Cwjc/14131/2021 Of Patliputra Builders Ltd v. Income Tax Settlement Commission

IN THE HIGH COURT OF JUDICATURE AT PATNACivil Writ Jurisdiction Case No.14131 of 2021 ====================================================== Patliputra Builders Ltd. a company incorporated under the Companies Act,1956 having its office at Flat No. 301, Maharaja Kameshwar Complex, FraserRoad, Patna through its Director, Niranjan Kumar (Male) (aged about 45years) Son of Late Yadu Nandan Singh, resident of Manas Path, Patel Nagar,Phulwari, P.S. Shastri Nagar, District - Patna. ... ... Petitioner/s Versus 1.Income Tax Settlement Commission through its Secretary having its office atAdditional Bench, 10-C Middleton Row, Second Floor, Kolkata - 700001.Additional Bench, 10-C Middleton Row, Second Floor, Kolkata - 700001. 2.Commissioner of Income Tax X 3.Asst. Commissioner of Income Tax, Central Circle 2, Patna. 4.Tax Recovery Officer, Central, Patna. ... ... Respondent/s ======================================================Appearance :For the Petitioner/s: Mr.D.V.Pathy, Advocate Mr.Sadashiv Tiwary, AdvocateFor the Income Tax: Mrs.Archana Sinha, Sr. Standing Counsel Mr. Alok Kumar, Advocate ====================================================== CORAM: HONOURABLE THE CHIEF JUSTICE and HONOURABLE MR. JUSTICE RAJIV ROYORAL JUDGMENT(Per: HONOURABLE THE CHIEF JUSTICE) Date : 24-01-2024 The petitioner is before this Court challengingthe withdrawal of immunity as granted by the SettlementCommission by Annexure-1 order. Annexure-1 order runs intoseveral pages, but there is no dispute on the quantum of theamounts determined by the Settlement Commission for thepurpose of concluding the matter. The quantum was Rs.2,72,40,648 and the dispute raised is on its satisfaction. 2. In considering the immunity granted by the Settlement Commission, we have to extract Paragraph 95 and 96of the order. 95. IMMUNITY: The applicant group hasmade a prayer for granting immunity from penalty andprosecution under the Income Tax Act. Considering thecooperation extended and the facts of the case, we allowthe prayer of the applicant for immunity from penalty andprosecution under the Income Tax Act only, so far as thesame relate to issues dealt with in this order of settlement. 95.1 Prosecution:However, in our view, anyprosecution launched prior to the date of filing ofapplication will subsist, and such proceedings wouldcontinue. Prosecution had been launched against theapplicant(s) for not complying with the directions underSection 142(2A) before filing these applications wouldsubsist in the case of the applicant(s). 96.PAYMENT OF TAXES:Thecomputation of income, tax and interest as per Annexuresenclosed. The applicants PBL and Shri Anil Kumar wouldhave substantial tax liabilities. The learned A.R. soughtpayment of taxes in eighteen installments in all cases.Considering the facts and the demand likely to arise, wegrant installments in the case of M/s PBL, M/s patliputraHytech Pvt. Ltd. and Shri Anil Kumar only. These threeapplicants shall pay 25% of their demand by 15[th] March,2016. The balance 75% would be paid in equal monthlyinstallments in F.Yr. 2016-17. 96.1 Credit for adjustment of seized cash inthe case of PBL shall be allowed from the date of seizure.As we have adjusted income year-wise, and also from onefrom one applicant to another while determining the income, the surplus tax paid in any year may be adjustedwith another year. Similarly, any refund due in the case ofan applicant, shall be adjusted against the demandpayable in the case of another applicant. 3. The immunity, hence was extended on the 96.1 Credit for adjustment of seized cash inthe case of PBL shall be allowed from the date of seizure.As we have adjusted income year-wise, and also from onefrom one applicant to another while determining the income, the surplus tax paid in any year may be adjustedwith another year. Similarly, any refund due in the case ofan applicant, shall be adjusted against the demandpayable in the case of another applicant. 3. The immunity, hence was extended on the applicants paying up the amounts as directed therein i.e., 25% ofthe demand by 15.03.2016 and the balance 75% in equalmonthly installments to be paid in Financial Year 2016-17.Admittedly, the petitioner did not pay up the amounts within theperiod provided in the order. The department approached thePrincipal Commissioner, Income Tax, Central for withdrawal ofthe immunity from penalty and prosecution. The PrincipalCommissioner, Income Tax, Central approached theGovernment of India which allowed the same as percommunication dated 17/18.01.2018. There was an appeal filedfrom the said order which also stood dismissed. 