Megha Engineering And Infrastructure Ltd v. Income Tax Settlement Commission & Ors

* IN THE HIGH COURT OF DELHI AT NEW DELHI % Judgement delivered on: 06.10.2025 + W.P.(C) 3479/2021 MEGHA ENGINEERING AND INFRASTRUCTURE LTD. ..... PETITIONER versus INCOME TAX SETTLEMENT COMMISSION & ORS. ..... RESPONDENTS + W.P.(C) 3710/2021 WESTERN UP POWER TRANSMISSION CO LTD ....PETITIONER versus INCOME TAX SETTLEMENT COMMISSION & ORS. ..... RESPONDENTS Advocates who appeared in this case For the Petitioner : Mr. Parag P. Tripathi, Sr. Adv. with Ms. Sanam Tripathi, Mr. Srinivasan, Mr. Ramaswamay, Mr. Dheeresh K. Dwivedi & Mr. Harjeet Singh, Advs. For the Respondents : Mr. Sanjay Kumar, SSC with Ms. Monica Benjamin and Ms. Easha, JSCs. CORAM: HON'BLE MR. JUSTICE V. KAMESWAR RAO HON'BLE MR. JUSTICE VINOD KUMAR V. KAMESWAR RAO, J. JUDGMENT 1.The captioned petitions have been filed with prayers inter alia seeking directions to the respondent No.1 Income Tax Settlement Commission (‘ITSC’, for short) to receive the applications filed by the respective petitioners and their related entities under Section 245-C of Income Tax Act, 1961 (‘the Act’, hereinafter) and process the same as per Chapter XIX-A of the Act uninfluenced by the provisions of the Finance Act, 2021. 2.As similar issues and questions of law arise in both these Writ Petitions, we shall decide the same together. 3.The petitioner in W.P.(C) 3479/2021 is a company incorporated under the provisions of the Companies Act, 1956 and is engaged in the business of execution of large scale EPC/Turnkey Water Management Projects all over India. On 11.10.2019, a search and seizure was conducted by the Income Tax authorities at the office of the petitioner. On 02.03.2021, the Deputy Commissioner of Income Tax, (‘DCIT’, for short), Central Circle-19 issued notices under Section 153-A upon the petitioner for the Assessment Year (‘AY’, for short) 2014-15 till 2019-20 based on the search. Thereafter, the petitioner engaged a consultant to prepare its application under Section 245 C of the Act to be filed before the ITSC for the said Assessment Years. However the petitioner then learnt that in light of the provisions of the Finance Bill, 2021, the ITSC was not accepting any application under Section 245 C of the Act. Hence, the petitioner filed the writ petition before this Court on 16.03.2021. On 17.03.2021, this Court passed an interim order directing the ITSC to accept and process the application of the petitioner in accordance with the provisions of the Act as the Finance Bill, 2021 had not morphed into a statute as of that date. The interim order was made absolute by this Court vide order dated 25.03.2021, during the pendency of the petition. 4.Pursuant thereto, the petitioner filed an application under Section 245 C on 22.03.2021 along with an amount of ₹30.04 crore by way of tax and interest on the income disclosed in the said application as statutorily required. The petitioner had informed the Assessing Officer (‘AO’, for short) about the application before the ITSC. However, no action was taken by the ITSC despite the direction by this Court to receive and process the application. 5. On 29.06.2021 and 30.06.2021, the petitioner received notices under Section 143(2) of the Act for the AY 2020-21 and AYs 2014-15 to 2019-20 respectively. Thereafter, on 05.08.2021, another notice under Section 142(1) of the Act was received for AYs 2014-15 to 2019-20. 6.Since the Finance Bill 2021, received the assent of the President and became the Finance Act, 2021 the petitioner filed an amended writ petition with the following prayers:- “a. Issue an appropriate writ, order or direction to Respondent No. 1 directing it to receive the application filed by the Petitioner under Section 245-C of the Income fax Act, 1961, and to process the same as per Chapter XIX-A of the Income Tax Act, 1961, as presently in force and uninfluenced by the provisions o f the Finance Bill, 2021; 5. On 29.06.2021 and 30.06.2021, the petitioner received notices under Section 143(2) of the Act for the AY 2020-21 and AYs 2014-15 to 2019-20 respectively. Thereafter, on 05.08.2021, another notice under Section 142(1) of the Act was received for AYs 2014-15 to 2019-20. 6.Since the Finance Bill 2021, received the assent of the President and became the Finance Act, 2021 the petitioner filed an amended writ petition with the following prayers:- “a. Issue an appropriate writ, order or direction to Respondent No. 1 directing it to receive the application filed by the Petitioner under Section 245-C of the Income fax Act, 1961, and to process the same as per Chapter XIX-A of the Income Tax Act, 1961, as presently in force and uninfluenced by the provisions o f the Finance Bill, 2021; b. Issue an appropriate writ, order or direction to the Respondent Nos. 2-3, directing them to stay all further actions in relation to the Petitioner for assessment years 2014-2015 till 2020-21, during the pendency of this writ petition or till the Petitioner’s application is accepted by the Respondent No. 1 under Section 245-C; c. Issue an appropriate writ, order or direction to the Respondent Nos. 2-3, directing them not to take any further steps in pursuance of the notices dated 02.03.2021 issued by Respondent No. 2 to the Petitioner under Section 153 A of the Income Tax Act, 1961 for AY 2014-15 till 2019-2020 during the pendency of this writ petition or till the Petitioner’s application is accepted by the Respondent No. 1 under Section 245-C; cc. Issue an appropriate writ, order or direction declaring Sections 62 to 73 of the Finance Act, 2021 as unconstitutional, as they have been passed by the Parliament as a money bill even though they do not