Wp/5862/2021 Of Sar Senapati Santaji Ghorpade Sugar Factory Ltd v. Assistant Commissioner Of Income Tax And Ors

1/35 WP-5862-2021.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAYCIVIL APPELLATE JURISDICTIONWRIT PETITION NO.5862 OF 2021 Sar Senapati Santaji Ghorpade Sugar Factory)Ltd., )Through its Authorised Signatory having its)address at 250, B/51 E Ward, Nagala Park, Off)Shahu Blood Bank, Kolhapur – 416 003) ….Petitioner V/s.1. Assistant Commissioner of Income Tax,)Central Circle 1(1), Room No.607, 6[th] Floor,)Aaykar Sadan, Bodhi Towers, Salisbury Park,)Gultekadi, Pune, Maharashtra – 411 037)2. Central Board of Direct Taxes, )North Block, Secretariat Building, )New Delhi – 110 001)3. Interim Board (Settlement Commission),)North Block, Secretariat Building, )New Delhi – 110 001)4. Union of India,)Through the Secretary, Department of)Revenue, Ministry of Finance, Government of)India, North Block, New Delhi – 110 001) ….Respondents ) ….Respondents ---- Mr. J.D. Mistri, Senior Advocate a/w. Mr. Madhur Agrawal and Mr. Atit Sonii/b. Mr. P.B. Gujar for petitioner.Mr. Suresh Kumar for respondents. ----CORAM : K. R. SHRIRAM & DR. NEELA GOKHALE, JJ.RESERVED ON : 21[st] MARCH 2024PRONOUNCED ON : 2[nd] APRIL 2024 JUDGMENT (PER K.R. SHRIRAM, J.): 1Since the pleadings are completed, by consent of the parties,we decided to dispose the petition at the admission stage itself. 2Therefore, rule. Rule made returnable forthwith. 3Petitioner is a company engaged in the business ofmanufacturing and trading in sugar, ethanol, power, etc. Petitioner received a notice dated 16[th] September 2021 from Assistant Commissioner of IncomeTax, Central Circle 1(1), Pune, who is respondent no.1, stating that a validapplication for Assessment Years 2014-15 to 2020-21 has not been filed bypetitioner before the Settlement Commission. It is this notice alongwith acondition in a Press Release dated 7[th] September 2021 in so far as it seeksto make only those assessees eligible to file application before theSettlement Commission who were eligible as on 31[st] January 2021 whichwas challenged in the petition. Subsequently, upon leave being granted, thepetition was amended to also impugn a notification dated 28[th] September2021 in so far as it sought to make only those assessees eligible to fileapplications before the Interim Board Settlement Commission (IBSC),respondent no.3, who are eligible as on 31[st] January 2021. Facts in brief : 4On 25[th] July 2019 a search action under Section 132 of theIncome Tax Act, 1961 (the Act) was conducted on petitioner and wasconcluded on 29[th] August 2019. Thereafter, petitioner received a noticedated 5[th] February 2021 under Section 153A of the Act for Assessment Years2014-15 to 2020-21 calling upon petitioner to file return of income within15 days. On 18[th] March 2021 petitioner filed before the SettlementCommission an application under Section 245C of the Act for AssessmentYears 2014-15 to 2020-21. 3/35 WP-5862-2021.doc 5 In the meantime, a Finance Bill, 2021 was laid before thelegislature on 1[st] February 2021. The Finance Bill proposed certainamendments to Chapter XIX-A of the Act including insertion of sub-section(5) to Section 245C of the Act to provide that “No application shall be madeunder this section on or after 1[st] February 2021”. 3/35 WP-5862-2021.doc 5 In the meantime, a Finance Bill, 2021 was laid before thelegislature on 1[st] February 2021. The Finance Bill proposed certainamendments to Chapter XIX-A of the Act including insertion of sub-section(5) to Section 245C of the Act to provide that “No application shall be madeunder this section on or after 1[st] February 2021”. 6It is stated in the petition that even though it was just the Billand was not promulgated into the Act, certain benches of the SettlementCommission stopped accepting the applications after 1[st] February 2021.Later, based on directions given by various Courts, the SettlementCommission accepted and entertained the applications filed by assessees asthe Bill gets enacted only after the assent of the Hon’ble President of Indiaand till such time, the Settlement Commission is duty bound to acceptapplications so filed by assessees. Accordingly, petitioner made applicationto the Settlement Commission on 18[th] March 2021, which was accepted bythe Settlement Commission. 