4. The present writ petition was filed challengingthe withdrawal of immunity on the ground that the petitionerwas not heard. We find that the communication of theGovernment of India only permitted further proceedings and itcannot be considered to be an order of withdrawal of immunity.The immunity was granted by the Settlement Commission andwas subject to the condition of payment being satisfied. The Central Government cannot withdraw the immunity granted bythe Settlement Commission, if the conditions are satisfied. But,on the other hand if the conditions are not satisfied within thetime period, the immunity would automatically cease to operate.The order of the Central government hence only directsproceedings on the cessation of immunity. The hearing of thepetitioner is an empty formality because the petitioner does nothave a case that he even paid one pie as per the settlement order. 5. The immunity granted was on condition of thepetitioner satisfying the Settlement Commission’s order whichalso prescribed specific time frame for payment. The SettlementCommission’s order works itself out if the payment is not madein accordance with the directions therein and automatically, theimmunity stands withdrawn. We find absolutely no reason tointerfere with the order. 6. Now, the learned counsel specifically takes us toan order passed by this Court at the time of admission by adifferent Division Bench, on 25.08.2021. After referring to thesubmission made by the learned counsel for the Department thatthere was default in compliance of the Settlement Commission’sorder based on which the immunity ceased; the learned Judgesopined that still the revenue is at fault for not having taken appropriate proceedings. The Division Bench issued directions,on the specific undertaking given by the learned counsel for thepetitioner, which we extract from Paragraph 4, 5, 6 and 7 of thesaid order: At this stage, Shri D.V. Pathy, learnedcounsel for the petitioner, states that to establish hisbona fides, the petitioner is ready and willing to depositthe remaining amount of Rs.2,72,40,648/- within aperiod of two months from today. Statement accepted and taken on record. Let the petitioner deposit the aforesaidamount within the aforesaid period. At least Rupees OneCrore, out of the said amount, he must deposit on orbefore 09.09.2021. At this stage, Ms. Archana Sinha states thatthe department would be at liberty to claim interest ondelayed payment. 7. Learned counsel takes us to the supplementary At this stage, Shri D.V. Pathy, learnedcounsel for the petitioner, states that to establish hisbona fides, the petitioner is ready and willing to depositthe remaining amount of Rs.2,72,40,648/- within aperiod of two months from today. Statement accepted and taken on record. Let the petitioner deposit the aforesaidamount within the aforesaid period. At least Rupees OneCrore, out of the said amount, he must deposit on orbefore 09.09.2021. At this stage, Ms. Archana Sinha states thatthe department would be at liberty to claim interest ondelayed payment. 7. Learned counsel takes us to the supplementary counter affidavit to point out that Rs. One crore was paid withinthe period provided in the interim order and the balanceamounts also settled. Though Rs. One crore was paid within09.09.2021, the petitioner failed to comply with the undertakingthat the entire amounts would be paid within two months fromthe date of the order above extracted, which should have beenon or before 25.08.2021. The payments as seen from Annexure-5 series produced by the petitioner in the supplementary counter affidavit are far later to that. Hence, just as the SettlementCommission’s order worked itself out, the interim order of thisCourt also worked itself out. 8. The learned Standing Counsel for the respondentdepartment also pointed out from the counter affidavit that thedelay would create the liability of interest, interest on interestand penalty also, which has been tabulated in the counteraffidavit dated 24.04.2023 filed by the department. We wouldonly say that the statutory consequences follow. 9. It is submitted by the learned counsel appearingfor the department that the quantum as submitted by thepetitioner is also not the actual amounts made liable on delayedpayment. 10. We agree with the learned counsel for therespondent that the interim order passed by another DivisionBench, was only on the petitioner’s submission that the amountsto be paid are Rs. 2,72,40,648/-. It is also pertinent that even theundertaking as seen from the interim order has not beencomplied with. We also have our own reservation as to whetherby a judicial order, the necessary consequences of an order ofthe Settlement Commission, on non-compliance, can be set atnaught by this Court. However, we need not look into that aspect since even according to the petitioner he has notcomplied with the interim order. 11. The order of the Settlement Commission and theinterim order of this Court has worked itself out; both, on non-compliance of the conditions of payment, by the petitioner. Theconsequences with respect to immunity having been set atnaught, would be visited on the petitioner. The SettlementCommission’s order would not be enforceable, but we made itclear that the delayed payments made would be set-off againstthe demands raised against the petitioner either interest orprinciple due, as the statute mandates. 12. The writ petition would stand dismissed. (K. Vinod Chandran, CJ) Anushka/- ( Rajiv Roy, J) AFR/NAFRCAV DATEUploading Date06.02.2024Transmission Date