fulfil the criteria of a money bill as specified in Article 110 of the Constitution of India; dd. Issue an appropriate writ, order or direction declaring that the Petitioner is not required to file a fresh application under Section 245C and that the application filed by it on 22.03.2021 shall be considered to be a ‘pending application’ as defined in Section 245 (eb) of the Income Tax Act, 1961; ee. Issue an appropriate writ, order or direction declaring that in light of the press release issued by the Central Board of Direct Taxes, dated 07.09.2021, the Petitioner is not required to file a fresh application under Section 245C and that the application filed by it on 22.03.2021 shall be considered to be a ‘pending application as defined in Section 245 (eb) of the Income Tax Act, 1961; ff. Issue an appropriate writ, order or direction clarifying that the Respondent No. 1 continued to exist and function till 01.04.2021, as per the provisions of the Income Tax Act, 1961, then in force, unaffected by the provisions of the Finance Act, 2021; gg. Issue an appropriate writ, order or direction declaring the proviso to Section 245B(1), the proviso to Section 245BC, the proviso to Section 245BD and Section 245C(5) of the Income Tax Act, 1961, as inserted by the Finance Act, 2021, to the extent that it applies w.e.f 01.02.2021, as unconstitutional and in violation of inter alia, Articles 14, 19 (l)(g), 20, 21 and 300A of the Constitution of India and consequently directing the Respondents to treat the application filed by the Petitioner No.1 before Respondent No. 1 on 22.03.2021 as a ‘pending application’ as defined in Section 245A(eb) of the Income Tax Act, 1961; gg. Issue an appropriate writ, order or direction declaring the proviso to Section 245B(1), the proviso to Section 245BC, the proviso to Section 245BD and Section 245C(5) of the Income Tax Act, 1961, as inserted by the Finance Act, 2021, to the extent that it applies w.e.f 01.02.2021, as unconstitutional and in violation of inter alia, Articles 14, 19 (l)(g), 20, 21 and 300A of the Constitution of India and consequently directing the Respondents to treat the application filed by the Petitioner No.1 before Respondent No. 1 on 22.03.2021 as a ‘pending application’ as defined in Section 245A(eb) of the Income Tax Act, 1961; hh. In the alternate, issue an appropriate writ, order or direction reading down the proviso to Section 245B(1), the proviso to Section 245BC, the proviso to Section 245BD and Section 245C(5) of the Income Tax Act, 1961, as inserted by the Finance Act, 2021, to hold that the said provisions will be effective from 01.04.2021 and not from 01.02.2021 and consequently directing the Respondents to treat the application filed by the Petitioner No.1 before Respondent No.1 on 22.03.2021 as a ‘pending application’ as defined in Section 245A(eb) of the Income Tax Act, 1961; ii. Issue an appropriate writ, order or direction in the nature of certiorari quashing the notices dated 29.06.2021 and 30.06.2021 issued by Respondent No. 2 to the Petitioner under Section 143(2) of the Income Tax Act, 1961; jj. Issue an appropriate writ, order or direction in the nature of certiorari quashing the notices dated 05.08.2021 issued by Respondent No. 2 to the Petitioner under Section 142(1) of the Income Tax Act, 1961; kk. Issue an appropriate writ, order or direction in the nature of prohibition to Respondent Nos.2-3, prohibiting them from taking any steps against the Petitioner No. 1 under the provisions of the IT Act, 1961, including with respect to the notices dated 29.06.2021 and 30.06.2021 issued by the Respondent No. 2 to the Petitioner under Section 143 (2) of the Income Tax Act, 1961 and the notices dated 05.08.2021 issued by the Respondent No. 2 to the Petitioner under Section 142 (1) of the Income Tax Act, 1961, during the pendency of the present writ petition or till the final adjudication of the application dated 22.03.2021 filed by the Petitioner No. 1 before the Respondent No.1;” 7.The petitioner in W.P.(C.) 3710/2021 is also a company incorporated under the provisions of the Companies Act, 1956 and is engaged in the business of transmission and distribution of electricity in the state of Uttar Pradesh. On 11.10.2019, a search and seizure was carried out by the Income Tax authorities at the office of the petitioner. Thereafter, on 18.03.2021, the DCIT, Central Circle-19, Delhi, issued notices under Section 153 C upon the petitioner for the AYs 2014-15 till 2019-20 and under Section 143(2) for the AY 2020-21. As the petitioner learnt that the ITSC was not accepting any application, it approached this Court by way of the Writ Petition, pursuant whereto, this Court passed an interim order directing the ITSC to accept and process the application of the petitioner in accordance with the provisions of the Act as the Finance Bill, 2021 had not morphed into a statute as of that date. On 25.03.2021, this Court made the interim order absolute, during the pendency of the petition. On 30.06.2021, the petitioner received notices under Section 143(2) of the Act for AYs 2014-15 to 2019-20. 