7The Hon’ble President of India gave assent to the Finance Billon 28[th] March 2021 after which sub-section (5) was inserted in Section245C of the Act. The other amendments in the Finance Act, 2021, in so faras they are relevant, are as under : (i) Interim Board was defined in Section 245A(da)to mean a board as constituted under Section245AA. (ii) “pending application” was defined in Section245A(eb) to mean an application which was filed under Section 245C and which fulfills the followingconditions, viz.: (a) it was not declared invalid under sub-section (2c) of Section 245D of the Act; and (b) No order under sub-section (4) of Section245D was issued on or before 31[st] January2021 with respect to such applications. (iii) Interim Board was constituted as per Section245AA of the Act. (iv) A proviso was inserted in Section 245B of theAct to provide that the Settlement Commission shallcease to operate on or after 1[st] February 2021. (v) Other provisions were also made in ChapterXIXA to provide for similar powers to the InterimBoard settlement for settlement of disputes as wereprovided earlier to the Settlement Commission. 8The Interim Board was notified by the Union of India byNotification No.91 of 2021 dated 10[th] August 2021. 9Respondent no.3, the IBSC, issued a Press Release dated7[th] September 2021 stating that in order to provide relief to the tax payers,who were eligible for filing applications as on 31[st] January 2021 and whocould not file the same due to the amendments by the Finance Act, 2021,the applications for settlement can be filed by such tax payers, on or before30[th] September 2021 before the Interim Board. The two conditions, which have been notified as necessary for filing application are (i) the assesseeswere eligible to file applications for settlement on 31[st] January 2021 for theassessment year, for which application is sought to be filed; and (ii) the assessment proceedings for the relevant assessment years are pending as onthe date of filing applications. This Press Release has been impugned in thepetition. 10Thereafter, respondent no.1 issued notices dated 30[th] August2021 and 13[th] September 2021 under Section 142(1) of the Act calling forcertain information with respect to the assessment proceedings forAssessment Years 2014-15 to 2020-21. In response, petitioner filedsubmissions dated 2[nd] September 2021 stating that petitioner has filed,before amendment of the Act, an application before the SettlementCommission on 18[th] March 2021 which is deemed to have been allowed tobe proceeded with in terms of Section 245D(1) of the Act and, therefore,the assessment proceedings be kept in abeyance till the disposal of theapplication filed by petitioner before the Settlement Commission. Petitionerfiled further submissions dated 15[th] September 2021. 10Thereafter, respondent no.1 issued notices dated 30[th] August2021 and 13[th] September 2021 under Section 142(1) of the Act calling forcertain information with respect to the assessment proceedings forAssessment Years 2014-15 to 2020-21. In response, petitioner filedsubmissions dated 2[nd] September 2021 stating that petitioner has filed,before amendment of the Act, an application before the SettlementCommission on 18[th] March 2021 which is deemed to have been allowed tobe proceeded with in terms of Section 245D(1) of the Act and, therefore,the assessment proceedings be kept in abeyance till the disposal of theapplication filed by petitioner before the Settlement Commission. Petitionerfiled further submissions dated 15[th] September 2021. 11 Respondent no.1 thereafter issued a notice dated16[th] September 2021 under Section 142(1) of the Act, which is alsoimpugned in the petition, stating that : (a) in the Press Release dated7[th] September 2021 it has specifically been mentioned that assessee shouldbe eligible to file application for settlement on 31[st] January 2021; (b) inpetitioner’s case notices under Section 153A of the Act were issued on5[th] February 2021. As the assessment proceedings for the relevantassessment years were not pending as on 31[st] January 2021, petitioner was not an eligible assessee as on that date. Accordingly, petitioner does notfulfill the conditions as laid down in the Press Release; and (c) it cannot besaid that any valid application is pending before the SettlementCommission. Petitioner was called upon to furnish details immediately. 