfully challenged before the High Court the validity of a service rule framed by Jammu and Kashmir Government which permitted a classification of Assistant Engineer between Diploma holder and Degree holder for promotion as Executive Engineer. The Constitution Bench of the Supreme Court observed that in order to establish that the protection of the equal opportunity clause has been denied to them, it is not enough for the respondents to say that they have been treated differently from others, not even enough that a differential treatment has been accorded to them in comparison to others similarly circumstanced. Discrimination is the essence of classification and does violence to the constitutional guarantee of equality only if it reasons on an unreasonable basis.
20. In case of Indian Express Newspapers (Bombay) Private Ltd and others reported in (1985) 1 Supreme Court Cases 641, the Court was examining the validity of a subordinate legislation levying customs duty on imported newsprint. In this context, it was observed that a sub ordinate legislation may be questioned on the grounds of legislative competence on which the plenary legislation is also subject or being ultra vires the Constitution, as also additional grounds such as, being ultra vires the parent statute or being in conflict with any other statute or being so arbitrary that it could not be said to conform to the statute or violative of Article 14 of the Constitution
21. It was argued that these amendments may act somewhat harshly on the assessees and particularly when such amendments are applied to pending applications for settlement, the same would be arbitrary. It is well settled Page 14 of 20 HC-NIC Page 14 of 20 Created On Sat Sep 16 06:31:43 IST 2017 C/SCA/6854/2008 JUDGMENT that the statute cannot be declared as unconstitutional merely because it is likely to work harshly against some sections of the citizens. Merely because those who have already applied for settlement are now asked to pay the additional tax on income disclosed in the settlement application before a certain date, by itself would not render the statute arbitrary. This would be for multiple reasons. Firstly, the tax being collected is on the admitted income, the income which the assessee had not disclosed in the original return filed before the Assessing Officer but which he now admits in the application for settlement filed before the Commission. No tax payer can claim liberty from payment of tax on an admitted income. Secondly, even in the provisions prevailing upto 1st June 2007, there was always the liability of the assessee applying for settlement to pay the additional tax on the income disclosed. If he failed to pay the sum within the prescribed time, he would have to pay the tax along with interest at the prescribed rate. We are conscious that the provision for abatement of settlement proceedings before the Commission, upon the assessee not being able to pay the sum by 31st July 2017, was newly introduced. However, the applicant before the Settlement Commission cannot claim vested right to have the application granted and seek immunity from penalty and prosecution even while continuing to be in default in paying the tax on admitted income. What the statute perhaps cannot take away is a vested right and not a perceived right in which the assessee had no vested interest.
22. We may recall subsection(1) of section 245HA provides for abatement of proceedings before the Settlement Commission under certain circumstances. As per sub section(2) of section 245HA, where the proceedings so abate, the Assessing Officer or the incometax authorities before whom the proceedings at the time of making of the application was pending, would proceed to dispose of the same in accordance with the provisions of the Act as if no Page 15 of 20 HC-NIC Page 15 of 20 Created On Sat Sep 16 06:31:43 IST 2017 C/SCA/6854/2008 JUDGMENT application for settlement was made. While doing so, under subsection(3), such authority would be entitled to use all the material and other information provided by the assessee before the Commission or the results of the inquiry held or evidence recorded by the Commission in the course of such proceedings, as if such material, information, inquiry and evidence had been produced before the Assessing Officer or the authority. The effect of subsection(3) of section 245HA is to enable the incometax authority, be it Assessing Officer or some other authority, who upon abatement of settlement proceedings would proceed to decide the pending cases in accordance with the provisions of the Act, to utilise all the material and other information produced by the assessee before the Commission as well as the material collected through inquiry during the course of such settlement proceedings or evidence recorded by the Commission. Effectively, this would transpose the material before the Commission, collected till the proceedings reached the stage of abatement before the incometax authority, who would be entitled to use the same.