8. The prayers made in the amended petition are the following:- “a. Issue an appropriate writ, order or direction to Respondent No.1 directing it to receive the application filed by the Petitioner under Section 245-C of the Income Tax Act, 1961, and to process the same as per Chapter XIX-A of the Income Tax Act, 1961, as presently in force and uninfluenced by the provisions of the Finance Bill, 2021; b. Issue an appropriate writ, order or direction to the 8. The prayers made in the amended petition are the following:- “a. Issue an appropriate writ, order or direction to Respondent No.1 directing it to receive the application filed by the Petitioner under Section 245-C of the Income Tax Act, 1961, and to process the same as per Chapter XIX-A of the Income Tax Act, 1961, as presently in force and uninfluenced by the provisions of the Finance Bill, 2021; b. Issue an appropriate writ, order or direction to the Respondent Nos.2-3, directing them to stay all further actions in relation to the Petitioner for assessment years 2014-2015 till 2020-21, during the pendency of this writ petition or till the Petitioner’s application is accepted by the Respondent No. 1 under Section 245-C; c. Issue an appropriate writ, order or direction to the Respondent Nos. 2-3, directing them not to take any further steps in pursuance of the notices dated 18.03.2021 issued by Respondent No. 2 to the Petitioner under Section 153-C IT Act for AY 2014-2015 till 2019- 2020 and under Section 143(2) IT Act for AY 2020-21 during the pendency of this writ petition or till the Petitioner’s application is accepted by the Respondent No. 1 under Section 245-C; cc. Issue an appropriate writ, order or direction declaring Sections 62 to 73 of the Finance Act, 2021 as unconstitutional, as they have been passed by the Parliament as a money bill even though they do not fulfil the criteria of a money bill as specified in Article 110 of the Constitution of India; dd. Issue an appropriate writ, order or direction declaring that the Petitioner is not required to file a fresh application under Section 245C and that the application filed by it on 22.03.2021 shall be considered to be a ‘pending application’ as defined in Section 245 (eb) of the Income Tax Act, 1961; ee. Issue an appropriate writ, order or direction declaring that in light of the press release issued by the Central Board of Direct Taxes, dated 07.09.2021, the Petitioner is not required to file a fresh application under Section 245C and that the application filed by it on 22.03.2021 shall be considered to be a ‘pending application’ as defined in Section 245 (eb) of the Income Tax Act, 1961; ff. Issue an appropriate writ, order or direction clarifying that the Respondent No. 1 continued to exist and function till 01.04.2021, as per the provisions of the Income Tax Act, 1961, then in force, unaffected by the provisions of the Finance Act, 2021; gg. Issue an appropriate writ, order or direction declaring the proviso to Section 245B(1), the proviso to Section 245BC, the proviso to Section 245BD and Section 245C(5) of the Income Tax Act, 1961, as inserted by the Finance Act, 2021, to the extent that it applies w.e.f 01.02.2021, as unconstitutional and in violation of inter alia, Articles 14, 19 (l)(g), 20, 21 and 300A of the Constitution of India and consequently directing the Respondents to treat the application filed by the Petitioner No. 1 before Respondent No. 1 on 22.03.2021 as a ‘pending application’ as defined in Section 245A(eb) of the Income Tax Act, 1961; hh. In the alternate, issue an appropriate writ, order or direction reading down the proviso to Section 245B(1), the proviso to Section 245BC, the proviso to Section 245BD and Section 245C(5) of the Income Tax Act, 1961, as inserted by the Finance Act, 2021, to hold that the said provisions will be effective from 01.04.2021 and not from 01.02.2021 and consequently directing the Respondents to treat the application filed by the Petitioner No. 1 before Respondent No. 1 on 22.03.2021 as a ‘pending application’ as defined in Section 245A(eb) of the Income Tax Act, 1961; ii. Issue an appropriate writ, order or direction in the nature of certiorari quashing the notices dated 30.06.2021 issued by Respondent No. 2 to the Petitioner under Section 143(2) of the Income Tax Act, 1961; hh. In the alternate, issue an appropriate writ, order or direction reading down the proviso to Section 245B(1), the proviso to Section 245BC, the proviso to Section 245BD and Section 245C(5) of the Income Tax Act, 1961, as inserted by the Finance Act, 2021, to hold that the said provisions will be effective from 01.04.2021 and not from 01.02.2021 and consequently directing the Respondents to treat the application filed by the Petitioner No. 1 before Respondent No. 1 on 22.03.2021 as a ‘pending application’ as defined in Section 245A(eb) of the Income Tax Act, 1961; ii. Issue an appropriate writ, order or direction in the nature of certiorari quashing the notices dated 30.06.2021 issued by Respondent No. 2 to the Petitioner under Section 143(2) of the Income Tax Act, 1961; jj. Issue an appropriate writ, order or direction in the nature of prohibition to Respondent Nos. 2-3, prohibiting them from taking any steps against the Petitioner No. 1 under the provisions of the IT Act, 1961, including with respect to the notices dated 30.06.2021 issued by the Respondent No. 2 to the Petitioner under Section 143 (2) of the Income Tax Act, 1961, during the pendency of the present writ W.P.(C) 3479/2021 & W.P.(C) 3710/2021 Page 8 of 43 petition or till the final adjudication of the application dated 22.03.2021 filed by the Petitioner No. 1 before the Respondent No.1;” 9.On 01.02.2021, the Finance Bill of 2021 (Bill No.15 of 2021) was introduced in the Parliament, Clauses 55-65 whereof were to amend Section 245A to 245M of the Act and envisaged replacing the ITSC with a body known as the Interim Board of Settlements (‘the Interim Board’, hereinafter). 10.As per Clause 55 of the Finance Bill, 2021, from 01.02.2021, the ITSC is to be replaced by the Interim Board. As per Clauses 56 to 59, the ITSC will cease to operate from 01.02.2021 and applications cannot be made before it after 01.02.2021. As per Clauses 61 to 64 the functions exercisable by the ITSC prior to 01.02.2021 will be exercised mutatis mutandis by the Interim Board. Clause 65 deals with how cases pending before the ITSC prior to 01.02.2021 are to be adjudicated. 