12Subsequently, respondent no.3 issued a notification dated28[th] September 2021, which is also impugned in the petition, stating thatthe tax payers, who were eligible to file applications before SettlementCommission as on 31[st] January 2021, but could not file the same in view ofthe amendments made by the Finance Act, 2021, are now permitted to filethe applications before respondent no.2 for settlement of disputes by30[th] September 2021. 13Petitioner is aggrieved by the impugned notice dated16[th] September 2021 by which respondent no.1 has proposed to proceedwith the assessment for Assessment Years 2014-15 to 2020-21; the PressRelease dated 7[th] September 2021 issued by respondent no.3 onlypermitting assessees who are eligible to file applications as on 31[st] January2021 to make fresh applications upto 30[th] September 2021; the impugnednotification dated 28[th] September 2021 issued by respondent no.3 in termsof the impugned Press Release dated 7[th] September 2021 and retrospectiveapplicability of sub-section (5) in Section 245C of the Act inserted by theFinance Act, 2021 with retrospective effect from 1[st] February 2021. In short, petitioner is challenging the order of Department ofRevenue in its circular dated 28[th] September 2021 in as much as itrestricted filing of application before the Interim Board for settlement onlyby those assessees who are eligible to file the application for settlement on31[st] January 2021. 14Mr. Mistri submitted as under: (a) the Settlement Commission having accepted petitioner’sapplication dated 18[th] March 2021, in view of proviso to Section 245D(1) ofthe Act, the said application is deemed to have been proceeded with. Noorder has been passed by the Settlement Commission and/or respondentno.2 treating petitioner’s application as invalid or dismissing/rejectingpetitioner’s application. Since petitioner’s application is still pending beforethe Settlement Commission, the finding of respondent no.1 in theimpugned notice to treat such application as not a valid application is badin law; (b) the statutory remedy of approaching the Interim Board 14Mr. Mistri submitted as under: (a) the Settlement Commission having accepted petitioner’sapplication dated 18[th] March 2021, in view of proviso to Section 245D(1) ofthe Act, the said application is deemed to have been proceeded with. Noorder has been passed by the Settlement Commission and/or respondentno.2 treating petitioner’s application as invalid or dismissing/rejectingpetitioner’s application. Since petitioner’s application is still pending beforethe Settlement Commission, the finding of respondent no.1 in theimpugned notice to treat such application as not a valid application is badin law; (b) the statutory remedy of approaching the Interim Board cannot be taken away retrospectively. Retrospective legislation cannot affectthe vested rights. When the Department has extended the last date from1[st] February 2021 to 30[th] September 2021, it can only extend the deadlinebut cannot introduce a new concept of “eligibility as on 1[st] February 2021”which is not there in the Act itself; 8/35 WP-5862-2021.doc (c) in petitioner’s case the search was conducted between25[th] July 2019 and 29[th] August 2019 but for the reasons best known tothem, the authorities issued the notice of reopening only on 5[th] February2021, i.e., 5 days after 31[st] January 2021 and thus, the very right ofapproaching the Interim Board now in the scheme of things stooddependent on the vagaries of action being taken by the authorities as pertheir convenience; (d) under Section 245M of the Act, the Settlement Commission had to transfer all the pending applications to the Interim Board. Nowhereany date of eligibility or a cut-off date is mentioned. Therefore, the circularwhile extending the time for making the applications upto 30[th] September2021 ought not to have introduced a new condition of eligibility. (e) As held in Tata Iron and Steel Co. Ltd. vs. N.C. Upadhyay[1], the binding nature of circular issued by the CBDT must be confined to taxlaws and that also for the purpose of giving administrative relief to thetaxpayer and not for the purpose of imposing a burden on him. (f) In UCO Bank vs. Commissioner of Income Tax[2], the Hon’bleApex Court held that the question is not whether a circular can override ordetract from the provisions of the act. The question is whether this circularseeks to mitigate the rigour of particular section for the benefit of theassessee in certain specified circumstances. So long as such a circular is inforce, it would be binding on the departmental authorities in view of the 11974 (96) ITR 121999 (104) taxman 547 21999 (104) taxman 547 provisions of Section 119 to ensure a uniform and proper administrationand application of the Act. (g) As held in Godrej and Boyce Manufacturing vs. State of Maharashtra & Ors.