Hereinafter Referred To As ‘The Act’) Filed By The Assessees To Be‘not Invalid’ And Allowed To Be Proceeded With Further v. Punjab And Haryana High Court In M/S C & Cconstructions’ Case (Supra), While Considering An Identical Issuewhere Challenge Was To The Orders Passed By The Commi

Chief Justice’s CourtSerial Nos. 3017 HIGH COURT OF JUDICATURE AT ALLAHABAD*** WRIT TAX No. - 489 of 2020 Assistant Commissioner of Income Tax …. Petitioner Through:- Mr. Manu Ghildyal, Advocate Income Tax Settlement Commission and another ….Respondents Through:- Mr. Tanmay Sadh and Mr. Nikhil Agrawal, Advocates for respondents CORAM : HON'BLE RAJESH BINDAL, CHIEF JUSTICEHON'BLE J.J. MUNIR, JUDGE ORDER 1.This order will dispose of following bunch of writpetitions : Writ Tax Nos. 489, 491, 492, 493, 495, 496, 498, 499,500, 501, 506, 507, 510, 513, 514, 527,531, 533, 534, 535, 536, 538, 539, 540,541, 542, 543, 544, 546, 547, 548, 554and 557 of 2020 2.As common legal issues are involved, facts are beingnoticed from Writ Tax No. 489 of 2020. Challenge in the writ petitionis to the order dated September 26, 2019 passed by the Income TaxSettlement Commission (hereinafter referred to as ‘Commission’)declaring the applications under Section 245C of the Income Tax Act, 2 WRIT TAX No. 489 of 2020 1961 (hereinafter referred to as ‘the Act’) filed by the assessees to be‘not invalid’ and allowed to be proceeded with further. 3.The argument raised by learned counsel for the petitioneris that two core issues regarding maintainability of applications beforethe Commission have not been considered before entertaining theapplications filed by the assessees. The same are non-disclosure of fulland true income of the applicants and further non payment of amountof tax due at the time of filing the applications in terms of theprovisions of the Act. The argument is that in the report submitted bythe Principal Chief Commissioner of Income Tax details werefurnished which establish that true disclosure was not made by theassessees, hence, the applications should not have been entertained.The issue was required to be decided then and there, instead ofproceeding further. 4.In response, learned counsel for the assessees submittedthat all the issues including maintainability of the application and onmerits are subject to challenge by either of the aggrieved party afterthe application is finally decided by the Commission. At this stage, thewrit petition filed by the Department is premature. In support of theargument, reliance has been placed on order dated February 27, 2009passed by Hon’ble the Supreme Court in Special Leave to Appeal(Civil) No. 2295 of 2009 titled as C.I.T. vs. K. Jaya PrakashNarayanan, which was subsequently followed by Punjab andHaryana High Court in Commissioner of Income Tax (Central),Gurgaon vs. M/s C & C Constructions and others, CWP No. 9251of 2012 decided on October 18, 2012, Delhi High Court inCommissioner of Income-Tax vs. Income-Tax SettlementCommission and others, (2014) 360 ITR 407 Delhi and AndhraPradesh High Court in Commissioner of Income-Tax and anothervs. Settlement Commission (IT & WT) and another, (2014) 364 3 WRIT TAX No. 489 of 2020 ITR 625 (AP). It is submitted that it has been specifically held in theaforesaid judgments that at the time of challenge to the final order byeither of the aggrieved party, all the issues including maintainabilityof the application under Section 245D(4) of the Act can be raised,hence, the writ petitions filed by the Department deserve to bedismissed being premature. 5.After hearing learned counsel for the parties andconsidering the views expressed by Hon’ble the Supreme Court inK. Jaya Prakash Narayanan’s case (supra) as well as High Courtsof Punjab and Haryana, Delhi and Andhra Pradesh, we are of the viewthat the contentions raised by learned counsel for the respondents aretenable. 3 WRIT TAX No. 489 of 2020 ITR 625 (AP). It is submitted that it has been specifically held in theaforesaid judgments that at the time of challenge to the final order byeither of the aggrieved party, all the issues including maintainabilityof the application under Section 245D(4) of the Act can be raised,hence, the writ petitions filed by the Department deserve to bedismissed being premature. 5.After hearing learned counsel for the parties andconsidering the views expressed by Hon’ble the Supreme Court inK. Jaya Prakash Narayanan’s case (supra) as well as High Courtsof Punjab and Haryana, Delhi and Andhra Pradesh, we are of the viewthat the contentions raised by learned counsel for the respondents aretenable. 6.Punjab and Haryana High Court in M/s C & CConstructions’ case (supra), while considering an identical issuewhere challenge was to the orders passed by the Commissionentertaining the application, had held that validity of such order wasnot required to be gone into at that stage as the final order can bechallenged by availing appropriate remedy by either of the aggrievedparty and at that stage all the issues, including challenge to themaintainability of the application, will be open. The relevantparagraph thereof is extracted hereinbelow : “Having regard to the aforesaid considerations inmind, we are of the opinion that in exercise ofextraordinary jurisdiction under Article 226 of theConstitution of India, it is not necessary to go into thevalidity of the impugned order at this stage. In case thefinal order passed by the Settlement Commission isagainst the department or is not acceptable on theterms on which the same is passed, it would be open to 4 WRIT TAX No. 489 of 2020 the department to challenge the same by filingappropriate proceedings. At this stage, it would beopen to the department to raise all the contentionswhich are permissible including challenge to theimpugned order passed and the observations made inthe impugned order. Giving the aforesaid liberty to thedepartment, both the petitions are not entertained atthis stage being premature. Hence, the same are herebydismissed.” 