11.Mr. Parag P. Tripathi, learned Senior Counsel appearing for the petitioners in both the matters, at the outset provided a contextual background of the establishment of ITSC. It was constituted on the recommendation of the Wanchoo Committee w.e.f. 01.04.1976 as an alternative tax-dispute resolution mechanism. The raison d’etre of the ITSC was to provide a scope for compromise and settlement between the state and its tax payers, so as to raise revenue of the state by providing a one time opportunity to defaulting tax payers to make a true and full disclosure of their income tax liabilities by filing an application for settlement. Therefore, while entertaining an application for settlement before the ITSC, a liberal approach ought to be taken. 12.His challenge is to Sections 62 to 73 of the Finance Act, 2021 which came into force on 01.04.2021 on the ground that they are arbitrary to the extent they retrospectively abolished the ITSC w.e.f. 01.02.2021. While he conceded that there can be no filing before the ITSC after 01.04.2021, there cannot be a complete vacuum between 01.02.2021 and 01.04.2021 as the law does not contemplate the same. Therefore the question that needs to be answered by this Court is, whether the petitioners, having already made settlement applications on 22.03.2021, at which point there was no amendment of the statute, can be denied acceptance/processing of the said applications by way of a retrospective amendment. approach ought to be taken. 12.His challenge is to Sections 62 to 73 of the Finance Act, 2021 which came into force on 01.04.2021 on the ground that they are arbitrary to the extent they retrospectively abolished the ITSC w.e.f. 01.02.2021. While he conceded that there can be no filing before the ITSC after 01.04.2021, there cannot be a complete vacuum between 01.02.2021 and 01.04.2021 as the law does not contemplate the same. Therefore the question that needs to be answered by this Court is, whether the petitioners, having already made settlement applications on 22.03.2021, at which point there was no amendment of the statute, can be denied acceptance/processing of the said applications by way of a retrospective amendment. 13.He submitted that this issue is no longer res integra and has been squarely dealt with by the Bombay High Court in Sar Senapati Santaji Ghorpade Sugar Factory v. ACIT, 2024 SCC OnLine Bom 981 which was delivered in the backdrop of identical factual circumstances, i.e., on 25.07.2019, a search under Section 132 of the Act was conducted on the petitioner therein, and a notice was received under Section 153 A on 05.02.2021, which was after the Finance Bill, 2021 was introduced but before the Finance Act, 2021 came into force. The petitioner therein had filed an application before the ITSC on 18.03.2021. The Bombay High Court rejected the submissions of the Revenue vide order dated 21.08.2023, and held that though the State had the power to bring amendment with retrospective effect, it cannot take away the vested rights of the petitioners therein, unless the statute provides for the same expressly or by necessary intendment. 14.A Special Leave Petition (SLP, for short) bearing Diary No. 54328/2024 was filed by the Revenue challenging the judgment of the Bombay High Court and the same was tagged along with a batch of matters led by ACIT v. Sanman Trade Impacts Ltd, SLP (C) Diary No. 49100/2024decided on 06.01.2025. The SLP was disposed of by the Supreme Court videorder dated 06.01.2025 holding that the matters stood squarely covered by its judgment dated 03.01.2024 in Union of India v. Rajeev Bansal, 2024 SCC OnLine SC 2693, where, the issues before the Supreme Court, as can be seen from paragraph 18 of the judgment, were principally the following: 1. Whether the Taxation and Other Loss (Relaxation and Amendment of Central Provisions) Act, 2020 and the notification issued under it will also apply to reassessment notices issued after 01.04.2021. Central Provisions) Act, 2020 and the notification issued under it will also apply to reassessment notices issued after 01.04.2021. 2. Whether the reassessment notices issued under Section 148 of the new regime between July and September, 2022 are valid. regime between July and September, 2022 are valid. 15.It is his submission that the judgment in Sar Senapati Santaji Ghorpade Sugar Factory (supra) has not been interfered with or set aside by the Supreme Court, and is squarely applicable to the present case. 16.That apart, a vested right accrued to the petitioners when the search and seizure was conducted on their premises on 11.10.2019 and also when they received notices under Sections 153A, 153C and 143(2), and also when the applications were filed before the ITSC. So long as the notices were issued prior to 01.04.2021, the petitioners have a right to approach the ITSC because it existed factually until 01.04.2021, and was only removed retrospectively, as has been held by the Bombay High Court in Sar Senapati Santaji Ghorpade Sugar Factory (supra). 15.It is his submission that the judgment in Sar Senapati Santaji Ghorpade Sugar Factory (supra) has not been interfered with or set aside by the Supreme Court, and is squarely applicable to the present case. 16.That apart, a vested right accrued to the petitioners when the search and seizure was conducted on their premises on 11.10.2019 and also when they received notices under Sections 153A, 153C and 143(2), and also when the applications were filed before the ITSC. So long as the notices were issued prior to 01.04.2021, the petitioners have a right to approach the ITSC because it existed factually until 01.04.2021, and was only removed retrospectively, as has been held by the Bombay High Court in Sar Senapati Santaji Ghorpade Sugar Factory (supra). 