[3], additional condition of eligibility cannot be brought inby the circular. It is of course open to the legislature to add to theconditions provided for in the statute or for that matter to do away withcertain conditions that might be in existence. But it certainly cannot be leftin the hands of the executive to impose conditions in addition to those inthe statutes; (h) when the application of petitioner has been treated aspending application, the circular is without application of mind and as suchis arbitrary. The legislature while doing away with the SettlementCommission cannot take away vested rights. (i) As held in Commissioner of Income Tax vs. Shah Sadiq & Sons[4], a right which had become vested, continued to be capable of beingenforced, notwithstanding the repeal of the statute under which the rightaccrued unless the repealing statute took away the right expressly or bynecessary implication. This is the effect of Section 6 of the General ClausesAct. (j) In Punjab State Co-operative Agriculture Development BankLimited vs. The Registrar of Co-operative Society and Ors.[5] the Court held (h) when the application of petitioner has been treated aspending application, the circular is without application of mind and as suchis arbitrary. The legislature while doing away with the SettlementCommission cannot take away vested rights. (i) As held in Commissioner of Income Tax vs. Shah Sadiq & Sons[4], a right which had become vested, continued to be capable of beingenforced, notwithstanding the repeal of the statute under which the rightaccrued unless the repealing statute took away the right expressly or bynecessary implication. This is the effect of Section 6 of the General ClausesAct. (j) In Punjab State Co-operative Agriculture Development BankLimited vs. The Registrar of Co-operative Society and Ors.[5] the Court held 32009 (5) SCC 2441987 (166) ITR 1025Civil Appeal Nos.297-298 of 2022 dated 11.01.202241987 (166) ITR 1025Civil Appeal Nos.297-298 of 2022 dated 11.01.2022 that an amendment having retrospective operation, which has the effect oftaking away the benefit already available to the employee under theexisting rule, indeed divest the employee from his vested or accrued rightsand that being so, it would be held to be violative of the rights guaranteedunder Article 14 and 16 of the Constitution. (k) As held in Union of India & Ors. vs. Tushar Ranjan Mohanty and Ors.[6], though the legislature has the power to make laws withretrospective effect, that power cannot be used to deprive a person of anaccrued right vested in him under a statute or under the Constitution; (l) it was open to respondent no.3 to relax the rigours of theprovisions of the Act for the benefit of assessees by issuing any direction orPress Release but it is not open to respondent no.3 to put in new rigours orimpediments to the rights of an assessee in a Press Release or a notificationwhich is contrary to the provisions of the Act. If petitioner was entitled tofile a fresh application on 18[th] March 2021 irrespective of whetherpetitioner was eligibile on 31[st] January 2021 or not, putting such a furthercondition in the Press Release of assessee being eligible for makingapplication only if assessee was eligible on 31[st] January 2021 is clearlyinvalid; (m) respondent no.1 cannot be permitted to take benefit of hisown action by delaying the issue of notice under Section 153A of the Act.The search of petitioner had already been completed on 29[th] August 2019 and as per the provisions of Section 153A of the Act, it was mandatory forrespondent no.1 to issue the notices in respect of each of the six assessmentyears immediately preceding the assessment year relevant to the previousyear in which such search is conducted. There was no justification forrespondent no.1 to delay the issue of notice under Section 153A of the Actto 5[th] February 2021. If respondent no.1 had issued the notices within areasonable time after completion of the search or after the centralization ofthe case, petitioner would have been eligible to make the application as on31[st] January 2021. Therefore, by delaying the issue of the notices,respondent no.1 is trying to get the advantage of his own delay/of his ownwrong and denying petitioner the benefit of approaching the SettlementCommission;(n) sub-section (5) of Section 245C of the Act, even thoughinserted with retrospective effect from 1[st] February 2021, can be giveneffect to only after the date when the assent of the Hon’ble President ofIndia was received to promulgate the Finance Act, 2021. Sub-section (5) ofSection 245C of the Act provides that no application shall be made underthis section on and after 1[st] February 2021. Petitioner had already made theapplication on 18[th] March 2021 when sub-section (5) was not in the statuteand hence, petitioner had made the valid application as per the provisionsof the Act. The purport of sub-section (5) is not to make an applicationalready filed after 1[st] February 2021 as invalid but it should be read as noapplication shall be made after 1[st] February 2021 once the assent of the Hon’ble President of India has been received. But before receipt of theassent any application made by an assessee will not be hit by sub-section(5) of Section 245C of the Act. 15 Mr. Suresh Kumar submitted as under : (a) The very purpose of the Finance Act, 2021 impugnedlegislation itself is to do away with the Settlement Commission and to setup an Interim Board to deal with the pending applications. The Finance Actreceived the assent of the Hon’ble President of India on 28[th] March 2021and was published in the gazette and notified on 1[st] April 2021. It wasexpressly given retrospective effect from 1[st] February 2021. Petitioner doesnot have any vested right for settlement and the settlement itself is aconcession;(b) the very concept of settlement is only for the benefit ofRevenue to ease and expedite the collection; (c) the Circular merely extended the time for submitting the applications and nothing beyond. As per the Act itself, petitioners wereeligible to file applications only if their case was pending as on 1[st] February2021 and the pending applications ought to be transferred to the InterimBoard. Therefore, it is clear that only the applications which are eligible andfiled before 1[st] February 2021 alone have to be dealt with by the InterimBoard; (d) the introduction of the abolition of settlement scheme orresolution scheme is the legislative policy and the same cannot bechallenged and the scope of judicial review in respect of the same is verylimited. In Howrah Municipal Corporation and Ors. V/s. Ganges Rope Co.Ltd. and Ors.[7] the Hon’ble Apex Court has described what is vested right.The word “vest” is normally used where an immediate fixed right in presentor future enjoyment in respect of a property is created. As held in HowrahMunicipal Corporation (Supra) in the case of petitioner, no vested right hadbeen created. Moreover, the settlement itself was a concession, there was novested right of settlement even prior to the amendment and thus it cannotbe deemed to be preserved by the provisions of Section 6 of the GeneralClauses Act and assessees have other remedies of appeal etc;(e) even assuming that there was a right to approach theSettlement Commission, the parliament which conferred the right has thepower to take away the same. The parliament has the power to amend,repeal or supersede and such powers can be exercised retrospectively also.Unless the retrospective operation of its statute is found to be undulyoppressive and confiscatory, it can be held to be unreasonable as to violatethe constitutional norms. As held by the Hon’ble Apex Court in ChhotabhaiJethabhai Patel and Co. vs. Union of India[8], the legislature was within itspowers to legislate, prospective or retrospective, including legislation withregard to taxation and the Finance Bill, 2021 would take effect from the 7(2004) 1 SCC 66381961 SCC Online SC 1281961 SCC Online SC 12 14/35 WP-5862-2021.doc date of the Finance Bill, i.e., 1[st] February 2021. Even Colonial SugarRefining Company Ltd. vs. Irving[9] provides that the parliament has powerto make retrospective legislation; (f) in Authorised Officer, Central Bank of India vs.Shanmugavelu[10], the Hon’ble Apex Court dealt with the law on the principleof reading down of a provision. The rationale behind the principle ofreading down is to avoid striking down an entire legislation. Courtsgenerally prefer to preserve the intent of the legislature and the overallvalidity of a law by adopting an interpretation that addresses the specificconstitutional concerns without invalidating the entire statute. It is only forthe limited purpose of making a provision workable and its objectiveachievable. A Single