Commissioner Of Income Tax Central Jaipur v. M/S Anil Hastkala (P) Ltd & Anr

CW 12911/08 //1// In the High Court of Judicature for Rajasthan Jaipur Bench ** 1- Civil Writ Petition No.12911/2008 Commissioner of Income Tax Central Jaipur Versus M/s Anil Hastkala (P) Ltd & Anr. (And Cognate matters shown in Schedule A) /Reportable/And 2- Civil Writ Petition No.5036/2008 Prakash Chand Jalan Versus Commnr of Income Tax Central Jaipur & Anr. (And Cognate matters shown in Schedule B) Commnr of Income Tax Central Jaipur & Anr. (And Cognate matters shown in Schedule B) Date of Order ::: 13/08/09 Hon'ble Mr. Justice Ajay Rastogi Mr. JK Singhi ) Mr. Anuroop Singhi ) for Revenue Mr. N.M.Ranka, Sr. Adv. & Sarva Shri Anant Kasliwal)Vaibhav Kasliwal, NK Jain, SK Tewari, & Ms Anupma Parashar ) for Assessees Sarva Shri Sanjay Jhanwar, GC Garg, Samit Bishnoi )Gunjan Pathak, Naresh Gupta, & Ms Nivedia Sarda ) Mr. Vinod Sharma for Mr. Ashok Bansal) for assessees Since bunch of cross-petitions filedby Assessees as well as by Revenue assailingorders of Settlement Commission in cases ofdifferent assessees, involve self-same issuefor consideration; hence at request, werefinally heard together for its disposal bythis common order at admission stage. Primary question for consideration ina bunch of writ petitions preferred by Revenueand cross petitions by different assessees iswith regard to applications filed beforesettlement commission on or before 01/06/2007and assailing orders of Settlement Commission, on the premise that if impugned order ofSettlement commission U/s 245-D(4) of IncomeTax Act, 1961 (“Act”) is held to be legallyunsustainable, in such an eventuality, whethermatters are to be remitted back to settlementcommission to examine afresh in accordancewith law or to the assessing authority in viewof proceedings initiated under Chapter-XIX-Aon being held to be abated in terms of S.245-HA of the Act ? Except on few aspects, as regardsorders of settlement commission U/s 245-D(4)of the Act to be referred in later part,Assessees-writ petitioners & respondent-Revenue in cross petitions, both are joint onthe issue that the procedure adopted bysettlement commission while passing ordersimpugned is in violation of S.245-D(4) of theAct & without following the mandate ofstatute; however, Counsel for assessees havetried to convince that once orders ofsettlement commission are in violation ofprinciple of natural justice as having beenpassed without due application of mind &appreciation of material on record, mattersmust be remitted back to settlement commissionto decide afresh according to law. CW 12911/08 //3// Howeverthoughsupportedthesubmissions but Counsel for revenue has also tried to convince that once orders ofsettlement commission are not legallysustainable as per amendment made underFinance Act, 2007 being enforced w.e.f.01/06/07, proceedings stand abated in terms ofS.245-HA – as a consequence whereof, matter isrequired to be remitted to the assessingauthority or any other income tax authoritybefore whom proceedings were pending whilemaking application in terms of S.245-HA(2) ofthe Act. To examine the controversy at hand,bare facts necessarily for adjudication, beingcommon in bunch of all the petitions except asregards dates of making applications &assessment years, are being taken note out ofCWP-5036/08 (Prakash C.Jalan Vs. Settlement & Ors) & so also from CWP-11515/08 (CIT CentralVs. Ravi Prakash Modi & Anr.). Re. CWP-5036/2008 (Prakash C.Jalan Vs.Settlement Commission) Assessee (Prakash Chand Jalan) filedapplication before Settlement Commission on27/09/2001 for A.Yrs 1997-98 to 2000-01U/s 245(C) containing a full & true disclosure of hisincome having not been disclosed before the CW 12911/08 //4// Assessing officer. After fulfillment of statutory requirement under the Act upon To examine the controversy at hand,bare facts necessarily for adjudication, beingcommon in bunch of all the petitions except asregards dates of making applications &assessment years, are being taken note out ofCWP-5036/08 (Prakash C.Jalan Vs. Settlement & Ors) & so also from CWP-11515/08 (CIT CentralVs. Ravi Prakash Modi & Anr.). Re. CWP-5036/2008 (Prakash C.Jalan Vs.Settlement Commission) Assessee (Prakash Chand Jalan) filedapplication before Settlement Commission on27/09/2001 for A.Yrs 1997-98 to 2000-01U/s 245(C) containing a full & true disclosure of hisincome having not been disclosed before the CW 12911/08 //4// Assessing officer. After fulfillment of statutory requirement under the Act upon receipt of application, Settlement Commission summoned a report from Commissioner (IT) as provided U/r 9 of Income Tax Settlement Commission (Procedure) Rules, 1997 (“Rules,1997”) - on the basis of material containedtherein (supra), allowed the application to beproceeded with, which ordinarily is called tobe “motion hearing”; and after applicationbeing admitted, examined the assessees and soalso commissioner (IT) who are parties to thelitigation; and after inquiry being made U/s245-D(3), settlement commission was supposedto examine the records-report of Commissioner(IT) U/s 245-D(1) & the report, if any,received U/s 245-D(3) and after affordingopportunity of hearing to parties (assessee &revenue) either in person or throughrepresentative authorised on their behalf. Settlement commission was supposed topass order U/s 245-D(4); and at this