17.The same issues have come up for consideration before several other High Courts as well, wherein reliefs were granted to similarly placed parties i.e., parties who have received notices after 01.02.2021 and those who applied to the ITSC. Reliance in this regard is placed on the judgment of the High Court of Madras in Jain Metal Rolling Mills v. Union of India (2024) 461 ITR 423, which according to Mr. Tripathi, has read down Section 245C(5). The SLP preferred by the Revenue against the judgment bearing SLP(C) No. 16226/2024 has been dismissed, leaving the question of law, if any, open. 18.He has also referred to the judgment of the High Court of Gujarat in Vetrivel Infrastructure v. DCIT, (2024) 468 ITR 665. The SLP preferred by the Revenue against the judgment bearing SLP (C) Diary No. 9862/2024 has also been dismissed leaving the question of law, if any, open. 19.A reference is also made to the judgment of the High Court of Calcutta in Pradeep Kumar Naredi v. Union of India : 2024 SCC OnLine Cal 11543, wherein, the appellant was subjected to search and seizure under Section 132 on 16.01.2020. Notices under Section 153A were issued on 02.02.2021 and the appellant therein preferred an application before the ITSC on 17.03.2021. The Court, while setting aside the impugned judgment of the Single Judge, relied upon the judgments in Sar Senapati Santaji Ghorpade Sugar Factory, Jain Metal Rolling Mills, and Vetrivel Infrastructure (supra), and directed the Interim Board to consider the application of the appellant. 20.Mr. Tripathi submitted that the Revenue is now seeking to re-agitate the same issue despite categorical findings by multiple High Courts on the issue. There is no conceivable reason as to why a different yardstick is to be applied to the petitioners herein, as it would create grave arbitrariness because such persons against whom the Revenue has issued notices under Section 153 A before 01.02.2021 will be at an advantage, whereas others like the petitioners herein would be remediless. 21.He stated that if the stand of the Revenue is to be accepted it would create a position where, regardless of whether the notice was issued before 01.02.2021 or between 01.02.2021 & 31.03.2021, the valuable vested right to get the matter adjudicated by the ITSC will be taken away. 22.He further submitted that the settlement applications filed by the petitioners are ‘pending applications’ under Section 245A(eb) of the Act and therefore are liable to be adjudicated by the Interim Board as provided under Section 245AA of the Act. Section 245A(eb) of the Act as amended defines ‘pending application’ as an application which a. was not declared invalid under Section 245D(2C), and b. was not rejected under Section 245D(4) on or before 31.01.2021. 23.The applications preferred by the petitioners fulfilled both of these conditions and therefore are ‘pending applications’ as defined under Section 245D of the Act. He highlighted the fact that Section 245A(eb) does not say that an application filed after 31.01.2021 will not be treated as a pending application. The only condition for an application to be considered as a pending application are those mentioned in Section 245A(eb). a. was not declared invalid under Section 245D(2C), and b. was not rejected under Section 245D(4) on or before 31.01.2021. 23.The applications preferred by the petitioners fulfilled both of these conditions and therefore are ‘pending applications’ as defined under Section 245D of the Act. He highlighted the fact that Section 245A(eb) does not say that an application filed after 31.01.2021 will not be treated as a pending application. The only condition for an application to be considered as a pending application are those mentioned in Section 245A(eb). 24.Without prejudice to the above, he submitted that the applications filed by the petitioners are ‘pending applications’ in light of the Central Board of Direct Taxes (CBDT) press release dated 07.09.2021 and its order dated 28.09.2021, which clarified that, if a. the assessee was eligible to file an application on 31.01.2021, and b. assessment proceedings of the assessee were pending on the said date, date, then such settlement applications shall be deemed to be ‘pending applications’ for the purpose of Section 245A(eb) of the Act. 25.It is his submission that the said order must be given an interpretation which would benefit the tax payers, i.e., the conjunction ‘and’ appearing in paragraph 4 of the order should be read as ‘or’ which would make it clear that the application filed on orbefore 30.09.2021 are to be treated as ‘pending applications’ and are to be decided by the Interim Board. Any other interpretation will render the order redundant and otiose. 26.His contention is that the impugned provisions and the press release dated 07.09.2021 along with the order dated 28.09.2021 seek to create an artificial distinction between assessees in respect of whom notices under Section 153A where issue prior to 01.02.2021 and such assessees to whom notices were issued after 01.02.2021. Thus to fix 01.02.2021 as the cutoff date is arbitrary and has no rational nexus to the object sought to be achieved, namely, dismantling the ITSC w.e.f. 01.04.2021. 27.He submitted that in Star Televisions News Ltd. v. Union of India:Writ Petition No. 952 of 2008, the Bombay High Court was concerned with the vires of the Finance Act, 2007 which provided that applications made before 01.06.2007 that are pending before the ITSC as on 31.03.2018 shall abate. The Court held that such a classification is arbitrary and thus, read down Section 245HA(1) of the Act. This has been upheld by the Supreme Court. 