Judge of the Hon’ble Calcutta High Court in PradeepKumar Naredi vs. Union of India[11] had rejected the petition challenging thevery same Press Release and the CBDT order dated 28[th] September 2021. FINDINGS : (f) in Authorised Officer, Central Bank of India vs.Shanmugavelu[10], the Hon’ble Apex Court dealt with the law on the principleof reading down of a provision. The rationale behind the principle ofreading down is to avoid striking down an entire legislation. Courtsgenerally prefer to preserve the intent of the legislature and the overallvalidity of a law by adopting an interpretation that addresses the specificconstitutional concerns without invalidating the entire statute. It is only forthe limited purpose of making a provision workable and its objectiveachievable. A Single Judge of the Hon’ble Calcutta High Court in PradeepKumar Naredi vs. Union of India[11] had rejected the petition challenging thevery same Press Release and the CBDT order dated 28[th] September 2021. FINDINGS : 16At the outset, the question of the validity of the applicationsfiled before the Settlement Commission by various assessees similarlyplaced as petitioner has been decided by the Hon’ble Madras High Court inJain Metal Rolling Mills vs. UOI[12]wherein the Hon’ble High Court has heldthat the eligibility condition in the impugned Notification issued under 91906 AC 360 102024 SCC Online SC 9211(2022) 138 taxmann.com 378 (Calcutta)12156 taxmann.com 51311(2022) 138 taxmann.com 378 (Calcutta)12156 taxmann.com 513 15/35 WP-5862-2021.doc Section 119(2) of the Act should be read as 31[st] March 2021 and not31[st] January 2021 as the Finance Act, 2021 was notified, w.e.f. 1[st] April2021, and, therefore, the eligibility of an assessee is to be considered fromthe immediately preceding date. In view of the decision of the Madras HighCourt, the impugned notice/order dated 16[th] September 2021, passed byrespondent no.1 holding petitioner’s application as invalid and bad in law isclearly not sustainable as the decision of the Hon’ble Madras High Court,reading down the eligibility condition would be applicable pan India asheld by this Court in New India Assurance Company Limited vs. ACIT[13]andGroup M. Media India (P.) Ltd. vs. Union of India[14]. 17Be that as it may, let us consider whether petitioner havingmade a valid application under Section 254C of the Act had a vested rightof adjudication on the said application? The provisions of the Act for deciding this petition are :Sections 245A(b) with explanation (iiia), (eb); 245AA; 245C(1), (3), (4),(5); 245D(1), (2C), (4) (9); and 245M(2). The same read as under : 245A. In this Chapter, unless the context otherwise requires, - (a) ********************* (b) "case" means any proceeding for assessment under thisAct, of any person in respect of any assessment year orassessment years which may be pending before an AssessingOfficer on the date on which an application under sub-section (1) of section 245C is made. Explanation.—For the purposes of this clause— ************** (iiia) a proceeding for assessment or reassessment for any ofthe assessment years, referred to in clause (b) of sub-section(1) of section 153A in case of a person referred to in section153A or section 153C, shall be deemed to have commencedon the date of issue of notice initiating such proceeding andconcluded on the date on which the assessment is made; ************** (eb) "pending application" means an application which wasfiled under section 245C and which fulfils the followingconditions, namely: — (i) it was not declared invalid under sub-section (2C) ofsection 245D; and(ii) no order under sub-section (4) of section 245D wasissued on or before the 31st day of January, 2021 withrespect to such application;] ************** Interim Boards for Settlement 245AA. (1) The Central Government shall constitute one ormore Interim Boards for Settlement, as may be necessary, forthe settlement of pending applications. ************** (eb) "pending application" means an application which wasfiled under section 245C and which fulfils the followingconditions, namely: — (i) it was not declared invalid under sub-section (2C) ofsection 245D; and(ii) no order under sub-section (4) of section 245D wasissued on or before the 31st day of January, 2021 withrespect to such application;] ************** Interim Boards for Settlement 245AA. (1) The Central Government shall constitute one ormore Interim Boards for Settlement, as may be necessary, forthe settlement of pending applications. (2) Every Interim Board shall consist of three members, eachbeing an officer of the rank of Chief Commissioner, as may benominated by the Board. (3) If the Members of the Interim Board differ in opinion onany point, the point shall be decided according to the opinionof the majority. Application for settlement cases. 