stage,amendment came into force w.e.f. 01/06/07 videFinance Act, 2007, whereby sub-section 4A wasinserted to S.245-D of the Act and obligationwas casted upon settlement commission to passorder U/s 245-D(4) on or before 31/03/08, CW 12911/08 otherwise proceedings pending before it shallstand abated as provided U/s 245-HA(1); inthat eventuality, it would be remitted to theassessing officer or income tax authoritybefore whom proceedings at the time of makingapplication was pending and for being disposedof in accordance with statute as if noapplication U/s 245-C having been made. Due to a sword over the assessees, whohad already made full & true disclosure beforesettlement commission about their incomehaving not been disclosed before assessingauthority, the tax was also paid at the timeof admission of their applications wheresettlement commission prima facie examined therecords taking note of report U/r 9 of Rules,1997 submitted by commissioner (IT); and ifSettlement Commission failed to decide pendingapplication & proceedings were since going tobe abated by 31/03/2008, assessees preferredCWP-2982/2008 wherein this Court issued amandamus directing settlement commission todecide their applications on or before31/03/2008 since they had a fear and rightlyso, because of their applications havingremained pendente & likely to abate by virtueof amendment vide Finance Act, 2007 which will CW 12911/08 create complication for them. However, after taking note of numberof assessments pending & paucity of time, asobserved in orders impugned that it is notpracticable for the Commission to examine therecords and investigate the cases for propersettlement, rather impracticable to affordadequate opportunity to respective parties asprovided U/s 245-D(4) as it was directed bythis Court to pass orders on or before31/03/08; consequently, settlement commissioninvariably passed orders a day before or on31/03/08 in all cases. In instant bunch, applications weredecided by 31/03/08. It would be pertinent toextract part of order being relevant forpresent purpose, which are almost verbatim inall the orders impugned either by assessees orby the revenue ad infra:- create complication for them. However, after taking note of numberof assessments pending & paucity of time, asobserved in orders impugned that it is notpracticable for the Commission to examine therecords and investigate the cases for propersettlement, rather impracticable to affordadequate opportunity to respective parties asprovided U/s 245-D(4) as it was directed bythis Court to pass orders on or before31/03/08; consequently, settlement commissioninvariably passed orders a day before or on31/03/08 in all cases. In instant bunch, applications weredecided by 31/03/08. It would be pertinent toextract part of order being relevant forpresent purpose, which are almost verbatim inall the orders impugned either by assessees orby the revenue ad infra:- “3. In all the principal Bench of theCommissionhastill26/03/2008received more than 324 orders fromvarious High courts in the month ofMarch, 2008, directing the PrincipalBench to complete the cases by31/03/2008. 4. This would involve more than 1500assessments. The Settlement commissiondeals only with the assessments whichinvolve complexity of investigation CW 12911/08 //7// and the application is intended toprovide quietus to litigation. Forexample, in one group of cases where23 applications are involved, thepaper book, which has been filedbefore the Settlement commission runsinto thirty thousand pages. It goeswithout saying that sufficient andproper opportunity is required to begiven both to the applicant and thecommissioner of income tax forarriving at a proper settlement. 5.At this juncture, it is not practicable for the Commission toexamine the records and investigatethe case for proper settlement. Evengiving adequate opportunity to theapplicant and the department, as laiddown in section 245-D(4) of Income TaxAct, 1961 is not practicable. However,to comply with the directions of theHon'ble High Court, we hereby pass anorder U/s 245-D(4) of Income Tax Act,1961 : 6. The undisclosed income is settledas under : 1.Parkash Chand Jalan Rs.20,00,000/- 2.Rajendra Prasad Jalan Rs.40,00,000/- 3.Nawal Kumar Jalan Rs.30,00,000/-” (CIT Central Vs. Ravi Prakash Modi) Facts are almost self same in writ petitionsfiled by the Revenue wherein the assessees arerespondents. In CWP-11515/08, it appears thatsome where in the year 2002, applications were CW 12911/08 //8// filed by assessees and after pleadings werecomplete and when the case was not finallyheard by settlement commission, they alsoapproached this Court and got directionsissued – in pursuance whereof, settlement commission decided their applications bycommon order dt.29/03/08, in which also, parasare almost self-same as in order dt.31/03/08impugned in bunch of petitions of assessees(quoted supra) but it is pertinent to extractrelevant paras only to show that in para 5 oforder impugned, settlement commission recordedat its own that it would be impracticable toexamine the records & to afford adequateopportunity to the assessees & the Revenue asprovided under statute; but at the same time,the Commission still settled undisclosedincome ad infra: “3. In all the principal Bench of theCommissionhastill26/03/2008received more than 324 orders fromvarious High courts in the month ofMarch, 2008, directing the PrincipalBench to complete the cases by31/03/2008. 