Calcutta High Court (Appellete Side)
Pradeep Kumar Naredi vs U.O.I. & Ors on 22 March, 2022
Author: T. S. Sivagnanam
Bench: T. S. Sivagnanam
1
05 22.03.2022 MAT 375 of 2022
+ Ct. No. 16
06 With
RP IA No. CAN 1 of 2017 (Old No. CAN 7530 of 2017)
AN IA No. CAN 1 of 2022
Pradeep Kumar Naredi
vs.
U.O.I. & ors.
With
MAT 376 of 2022
With
IA No. CAN 1 of 2017 (Old No. CAN 7530 of 2017)
IA No. CAN 1 of 2022
RSB Industries Limited & anr.
vs.
U.O.I. & ors.
Mr. J. P. Khaitan, learned Senior Counsel
Mr. Saumya Kejriwal
Ms. Ananya Rath
Mr. G. S. Gupta
... for the appellant
Mr. Vipul Kundalia, learned Senior Counsel
Mr. Anurag Roy
Ms. S. Majumder
... for the Income Tax
Authorities
The appellants shall deposit the deficit court fees
during the course of the day.
Supplementary affidavit filed in MAT 376 of 2022
is taken on record.
We have heard Mr. Khaitan, learned senior counsel
for the appellant and Mr. Kundalia, learned senior counsel
for the Income Tax Authorities at length.
The assessees had filed the present appeals
against the common order dated 23.02.2022 passed in WPA
3048/2022 with WPA 3049/2022. The said writ petitions
were filed praying for issuance of writ of certiorari to quash
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the order dated 14.01.2022 by which the applications filed
by the appellants before the Settlement Commission under
the Income Tax Act, 1961 (in short, the Act) were rejected.
The appellants also challenged the circular issued by CBDT
dated 28.09.2021 which permitted the assessees to file
applications before the Settlement Commission not later
than 30.09.2021 as being discriminatory and violative of
Article 14 of the Constitution of India and also the
amendment to Income Tax Act by which the Settlement
Commission was abolished with effect from 01.02.2021.
The appellants also sought for consequential
reliefs to permit the appellants to pursue their applications
before the Settlement Commission and to prohibit the
second respondent/assessing officer from proceeding
further pursuant to the notice issued under Section 153(A) of the Act on 02.02.2021 for the assessment year 2013-14 to 2018-19 and other incidental and consequential reliefs. The writ petitions were dismissed at the admission stage holding that the order passed by the Settlement Commission dated 14.01.2022 rejecting the applications was legal and valid. With regard to the challenge to the legality and validity of the CBDT Circular, the Court held that the same is legal and valid as the Circular has been issued in exercise of powers under Section 119(2)(b) of the Act. There is nothing unconstitutional or illegality in the said Circular. We take note that there is no specific finding recorded by the learned writ Court with regard to challenge made by the appellants to the amendment to the Act by 3 which the Settlement Commission stood abolished with effect from 01.02.2021.
After hearing the learned counsel for the parties for a considerable period of time, we are of the view that the interesting and important question of law have been raised in the appeals which are to be decided. The applications filed by the appellants before the Settlement Commission on 08.03.2021 were subsequently rejected after issuance of the show cause notice. The Commission opined that in the assessees' case notice under Section 153(A) of the Act was issued on 02.02.2021 and as such the relevant assessment proceedings were not pending as on 31.01.2021 and, therefore, the assesssees were directed to show cause as to why the applications filed on 08.03.2021 should not be rejected as no relevant assessment proceedings were pending as on 31.01.2021 (that is before 01.02.2021). The assessees by reply dated 21.01.2021 submitted that since search and seizure operations had taken place on 16.01.2020, the assessment and re-assessment of past six assessment years has to be mandatorily done and that issuance of notice under Section 153(A) of the said Act is a procedural formality and, as such, the applications for settlement may be treated as valid. The explanation offered by the asseessees was not accepted on the ground that an eligible case for settlement is a case which is pending before the assessing officer that such proceeding will be deemed to have been commenced on the date of issuance of notice initiating such process.
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Further, in terms of the CBDT Circular, a case to be eligible for filing an application for settlement should be a pending proceeding before the assessing officer as on 31.01.2021. In the order of rejection, it was further stated that though search and seizure operations took place on 16.01.2020, notice under Section 153(A) was issued on 02.02.2021 and, as such, no proceedings were pending before the assessing officer as on 31.01.2021.
Therefore, by virtue of power vested upon the Secretary of the Commission, the applications were rejected. As observed by us, the interesting question of law arises for consideration in these appeals wherein we are required to interpret Section 153(A) of the Act, in particular, sub- sections contained therein read with Section 245(a), 245(C) and other related provisions. We also have to consider as to whether the case of the appellants fall within the definition of the case as defined under Section 245(A)(b) of the Act. That apart, challenge to the amendment to the Act been discriminatory and ultra vires of the Constitution of India also needs to be considered. There is also a challenge to the CBDT Circular as the same has been discriminatory and violative of Article 14 of the Constitution of India. That apart, it has been considered as to what would be the effect of the CBDT Circular extending time to file application before the Commission until 30.09.2021.
The arguments on behalf of the respondent authorities has also been considered as regards the relevancy of the conduct of the assessees as they have filed 5 applications before the Commission only on 08.03.2021, that is, much after they had approached the High Court at Jharkhand for certain reliefs.
In our view, all legal issues can be considered only after the respondents file their affidavit-in-opposition. Thus, we are of the view that the writ petitions should not have been dismissed at the admission stage and should have been heard after calling for affidavits as pure questions of law are needed to be first answered before proceeding into factual matrix.
Hence, we are inclined to entertain these appeals and, accordingly, these appeals are admitted. The assessing officer has already issued notices under Section 153(A) of the Act on 02.02.2021 and thereafter also issued fresh notices. Since, we have admitted the appeals; the notices issued by the assessing officer under Section 153(A) of the Act shall remain stayed till the disposal of the appeals.
Learned counsel for the respondent authorities pointed out that the assessment will get time barred by 31.03.2022 and, therefore, the assessing officer should be permitted to proceed further in the matter. The said objection is not sustainable because the explanation under Section 153(B) of the Act states that the period during which the assessment proceedings is stayed by an order or an injunction of any court stands excluded while computing period of limitation under Section 153(B) of the Act. Therefore, the Revenue's interest is sufficiently safeguarded. That apart, we also take note of the fact that the assessees 6 by filing applications before the Settlement Commission has admitted additional income and also remitted tax and interest on the additional income so admitted. This also would go to safeguard the interest of the Revenue. Hence, the notices issued by the assessing officer remain stayed.
The respondents are directed to file affidavit-in- opposition within four weeks from date after serving advance copy on the learned counsel for the appellants. Reply, if any, be filed within three weeks thereafter after serving copy on the learned counsel for the respondents.
List the matter after eight weeks from date.
(T. S. Sivagnanam, J.) (Hiranmay Bhattacharyya, J.)