28.It is his contention that the retrospective applicability of the impugned provisions is unconstitutional, being patently arbitrary and placing an unreasonable burden on the petitioners and others similarly placed. The retrospective application of legislation is a species of arbitrariness that, if present, vitiates a law and renders it contrary to Article 14 of the Constitution of India. The retrospective application of the Finance Act, 2021 is contrary to the general principle that fiscal legislation by which the conduct of mankind is to be regulated deals with future acts and ought not to change the character of past transactions carried out with faith under existing laws. To buttress this argument, he has referred to the judgment of the Supreme Court in the case of Commissioner of Income Tax v. Essar Technologies Ltd : (2018) 3 SCC 253(2J). 29.Mr. Tripathi would submit that even when the legislation has been specifically made retrospective, there must be strong, cogent and compelling reasons for doing so, such as considerations of public interest or remedying an existing mischief etc. Reliance in this regard is placed on the judgments in Tata Motors Ltd. v. State of Maharashtra : (2004) 5 SCC 783 and RC Tobacco v. Union of India : (2005) 7 SCC 725. The Finance Act, 2021 does 29.Mr. Tripathi would submit that even when the legislation has been specifically made retrospective, there must be strong, cogent and compelling reasons for doing so, such as considerations of public interest or remedying an existing mischief etc. Reliance in this regard is placed on the judgments in Tata Motors Ltd. v. State of Maharashtra : (2004) 5 SCC 783 and RC Tobacco v. Union of India : (2005) 7 SCC 725. The Finance Act, 2021 does not meet any of this criteria as no reason or rationale whatsoever has been provided to justify the retrospective and arbitrary cutoff date. This is also contrary to the settled custom that statutes affecting financial arrangements are typically brought in force from the beginning of the new financial year. This is so since the financial year holds a certain sanctity in income tax laws and tax payers conduct their affairs with the legitimate expectation that there will be no drastic changes in the middle of a financial year. The Revenue has not been able to provide any justification whatsoever so as to show why the date of 01.02.2021 was set as the cutoff date, which is simply a date that has been randomly plucked out of thin air. In this regard, he has relied upon the judgments in Star Television News Ltd. (supra) and Vatika Farms Pvt. Ltd. v. Union of India & Ors : 2008 (102) DRJ 356. 30.That apart, since the petitioners have made a full and true disclosure of all the facts and incomes which have not been subjected to assessments and has also paid hefty amounts along with interest while filing the settlement application, various admissions made therein could now be considered by the income tax authorities separately, which would severely prejudice the petitioners, further subjecting them to severe penalties. The declaration of the application of the petitioners as non’est would have disastrous consequences for the petitioners as on one hand, the application filed before the ITSC would be dismissed in limine having been filed invalidly, and on the other hand the respondents would be free to use the information contained in the said application in the normal course of assessment to the detriment of the petitioners, as if the applications of the petitioners, though filed validly, were declared invalid or rejected in terms of Section 245D of the Act. This would result in the violation of the rule against self incrimination enshrined in Article 20 (3) of the Constitution of India. Additionally, since the petitioners have filed the applications pursuant to orders of this Court dated 17.03.2021 and 22.03.2021, such a course of action would be contrary to the settled principle contained in the maxim actus curiae neminen gravabit, i.e., no person ought to be prejudiced by an order passed by a Court. Reliance in this regard is placed on the judgments in the cases of Indrachand Jain (dead) through LRs. V. Motilal (dead): (2009) 14 SCC 663 and Odisha Forest Development v. M/s Anupam Traders & Anr. : (2020) 15 SCC 146. 31.In any case, from 01.02.2021 till 01.04.2021 only a few applications would have been filed and no prejudice would be caused to the respondents if these applications are considered, but severe prejudice would be caused to the petitioners if the converse is done. 32.That apart, he submitted that even the Mumbai Bench of the ITSC continued to accept applications even after 01.02.2021 till the end of March 2021, dehors any direction by any Court. Even other benches of the ITSC were functioning and the officers and staff were being paid their salaries till 28.03.2021, i.e., when the Finance Bill, 2021 received the assent of the President. 33.Yet another submission of Mr. Tripathi is that as per the proviso to Section 245(D) of the Act, if an application filed before the ITSC is not accepted, and an order under Section 245(D)(1) is not passed within a period of 14 days, the application would be deemed to have been accepted. Since 32.That apart, he submitted that even the Mumbai Bench of the ITSC continued to accept applications even after 01.02.2021 till the end of March 2021, dehors any direction by any Court. Even other benches of the ITSC were functioning and the officers and staff were being paid their salaries till 28.03.2021, i.e., when the Finance Bill, 2021 received the assent of the President. 