4. This would involve more than 1500assessments. The Settlement commissiondeals only with the assessments whichinvolve complexity of investigationand the application is intended to CW 12911/08 //9// “3. In all the principal Bench of theCommissionhastill26/03/2008received more than 324 orders fromvarious High courts in the month ofMarch, 2008, directing the PrincipalBench to complete the cases by31/03/2008. 4. This would involve more than 1500assessments. The Settlement commissiondeals only with the assessments whichinvolve complexity of investigationand the application is intended to CW 12911/08 //9// provide quietus to litigation. Forexample, in one group of cases where23 applications are involved, thepaper book, which has been filedbefore the Settlement commission runsinto thirty thousand pages. It goeswithout saying that sufficient andproper opportunity is required to begiven both to the applicant and thecommissioner of income tax for arriving at a proper settlement.5.At this juncture, it is notpracticable for the Commission toexamine the records and investigatethe case for proper settlement. Evengiving adequate opportunity to theapplicant and the department, as laiddown in section 245-D(4) of Income TaxAct, 1961 is not practicable. However,to comply with the directions of theHon'ble High Court, we hereby pass anorder U/s 245-D(4) of Income Tax Act,1961 : 6. The undisclosed income is settledas under : i) Badri Narain Modi Rs.48,00,000/-ii)Smt. Champa Modi Rs.04,00,000/-iii)Ravi Prakash Modi Rs.11,00,000/-iv)Renu Modi Rs.07,00,000/-v)Pawan Modi Rs.09,00,000/-vi)Nidu /gardens (P) Ltd Rs.03,00,000/-vii)Modi Exports House Rs.04,00,000/-viii)IndianAgate Industries Rs.04,00,000/-ix)Ganpati Gems & Arts Rs.08,00,000/-” It is also pertinent to state that in para 10,the assessees were called upon to depositamount of tax alongwith interest within 35days from the date of receipt of intimation CW 12911/08 //10// from the assessing officer in consonance withS.245-D(6A); and accordingly, the Revenuecertainly issued notice U/s 156 of the Act torespective assessee and as informed to thisCourt, all the assessees who are either writpetitioners or respondents in writ petitionsof the Revenue, have deposited amount of taxassessed by settlement commission under ordersimpugned and rightly so, since as required U/s245-D(6A), if assessee fails to deposit amountof tax payable under orders of settlementcommission U/s 245-D(4) within thirty fivedays of receipt of certified copy thereof, heis liable to pay simple interest @ 15% p.a. Re. CWP-12911/2008 CIT Central Vs. M/s Anil Hastkala (P) Ltd In CWP-12911/08, after the order was passed U/s 245-D(4) on 29/03/08 (Ann.2), misc.application was filed by assessee (respondent)on 23/04/08 U/s 245-F(i) seeking certainrectification of mistakes in the order passedU/s 245-D(4) in regard to assessment made bysettlement commission and year-wise break upof amount settled; and after copy of misc.application being served upon the revenue, itwas allowed vide order dt.04/06/08, which wasobviously after cut-off date (31/03/08), and CW 12911/08 after which according to the Revenue,settlement commission has since become functusofficio, proceedings stood abated for allpractical purposes. Re. CWP-12911/2008 CIT Central Vs. M/s Anil Hastkala (P) Ltd In CWP-12911/08, after the order was passed U/s 245-D(4) on 29/03/08 (Ann.2), misc.application was filed by assessee (respondent)on 23/04/08 U/s 245-F(i) seeking certainrectification of mistakes in the order passedU/s 245-D(4) in regard to assessment made bysettlement commission and year-wise break upof amount settled; and after copy of misc.application being served upon the revenue, itwas allowed vide order dt.04/06/08, which wasobviously after cut-off date (31/03/08), and CW 12911/08 after which according to the Revenue,settlement commission has since become functusofficio, proceedings stood abated for allpractical purposes. Counsel for assessees submits that asrequired U/s 245-D(4) of the Act, settlementcommission is under legal obligation toexamine the records & report of Commissioner(IT), if any, submitted U/r 9 of Rules, 1997 &to afford opportunity of hearing to applicants(assessees) & Commissioner (IT) upon havingappeared in person or through authorisedrepresentatives on their behalf, and afterexamination of further evidence having beenplaced before it - taking note whereof,settlement commission could have passed theorder U/s 245-D(4) of the Act; but in instantbunch, aforesaid procedure has completely beengiven a go-bye by settlement commission as isclearly evident from para 5 of orders impugnedwhich clearly discloses that settlementcommission was not in a position to examinethe records & so also afford adequateopportunity of hearing as required under law;inasmuch as it has shown having feltimpracticable in view of so-called paucity oftime which always remains and a common //12// grievance for such authorities while usingsettled phrases that the time is not adequate;and without application of mind & appreciatingevidence on record, still the amount of taxhas been assessed in later para 6 of ordersimpugned. According to Counsel, very procedureadopted by settlement commission in passingorders impugned is a farce and not legallysustainable being violative of S.245-D(4) ofthe