7.Similar view has been expressed by Delhi High Court inCommissioner of Income-Tax’s case (supra) in paragraph 13,which is reproduced below : “13.From the above provisions, it is apparentthat the settlement application passes through severalstages before the final order providing for the terms ofsettlement is passed by the Settlement Commission.The first stage is under section 245D(1). This isfollowed by the next step under section 245D(2C) andfinally by the order passed under section 245D(4). Inthe present case, the final order under section 245D(4)is yet to be passed. The orders under section 245D(1)and 245D(2C) are not final orders and they are subjectto the final orders that may be passed under section245D(4). It is, therefore, clear that the issue of full andtrue disclosure on the part of the applicants and themanner in which the undisclosed income was derivedis still open for discussion and debate and theSettlement Commission would have to give its finaldecision on these aspects before an order of settlementis passed under section 245D(4) of the said Act. 5 WRIT TAX No. 489 of 2020 5 WRIT TAX No. 489 of 2020 Therefore, on a plain reading of the provisions, it isapparent that the submission made by learned counselfor respondents No. 2 to 5 merits acceptance in so faras it was contended by him that the entire issueremains open and at any stage of the proceedings tillthe order under section 245D(4) is passed by theSettlement Commission, the issue with regard to thefull and true disclosure and the manner in which theundisclosed income had been derived would be openand can be raised by the Revenue. In fact, it wasclarified by the learned counsel for respondents Nos. 2to 5 that the said respondents do not even contend thatonce an application has been proceeded with undersection 245D(1) and has not been held to be invalid245D(2C), the validity of the same in terms of therequisite conditions stipulated in section 245C(1)cannot be gone into at the subsequent stages up to thepassing of the order under section 245D(4) of the saidAct.” 8.The same view has been reiterated by Andhra PradeshHigh Court in Commissioner of Income-Tax and another vs.Settlement Commission (IT & WT) and another’s case (supra) inparagraph 11, which is being quoted below : “11.As a matter of fact, what all is requiredby the Settlement Commission at the stage ofentertaining the application is whether a prima faciecase is made out or not and in that context onlysubsequent amendments which have been brought insections 245C and 245D of the Act had dispensedwith even issuing a preliminary notice to the 6 WRIT TAX No. 489 of 2020 Commissioner of Income-tax leaving it to theabsolute discretion of the Settlement Commission toentertain a case or not for its consideration. Thereasons for giving such discretion to theCommission cannot be lost sight particularlykeeping in view of the objects of establishment ofthe Settlement Commission and to settle the disputesbetween the taxpayer and the Department in anamicable manner. As a matter of fact, the recentlegislative efforts in bringing section 268A of theAct and in issuing various circulars wherebyrestraining the Department officials to file appealsand further appeals in all and sundry casesrecognising futility of such exercise may be noticed.A close perusal of the order passed by the SettlementCommission, both at the stage of admission and alsoat the stage of passing of the final order, we find, asa matter of fact, ample opportunity was given to theDepartment to file their objections and also therepresentatives of the Department were heard beforepassing the orders and in that view of the matter, weare unable to concur with the contention of thelearned counsel for the petitioner that the order isvitiated on account of violation of the principles ofnatural justice. Inasmuch as we are satisfied that itwas within the discretion of the SettlementCommission at the stage of section 245D(1) of theAct to admit a case for consideration based on theprima facie view, the aspect of admission of a caseby the Settlement Commission except in exceptional 7 WRIT TAX No. 489 of 2020 circumstances cannot be the subject matter of ajudicial review. This becomes clear from the law laiddown in a catena of judgments with reference to therestricted scope of interference by the courts evenwith the final orders of the Settlement Commission.In that view of the matter, we do not see any reasonsto order the amendment petition. Accordingly, theW.P.M.P. No. 28188 of 2002 is dismissed.” 7 WRIT TAX No. 489 of 2020 circumstances cannot be the subject matter of ajudicial review. This becomes clear from the law laiddown in a catena of judgments with reference to therestricted scope of interference by the courts evenwith the final orders of the Settlement Commission.In that view of the matter, we do not see any reasonsto order the amendment petition. Accordingly, theW.P.M.P. No. 28188 of 2002 is dismissed.” 9.In view of aforesaid enunciation of law by different HighCourts referring to the order passed by Hon’ble the Supreme Court inK. Jaya Prakash Narayanan’s case (supra), in our view, thepresent writ petitions filed by the Department are premature and areliable to be dismissed, as it has authoritatively been held that an orderpassed by the Commission merely entertaining the application cannotbe subject matter of challenge as after passing of the final order underSection 245D (4) of the Act, either the Department or the assessee,whoever is aggrieved of the order, can avail of its appropriate remedyincluding challenge to the order entertaining the application. 10.The writ petitions are, accordingly, dismissed with theaforesaid observations. Allahabad 24.11.2022 Manish Himwan/Shiraz Whether the order is speaking : YesWhether the order is reportable : Yes/No