33.Yet another submission of Mr. Tripathi is that as per the proviso to Section 245(D) of the Act, if an application filed before the ITSC is not accepted, and an order under Section 245(D)(1) is not passed within a period of 14 days, the application would be deemed to have been accepted. Since no order was passed by the ITSC, despite a direction by this Court to receive and process the application and since the ITSC was very much in existence at least until 31.03.2021, the applications of the petitioners should be deemed to have been accepted. 34.He has also submitted that it is a settled law that penal statutes cannot be retrospective. The effect of abolishing the ITSC with effect from 01.02.2021 will have penal consequences for the petitioners and also for other persons and entities that had approached the ITSC, more so, in view of the fact that any information disclosed in these applications can be used by the income tax authorities for initiating penal and even criminal proceedings. 35.Though Mr. Tripathi has raised an argument that the impugned provisions of the Finance Act, 2021 could not have been enacted as a Money Bill under Article 110 of the Constitution of India, as the said issue has been referred by the Constitution Bench of the Supreme Court to a larger Bench in Rojer Mathews v. South Indian Bank Ltd. : (2020) 6 SCC 1, after noticing the judgment in K. S. Puttaswamy v. Union of India : (2019) 1 SCC 1, he would not press the argument. 36.Per contra, Mr. Sanjay Kumar, learned Senior Standing Counsel appearing for the respondents - the Revenue, would contest the stand of the petitioners and submit that the ITSC is a creation of a statute having been set up under Chapter XIX-A of the Act by the Taxation Laws (Amendment) Act, 1975, w.e.f. 01.04.1976. The ITSC provides for an alternative dispute resolution forum to assesses, wherever any assessment is pending, to approach it by making a full and true disclosure and settle the additional tax liabilities at the time of filing of settlement application. However, the Parliament, in its legislative wisdom, decided that the ITSC was no longer necessary, and through the Finance Act, 2021 discontinued the ITSC w.e.f. 01.02.2021 and constituted the Interim Board for settling pending applications of those persons who were eligible to make an application as on 01.02.2021. He has referred to the judgment of the Supreme Court in B.N. Bhattacharjee (supra) to contend that primary purpose of constitution of the ITSC was to ensure accelerated recovery of taxes in arrears by the State from tax evaders. 37.He submitted that the claim of the petitioners that prior to the amendment, Sections 245A to 245M granted valuable statutory rights to the petitioners which have been taken away as a result of the impugned amendments is without any basis and unsustainable. The fact that the assessee does not have any vested right of consideration of its application before the ITSC as is evident from a perusal of Section 245D which reads as under:- 37.He submitted that the claim of the petitioners that prior to the amendment, Sections 245A to 245M granted valuable statutory rights to the petitioners which have been taken away as a result of the impugned amendments is without any basis and unsustainable. The fact that the assessee does not have any vested right of consideration of its application before the ITSC as is evident from a perusal of Section 245D which reads as under:- “245D. (1) On receipt of an application under section 245C, the Settlement Commission shall, within seven days from the date of receipt of the application, issue a notice to the applicant requiring him to explain as to why the application made by him be allowed to be proceeded with, and on hearing the applicant, the Settlement Commission shall, within a period of fourteen days from the date of the application, by an order in writing, reject the application or allow the application to be proceeded with:” Settlement Commission shall, within seven days from the date of receipt of the application, issue a notice to the applicant requiring him to explain as to why the application made by him be allowed to be proceeded with, and on hearing the applicant, the Settlement Commission shall, within a period of fourteen days from the date of the application, by an order in writing, reject the application or allow the application to be proceeded with:” 38.It is his submission that the petitioners cannot claim to have any vested right in pursuing an application before the ITSC, in view of the fact that the ITSC was empowered under Section 245D(1) to reject any application received under Section 245C. Also, the ITSC was empowered to declare the application as invalid under Section 245D(2C) on the basis of the report received under Section 245D(2B). Therefore, even prior to the amendments brought about by the Finance Act, 2021, the ITSC exercised complete discretion and autonomy in respect of the applications received by it under Section 245C. The process of settlement as was provided under Chapter XIX-A of the Act was merely an opportunity granted to tax evaders to come clean and make full and true disclosure. 39.He further submitted that it is to enhance efficiency, transparency and accountability by overhauling of the processes that require interface with the taxpayer, that the existing scheme of settlement was discontinued and the ITSC ceased to exist with effect from 01.02.2021 and the Interim Board for settlement of pending applications were proposed to be constituted. The specific date of 01.02.2021 is a legislative choice and a policy decision and therefore not amenable to the jurisdiction of this Court under Article 226 of the Constitution of India. He has laid stress on the fact that the Finance Bill, 2021 was laid before the Lok Sabha on 01.02.2021. 