Act. Counsel further submits that ifstatute casts obligation to hold anyprocedure, settlement commission was to complywith statutory requirement and no deviationthere from was permitted under law andexercise of proceeding being judicial one,settlement commission was under legalobligation to assign reasons in support ofamount of tax being assessed – in absencewhereof, what has been assessed under ordersimpugned being not supported by material onrecord is not legally sustainable and deservesto be set aside. As regards scheme of the Act and scopeof judicial review U/Art.226 of theConstitution, Counsel has placed reliance upondecisions of Apex Court in Jyotendra Singhji CW 12911/08 Vs. SL Tripathi & Others (1993 (201)ITR 611) & Commnr. Of Income Tax Vs. Om Prakash Mittal(2005(273) ITR 326). However,Counselappearingforassessees in writ petition filed by Revenue,have tried to support orders impugned andsubmit that once the assessees have depositedthe tax as assessed by settlement commissionafter notice being served by the Revenue,atleast the Revenue cannot file writ petitionsafter acceptance of tax assessed by settlementcommission and are bound by principles ofpromissory estoppel in assailing findingsrecorded under orders impugned and cannot bepermitted to approbate & reprobate at the sametime. CW 12911/08 Vs. SL Tripathi & Others (1993 (201)ITR 611) & Commnr. Of Income Tax Vs. Om Prakash Mittal(2005(273) ITR 326). However,Counselappearingforassessees in writ petition filed by Revenue,have tried to support orders impugned andsubmit that once the assessees have depositedthe tax as assessed by settlement commissionafter notice being served by the Revenue,atleast the Revenue cannot file writ petitionsafter acceptance of tax assessed by settlementcommission and are bound by principles ofpromissory estoppel in assailing findingsrecorded under orders impugned and cannot bepermitted to approbate & reprobate at the sametime. Counsel for assessee further submitsthat hearing as provided U/s 245-D(4) of theAct is to be considered in context ofstatutory requirement in view of amendmentunder Finance Act, 2007 – as per whichapplications pending on or before 01/06/2007have to be decided by settlement commission by31/03/08 and this Hon'ble Court has directedsettlement commission to decide applicationsby 31/03/08; and as observed in ordersimpugned, there being more than 1500 CW 12911/08 applications pending were to be decided by31/03/08; so if settlement commission takingnote of prima facie material on record, madeassessment that has to be considered incompliance of S.245-D(4) of the Act. It has further been urged that atleastthe Revenue has not been able to justify byplacing any material on record by which thisCourt may infer that amount of tax assessed bysettlement commission is not prima facie basedon material on record – in absence whereof,merely because opportunity of hearing if beingnot afforded to the Revenue, that alone willnot nullify the order of settlement commissionunder challenge herein. It has also been urged that verynomenclature “settlement commission” is not amechanism for adjudication of a dispute andthere is always for settlement commission toexamine the record and may assess amount oftax payable in the facts of each case and nodetailed reasons are required to be recordedsupporting it under orders impugned. Insupport, Counsel relied upon CIT Mumbai Vs.Anjum M.H.Ghaswala (2002(1) SCC 633). However, all the Counsel for Assesseeseither appearing for writ petitioners or for respondents in petitions of the Revenue,jointly submit that certainly vested rightsstood created in favour of assessees for grantof protection of immunity from prosecution &penalty U/s 245-H due to non-disclosure ofconfidential record having been disclosed bythe assessee before settlement commission andalso because of non-availability of remedy ofappeal against order impugned being itconclusive U/s 245-I of the Act; and if thisCourt comes to the conclusion that ordersimpugned of settlement commission are notlegally sustainable because of non-complianceof S.245-D(4), the mater atleast be remittedback to the settlement commission to examineafresh in accordance with law after affordingopportunity of hearing providing all kinds ofprotection available to them which settlementcommission has also noticed in its ordersimpugned. Counsel further submits that sincesettlement commission passed orders on theirapplications on or before 31/03/08, and S.245-HA(1)(iv) only takes note of such applicationon which settlement commission failed to passorder U/s 245-D(4) within time prescribed U/s245-D(4A); as such proceedings in their cases CW 12911/08 be remitted back only to settlement commissionand not to the assessing authority by treatingproceedingspendentebeforesettlementcommission on being abated U/S 245-HA(2) ofthe Act. Counsel further submits that sincesettlement commission passed orders on theirapplications on or before 31/03/08, and S.245-HA(1)(iv) only takes note of such applicationon which settlement commission failed to passorder U/s 245-D(4) within time prescribed U/s245-D(4A); as such proceedings in their cases CW 12911/08 be remitted back only to settlement commissionand not to the assessing authority by treatingproceedingspendentebeforesettlementcommission on being abated U/S 245-HA(2) ofthe Act. Counsel for Revenue (respondents