23. It is not even the case of the petitioner that earlier there was any provision which prohibited the Assessing Officer or the incometax authority from accessing such information and utilising the same in the course of completion of pending cases, to which the settlement proceedings related. All that perhaps materially changed is that insofar as the material, other information produced by the assessee before the Commission is concerned, it would partake the character of the same having been produced by the assessee before the Assessing Officer or the incometax authority. Surely, no assessee can claim immunity from use of such material unless such immunity was granted in specific terms of statute. No assessee can claim that he made a certain declaration before the Commission which was true but should not be utilised by the incometax authority for the purpose of his assessment. Even while Page 16 of 20 HC-NIC Page 16 of 20 Created On Sat Sep 16 06:31:43 IST 2017 C/SCA/6854/2008 JUDGMENT filing a return before the Assessing Officer and participating in the assessment proceedings, be it before the Assessing Officer or at the appellate stage, there is inherent duty of every assessee to make true and full disclosures. In our opinion therefore, the newly inserted subsection(3) of section 245HA did not take away any vested right hitherto enjoyed by the assessee. In the result, the challenge to the vires of the statutory provisions must fail."
7. Shri Soparkar however submitted that the Settlement Commission did not dispose of the proceedings for a long time after conclusion of the hearing, as a result of which the liability to pay additional tax before 31.7.2007 arose.
Had the Settlement Commission disposed of the proceedings promptly, this situation would not have arisen.
In any case, the petitioner was not aware that the Settlement Commission had not disposed of the proceedings till 1.6.2007. He therefore, could not be blamed for not fulfilling the requirement of payment of additional tax before 31.7.2007.
8. Neither of these contentions can be accepted. Firstly, there was no time limit within which once the proceedings were finally heard and reserved for order, the Settlement commission had to dispose of the same by a final order. No malafides are attributed to the members of the Settlement Commission to suggest that there was deliberate delay on their part. If therefore, when the settlement proceeding was Page 17 of 20 HC-NIC Page 17 of 20 Created On Sat Sep 16 06:31:43 IST 2017 C/SCA/6854/2008 JUDGMENT still pending, amendments were made in the statute which applied to such pending proceeding, same had to be applied with full force. The statute does not make any distinction whether the proceedings were pending before the Settlement Commission at prehearing stage or at the stage where the hearing was over and the case was pending for disposal by the Settlement Commission.
9. The defence that the petitioner was not aware about the pendency of such proceeding ignores the documents on record. On 13.7.2007, the Settlement Commission had conveyed to the petitioner that there would be a further hearing on 7.8.2007. The footnote though was scored out in the copy forwarded to the petitioner obviously, because this did not concern the petitioner, did contain a reference to the CIT to state on the next date of hearing whether the requirement of payment of tax and interest as contained in subsection(2D) of section 245D has been fulfilled by the petitioner. As is evident from the petitioner's letter dated 31.7.2007 written to the Settlement Commission in response to the said communication, the petitioner received the same on 13.7.2017 itself. Well before the final date of 31.7.2017 for payment of additional tax and interest, the petitioner at any rate was aware that the proceedings before the Settlement Commission was not yet disposed of. The petitioner therefore had the responsibility Page 18 of 20 HC-NIC Page 18 of 20 Created On Sat Sep 16 06:31:43 IST 2017 C/SCA/6854/2008 JUDGMENT to pay the tax and interest as provided in section (2D) of section 245D of the Act. The petitioner failed to comply with such requirement. In terms of subsection(1) of section 245HA therefore, the settlement proceeding would abate. This was automatic. The Settlement Commission by the impugned judgment merely made a declaration of abatement which had even otherwise come about by virtue of operation of law. The Settlement Commission had no other alternative.
10. The alternative request of preventing the incometax authority from using the material on record before Settlement Commission cannot be accepted in terms of plain language used in subsection(3) of section 245HA of the Act which reads as under :
"(3) For the purposes of subsection (2), the Assessing Officer, or, as the case may be, other incometax authority, shall be entitled to use all the material and other information produced by the assessee before the Settlement Commission or the results of the inquiry held or evidence recorded by the Settlement Commission in the course of the proceedings before it, as if such material, information, inquiry and evidence had been produced before the Assessing Officer or other incometax authority or held or recorded by him in the course of the proceedings before him."
11. As noted, the petitioner has not challenged the vires Page 19 of 20 HC-NIC Page 19 of 20 Created On Sat Sep 16 06:31:43 IST 2017 C/SCA/6854/2008 JUDGMENT of this provision. In any case in an independent judgment we have upheld the same relevant provision, portion of which is noted in this judgment.
12. In the result, petition is dismissed.
(AKIL KURESHI, J.) (BIREN VAISHNAV, J.) raghu Page 20 of 20 HC-NIC Page 20 of 20 Created On Sat Sep 16 06:31:43 IST 2017