40.Mr. Kumar submitted that it is a settled position of law that legislation can be held invalid on the ground of discrimination only when equals are treated unequally or unequals are treated as equals. If there is equality and uniformity within each group, the law cannot be discriminatory. In the present case, the petitioners have failed to prove as to how the Finance Act, 2021 fails to provide for equality and uniformity within each group and hence the same cannot be held to be discriminatory. 41.He has referred to the judgment of the Supreme Court in Union of India and Ors. v. VKC Footsteps India Pvt. Ltd. (2022) 2 SCC 603¸ where the Court, while dealing with the vires of a provision of refund under the CGST Act, 2017, relied on the reasoning given in Union of India and Ors. v. Nitdip Textile Processors Pvt. Ltd. and Ors. [2011] 15 taxmann.com 59(SC) to observe as under: “76…. Parliament is entitled to make policy choices and adopt appropriate classifications, given the latitude which our constitutional jurisprudence allows it in matters involving tax legislation and to provide for exemptions, concessions and benefits on terms, as it considers appropriate.” 41.He has referred to the judgment of the Supreme Court in Union of India and Ors. v. VKC Footsteps India Pvt. Ltd. (2022) 2 SCC 603¸ where the Court, while dealing with the vires of a provision of refund under the CGST Act, 2017, relied on the reasoning given in Union of India and Ors. v. Nitdip Textile Processors Pvt. Ltd. and Ors. [2011] 15 taxmann.com 59(SC) to observe as under: “76…. Parliament is entitled to make policy choices and adopt appropriate classifications, given the latitude which our constitutional jurisprudence allows it in matters involving tax legislation and to provide for exemptions, concessions and benefits on terms, as it considers appropriate.” 42.He further submitted that in cases of legislation providing any cutoff date, there would always be some cases which are adversely affected by being in proximity of the cutoff date, but that alone will not render the provision arbitrary. He has placed reliance on the judgment of the Supreme Court in R.K. Garg v. Union of India, 133 ITR 239 (SC) to contend that while considering the constitutional validity of a statute to be in violation of Article 14 of the Constitution of India, the laws relating to economic activities should be viewed with a greater latitude than the laws relating to civil rights and personal liberty. It was further held that there is a presumption in favour of the constitutionality of a statute passed by the Parliament and the burden is upon him who attacks it to show that there is a clear transgression of constitutional principles. 43.Mr. Kumar, while conceding that multiple High Courts including the Madras High Court in Jain Metal Rolling Mills (supra) have decided the instant issue against the Revenue, stated that this Court is yet to decide the issue. Further, it is his case that the Madras High Court erred in holding that assessees even after the cutoff date of 01.02.2021 were eligible to approach the ITSC. Having held that the Parliament had the competence to make retrospective legislation regarding abolition of the ITSC, there was no occasion for the Court to hold that the ITSC was obligated to accept applications made after the cutoff date of 01.02.2021 but before 31.03.2021 as valid applications. 44.He further substantiated his stand by stating that nothing has been brought on record to even suggest that the Supreme Court has approved the findings of various High Courts by way of any speaking order on the merits of the issue while dismissing the SLPs filed by Revenue in those cases. All the dismissals were in-limine, except in the case of Interim Board for Settlement and Ors. v. Krushang Parakashbhai Soni, SLP (Civil) No. 9862/2025, wherein the question of law was left open. According to Mr. Kumar, thus, the judgments of various High Courts relied upon by Mr. Tripathi are not binding on this Court. 45.On the aspect of the Finance Act, 2021 being passed as a Money Bill, Mr. Kumar submitted that Article 110 of the Constitution of India mandates that a Money Bill may be passed in the Lok Sabha with respect to “the imposition, abolition, remission, alteration or regulation of any tax”. The functioning of the ITSC would qualify as an ‘imposition’, ‘remission’, ‘alteration’ or ‘regulation’ of a tax. The provisions for ITSC provide for regulation of income tax in a certain manner and hence any amendment thereto can be validly brought in by way of a Money Bill in view of the mandate of Article 110 of the Constitution of India. 46.He has sought dismissal of the petitions. ANALYSIS 47.Having heard the learned counsel for the parties, the common issue arising for consideration in these petitions is whether the petitioners are entitled to the relief as sought in the petitions for consideration of their settlement applications under Section 245-C of the Act. 46.He has sought dismissal of the petitions. ANALYSIS 47.Having heard the learned counsel for the parties, the common issue arising for consideration in these petitions is whether the petitioners are entitled to the relief as sought in the petitions for consideration of their settlement applications under Section 245-C of the Act. 48.There is no dispute that in both the cases, searches were conducted in the year 2019. The notice under Section 153-A of the Act i