inbunch of petitions) has made one & foremostcontention that once orders passed bysettlement commission is in violation ofS.245-D(4), the same is a nullity in the eyeof law as if no such order having been passedand in such situation, it would relate back tothe date of passing of the order; andproceedings having remained pendente beforesettlement commission on 31/03/08, certainlystood abated U/s 245-HA of the Act; andsettlement commission having become functusofficio after 31/03/2008 and that being so,all matters are to be remitted back to theassessing officer in terms of S.245-HA(2) ofthe Act so as to be governed by Finance Act,2007 on having become effective. Counselrelied upon 1989(1) SCC 628. Counsel further submits that once settlement commission has become functusofficio, no jurisdiction can now be conferredupon it to decide applications and matter can CW 12911/08 not be remitted conferring jurisdiction uponsettlement commission to decide applicationsin view of S.245-HA of the Act. In support,Counsel relied upon decisions in RSRTC Vs.B.Mukand Bairwa (2009(4) SCC 299), Chiranjilal Vs. Jasjit Singh (1993(2) SCC 507) & ARAntulay Vs. RS Nayak (1988(2) SCC 602. Counsel for Revenue further submitsthat if statute is unambiguous leaving no roomof doubt for interpretation, it has to be readas a whole and it cannot be furthersupplemented by judicial interpretation and ifthere is equity, it is the law which wouldprevail and the equity has no role to play. Insupport, Counsel relied upon Raghunath BarejaVs. Punjab National Bank(2007(2) SCC 230). I have considered rival contentions ofCounsel for parties and with their valuableassistance,examined material on record. Beforeadverting to examine the issue raised hereinfor consideration, this Court considers itappropriate to take note of Scheme introducedunder Chapter XIX-A of the Act relating tosettlement of cases. It appears to have beeninserted by the Taxation Laws (Amendment) Act,1975 w.e.f. April 1, 1976. A somewhat similarprovision was contained in sub-sections (1A) CW 12911/08 to (1D) of S.34 of Indian Income Tax Act, 1922introduced in year 1954. However, provisionsof Chapter XIX-A are qualitatively differentand more elaborate than provisions of the 1922Act. Proceedings commenced under Chapter XIX-Aare judicial as envisaged in S.245-L withinthe meaning of Ss.193 & 228 and for purposesof S.196 of Indian Penal Code. Chapter XIX-A is a complete Code initself as regards settlement of cases forhaving provided a complete mechanism otherthan procedure provided under the IT Act.Legislature conferred all powers uponSettlement Commission being vested in ITauthority under the Act as provided U/s 245-Fand what is being decided by settlementcommission is conclusive providing no remedyof revision/review or appeal to the assesseeor revenue, envisaged in S.245-I of the Act. Settlement commission is constitutedU/s 245-B and its jurisdiction & powers aregoverned by S.245-BA. Proceedings underChapter XIX-A commences upon application beingmade by assessee who can file at any stage ofcase pending relating to him in the manner asprescribed containing full & true disclosureof income which has not been disclosed before CW 12911/08 assessing authority, the manner in whichincome has been derived, additional amount of Settlement commission is constitutedU/s 245-B and its jurisdiction & powers aregoverned by S.245-BA. Proceedings underChapter XIX-A commences upon application beingmade by assessee who can file at any stage ofcase pending relating to him in the manner asprescribed containing full & true disclosureof income which has not been disclosed before CW 12911/08 assessing authority, the manner in whichincome has been derived, additional amount of income tax payable thereon and all otherparticulars, before the settlement commissionso as to have the case settled U/s 245-C ofthe Act. After application U/s 245-C beingfiled by assessee, S.245-D provides procedureto be followed. Sub-sections (1), (2A), (2B),(3) & (4) to S.245-D being relevant for purposes read ad infra: “245-D. Procedure on receipt of anapplicationundersection245C.(applicable prior to Finance Act, 2007w.e.f. 01/06/07)-applicationundersection245C.(applicable prior to Finance Act, 2007w.e.f. 01/06/07)- (1) On receipt of an application undersection 245C, the settlement commissionshall call for a report from theCommissioner and on the basis ofmaterials contained in such report andhaving regard to the nature andcircumstances of the case or the complexity of investigation involvedtherein, the settlement commission,shall where it is possible, by order,reject the application or allow theapplication to be proceeded with withina period of one year from the end ofthe month in which such application wasmade under section 245-C; Provided that an application shallnot be rejected under this sub-sectionunless an opportunity has been given to CW 12911/08 the applicant of being heard: ProvidedfurtherthattheCommissioner shall furnish the reportwithin a period of forty five days ofthe receipt of communication from theSettlement Commission in case of allapplications made under section 245C onor after the 1[st] day of July, 1995 andif the Commissioner fails to furnishthe report within the said period, thesettlement commission may make theorder without such report.” (2A)Subject to the provisions of sub-section (2B) the assessee shall, withinthirty five days of the receipt of acopy of the order under sub-section (1)allowing the application to beproceeded with, pay the additional amount of income tax payable on theincome disclosed in the application andshall furnish proof of such payment ofthe settlement commission. (2B) if the Settlement commission issatisfied, on an application made inthis behalf by the assessee, that he isunable for good and sufficient reasonsto pay the additional amount of incometax referred to in-sub-section (2A)within the time specified in that sub-section, it may extend the time forpayment of the amount which remainsunpaid or allow payment of byinstalments if the assessee furnishesadequate security for the paymentthereof. - (2C) Where the additional amount of CW 12911/08 income tax is not paid within the timespecified under sub-section(2A), then,whether or not the SettlementCommission has extended the time forpayment of the amount which remainsunpaid or has allowed payment thereofby instalments under sub-section (2B),the assessee shall be liable to paysimple interest at fifteen per cent perannum on the amount remaining unpaidfrom the date of expiry of the periodof thirty five days referred to in sub-section (2A). (2D) Where the additional amount of income tax referred to in sub-section(2A) is not paid by the assessee withinthe time specified under that sub-section or extended under sub-section (2B), as the case may be, the settlement commission may direct thatthe amount of income tax remainingunpaid, together with any interestpayable thereon under sub-section (2C),be recovered and any penalty fordefault in making payment of suchadditional amount may be imposed and recovered, in accordance with the (2D) Where the additional amount of income tax referred to in sub-section(2A) is not paid by the assessee withinthe time specified under that sub-section or extended under sub-section (2B), as the case may be, the settlement commission may direct thatthe amount of income tax remainingunpaid, together with any interestpayable thereon under sub-section (2C),be recovered and any penalty fordefault in making payment of suchadditional amount may be imposed and recovered, in accordance with the provisions of Chapter XVII, by the assessing officer having jurisdictionover the assessee. (3) Where an application is allowed tobe proceeded with under sub-section (1), the settlement commission may callfor the relevant records from theCommissioner and after examination of such records, if the settlement CW 12911/08 commission is of the opinion that anyfurther enquiry or investigation in thematter is necessary, it may direct thecommissioner to make or cause to bemadesuchfurtherenquiryorinvestigation and furnish a report onthe matters covered by the applicationand any other matter relating to thecase.” (4) After examination of the recordsand the report of the Commissioner, ifany, received under sub-section (3),and after giving an opportunity to theapplicant and to the commissioner to beheard, either in person or through arepresentative duly authorised in thisbehalf and after examining such furtherevidence as may be placed before it orobtained by it, the settlementcommission may, in accordance with theprovisions of this Act, pass such orderas it thinks fit on the matters coveredby the application and any other matterrelating to the case not covered by theapplication, but referred to in thereport of the commissioner under sub-section (1) or sub-section (3).(4A) In every application allowed tobe proceeded with under sub-section(1), the settlement Commission shall,where it is possible, pass an orderunder sub-section (4) within a periodof four years from the end of thefinancialyearinwhichsuchapplication was allowed to be proceededwith.” CW 12911/08 //23// Sub-section (4A) to S.245-D duly amended videFinance Act, 2007 reads ad infra: “(4A)The settlement commissionshall pass an order under sub-section (4), - (i) in respect of an applicationreferred to in sub-section (2A) orsub-section (2D), on or before the31[st] day of March, 2008; (ii) in respect of an applicationmade on or after the 1[st] day ofJune, 2007, within twelve monthsfrom the end of the month in whichthe application was made.” From the provisions quoted supra, it clearlyemerges that after examination of the recordsand Rule-9 report of Commissioner (IT) undersub-section (1) & report of Commissioner (IT),if any, received under sub-section (3), andafter giving opportunity to the applicant &Commissioner (IT) to be heard either in personor through a representative authorised in thisbehalf and after examining such furtherevidence as placed before it or obtained byit, settlement commission may, in accordancewith the Act, pass such order as it thinks fiton the matters covered by the application andany other matter relating to the case notcovered by application but referred to in thereport of Commissioner (IT) under sub-section(1) or (3). S.245-E empowers settlement commission CW 12911/08 //24// to reopen the completed proceedings inappropriate cases while S.245-F confers allpowers of an income-tax authority uponcommission. S.245-H empowers settlement Commissionto grant immunity from prosecution & penaltywith or without conditions, in cases where itis satisfied that the assessee has made a fulldisclosure of his income & its sources.At thesame time, S.245-HA has been inserted byFinance Act, 2007 w.e.f. 01/06/07 beingrelevant reads ad infra: “245-HA.Abatement of proceedings before settlement commission -(1) Where S.245-E empowers settlement commission CW 12911/08 //24// to reopen the completed proceedings inappropriate cases while S.245-F confers allpowers of an income-tax authority uponcommission. S.245-H empowers settlement Commissionto grant immunity from prosecution & penaltywith or without conditions, in cases where itis satisfied that the assessee has made a fulldisclosure of his income & its sources.At thesame time, S.245-HA has been inserted byFinance Act, 2007 w.e.f. 01/06/07 beingrelevant reads ad infra: “245-HA.Abatement of proceedings before settlement commission -(1) Where (i) an application made under section245C on or after the 1[st] day of June,2007 has been rejected under sub-section (1)of section 245-D; or245C on or after the 1[st] day of June,2007 has been rejected under sub-section (1)of section 245-D; or (ii) an application made under section245-C has not been allowed to beproceeded with under sub-section(2A) or further proceeded with undersub-section (2D) of section 245-D;or 245-C has not been allowed to beproceeded with under sub-section(2A) or further proceeded with undersub-section (2D) of section 245-D;or (iii)an application made under section245C has been declared as invalidunder sub-section (2C) of section245-D; or245C has been declared as invalidunder sub-section (2C) of section245-D; or (iv)in respect of any other applicationunder section 245C, an order undersub-section (4) of Section 245D hasnot been passed within the time orunder section 245C, an order undersub-section (4) of Section 245D hasnot been passed within the time or CW 12911/08 period specified under sub-section (4A) of section 245-D, the proceedings before the settlementcommission shall abate on thespecified date. Explanation. - For the purposes ofthis sub-section, “specified date”means -(a) in respect of an applicationreferred to in clause (i), the day onwhich the application was rejected; (b) in respect of an applicationreferred to in clause (ii), the 31[st]day of July, 2007; (c) in respect of an applicationreferred to in clause (iii), the lastday of the month in which theapplication was declared invalid; (d) in respect of an applicationreferred to in clause (iv), on thedate on which the time or periodspecified in sub-section (4A) ofsection 245D expires. (2) Where a proceeding before thesettlement commission abates, theassessing officer, or, as the case maybe, any other income tax authoritybefore whom the proceeding at the timeof making application was pending,shall dispose of the case in accordance with the provisions of thisAct as if no application under section245C had been made. (3)For the purposes of sub-section(2), the Assessing officer, or, as the case may be, other income tax //26// authority, shall be entitled to useall the material and other informationproduced by the assessee before thesettlement commission or the resultsof the inquiry held or evidencerecorded by the Settlement commissionin the course of the proceedingsbefore it, as if such material,information, inquiry and evidence hadbeen produced before the assessingofficer or other income tax authorityor held or recorded by him in thecourse of the proceedings before him.” Every order passed by Settlement CommissionU/s 245-D(4) is final & conclusive in terms ofS.245-I of the Act and no matter covered bysuch order shall save as otherwise provided inChapter XIX-A be re-opened in any proceedingsunder the Act or under any other law for thetime being in force. As already observed,proceedings before settlement commission aredeemed to be judicial proceedings within themeaning of Ss.193 & 228 and for purposes ofS.196, IPC as provided U/s 245-L of the Act. Every order passed by Settlement CommissionU/s 245-D(4) is final & conclusive in terms ofS.245-I of the Act and no matter covered bysuch order shall save as otherwise provided inChapter XIX-A be re-opened in any proceedingsunder the Act or under any other law for thetime being in force. As already observed,proceedings before settlement commission aredeemed to be judicial proceedings within themeaning of Ss.193 & 228 and for purposes ofS.196, IPC as provided U/s 245-L of the Act. However, by amendment made whileinserting S.245-D(4A) vide Finance Act, 2007making effective w.e.f. 01/06/07, suchapplicants having filed on or after 01/06/07have not been provided with protection asprovided U/s 245-E to reopen completed proceedings or 245-H relating to grant ofimmunity from prosecution & penalty and soalso confidentiality of their record whichthey have disclosed before settlementcommission in their application U/s 245-C ofthe Act. On the contrary, after Finance Act,2007, in cases where proceedings stood abatedU/s 245-HA(1) because of pending applicationshaving not been decided by settlementcommission on or before 31/03/08 all suchpending applications being abated were to bereverted back U/s 245-HA(2) to the assessingofficer or to any other income tax authorityfor being decided afresh in accordance withregular proceedings under the Act as if nosuch application U/s 245-C had been made; andwhatever record has been disclosed by assesseebefore settlement commission in applicationU/s 245-C(supra), it was pre-condition whilesubmitting application for the assessee tocome with true & full disclosure of his incomehaving not been disclosed before assessingauthority and all such records which theassesseedisclosedbeforesettlementcommission in terms of S.245-HA(3) of the Actcan be used as material information byassessing officer in course of proceedings CW 12911/08 before him. Thus, it clearly emerges from ChapterXIX-A that object of legislature inintroducing S.245-C is to avoid protractedproceedings before the authority or in courtsby resorting to settlement of cases. In thisprocess, the assessee cannot expect reductionof amount statutorily payable under the Act.Foundation for settlement is the applicationwhich the assessee files at any stage of acase relating to him in such form and manneras prescribed, Statutory mandate is thatapplication shall contain true & fulldisclosure of income having not been disclosedby him earlier before assessing officer, andthe manner in which income has been derived.Thus, fundamental requirement of applicationU/s 245-C is the true & full disclosure ofincome alongwith manner in which income hasbeen derived.However, by later amendment made forsubstitution vide Finance Act, 2007, procedurehas been changed and after receipt ofapplication U/s 245-C, procedure like impugnedhere where report as earlier required fromCommissioner (IT) is not required, and afterhearingapplicantassessee,settlement CW 12911/08 commission under statutory period of fourteendays by an order in writing either to rejector allow application to be proceeded, with afurther rider that if no order is passedwithin statutory period, it shall be deemed tohave been allowed to be proceeded with. However, present matters since havingarise for consideration on application beingfiled on or before 01/06/07, their cases wereto be considered for taking report ofcommissioner (IT) U/r 9 of Rules, 1997 andafter being prima facie satisfied, settlementcommission took decision to allow applicationto be proceeded with and only thereafterproceedings had further commenced as providedU/Ss 245-D (3) & (4) of the Act. CW 12911/08 commission under statutory period of fourteendays by an order in writing either to rejector allow application to be proceeded, with afurther rider that if no order is passedwithin statutory period, it shall be deemed tohave been allowed to be proceeded with. However, present matters since havingarise for consideration on application beingfiled on or before 01/06/07, their cases wereto be considered for taking report ofcommissioner (IT) U/r 9 of Rules, 1997 andafter being prima facie satisfied, settlementcommission took decision to allow applicationto be proceeded with and only thereafterproceedings had further commenced as providedU/Ss 245-D (3) & (4) of the Act. As already observed, S.245-D)4) castsan obligations upon settlement commission toexamine the records, report of Commissioner(IT) if any, and afford opportunity of hearingto the assessee & Commissioner (IT) either inperson or through representative dulyauthorised in this behalf, and after examiningsuch further evidence as having been placedbefore it or obtained by Commission, may inaccordance with the IT Act, pass such order asit thinks fit. CW 12911/08 //30// In instant bunch, from a bare perusalof paras 5 & 6 quoted supra, it clearlymanifest that observations made therein speakvolumes about procedure having been adopted bysettlement commission in deciding applicationsunder orders impugned as the Commissionspecifically observed that it is impracticableto examine the records & investigate the casesfor proper settlement and even opportunity ofhearing as contemplated U/s 245-D (4) is alsonot practicable; but since this Court directedCommission to pass order before 31/03/08, inpara 6, at its own assessed the undisclosedincome of applicants for being taxed, as isalmost self same verbatim in all the ordersimpugned. Question arises for consideration asto whether in the facts of instant cases,there can be considered to be true complianceof statutory mandate U/s 245-D(4) of the Act.There cannot be two opinions about it andirresistible conclusion is that settlementcommission has failed to afford a reasonableopportunity of hearing nor examined therecords as per statutory requirement of lawand has passed orders impugned without dueapplication of mind; in such circumstances, CW 12911/08 orders impugned in no manner are legallysustainable and are in violation of S.245-D(4)of the Act. That apart, it was common contentionon behalf of assessees and the Revenue that iforders are not sustainable being in violationof S.245-D(4), as per Counsel for assessees,it must be remitted back to settlementcommission while according to Counsel forRevenue, since settlement commission hasbecome functus officio after 31/03/08, matterdeserves to be remitted back to the assessingauthority as contemplated U/s 245HA(2) whowill make assessment of respective assesseesin accordance with law as if no suchapplication has been submitted by respectiveassessees before settlement commission. It is to be noted that instant matterspertain to applications being filed beforesettlement commission on or before 01/06/2007and all such applications being finallydecided by commission by 31/03/08, what hasbeen pointed out by Counsel for respectiveparties is that settlement commission hasfailed to comply with mandate provided U/s245-D(4) of the Act and if having faile