245C. (1) An assessee may, at any stage of a case relating tohim, make an application in such form and in such manneras may be prescribed, and containing a full and truedisclosure of his income which has not been disclosed beforethe Assessing Officer, the manner in which such income hasbeen derived, the additional amount of income-tax payableon such income and such other particulars as may beprescribed, to the Settlement Commission to have the casesettled and any such application shall be disposed of in themanner hereinafter provided: ************************* (2) ******************* 3) An application made under sub-section (1) shall not beallowed to be withdrawn by the applicant. 17/35 WP-5862-2021.doc (4) An assessee shall, on the date on which he makes anapplication under sub-section (1) to the SettlementCommission, also intimate the Assessing Officer in theprescribed manner of having made such application to thesaid Commission. (5) No application shall be made under this section on orafter the 1st day of February, 2021. Procedure on receipt of an application under section 245C. 245D. (1) On receipt of an application under section 245C,the Settlement Commission shall, within seven days from thedate of receipt of the application, issue a notice to theapplicant requiring him to explain as to why the applicationmade by him be allowed to be proceeded with, and onhearing the applicant, the Settlement Commission shall,within a period of fourteen days from the date of theapplication, by an order in writing, reject the application orallow the application to be proceeded with: Provided that where no order has been passed within theaforesaid period by the Settlement Commission, theapplication shall be deemed to have been allowed to beproceeded with. ****************** (2C) Where a report of the Principal Commissioner orCommissioner called for under sub-section (2B) has beenfurnished within the period specified therein, the SettlementCommission may, on the basis of the report and within aperiod of fifteen days of the receipt of the report, by an orderin writing, declare the application in question as invalid, andshall send the copy of such order to the applicant and thePrincipal Commissioner or Commissioner: Provided that an application shall not be declared invalidunless an opportunity has been given to the applicant ofbeing heard: Provided further that where the Principal Commissioner orCommissioner has not furnished the report within theaforesaid period, the Settlement Commission shall proceedfurther in the matter without the report of the PrincipalCommissioner or Commissioner: [Provided also that where in respect of an application, anorder, which was required to be passed under this sub-sectionon or before the 31st day of January, 2021, has not beenpassed on or before the 31st day of January, 2021, suchapplication shall deemed to be valid.] Provided that an application shall not be declared invalidunless an opportunity has been given to the applicant ofbeing heard: Provided further that where the Principal Commissioner orCommissioner has not furnished the report within theaforesaid period, the Settlement Commission shall proceedfurther in the matter without the report of the PrincipalCommissioner or Commissioner: [Provided also that where in respect of an application, anorder, which was required to be passed under this sub-sectionon or before the 31st day of January, 2021, has not beenpassed on or before the 31st day of January, 2021, suchapplication shall deemed to be valid.] 18/35 WP-5862-2021.doc ********************* (4) After examination of the records and the report of thePrincipal Commissioner or Commissioner, if any, receivedunder— (i) sub-section (2B) or sub-section (3), or (ii) the provisions of sub-section (1) as they stoodimmediately before their amendment by the Finance Act,2007, and after giving an opportunity to the applicant and tothe Principal Commissioner or Commissioner to be heard,either in person or through a representative duly authorisedin this behalf, and after examining such further evidence asmay be placed before it or obtained by it, the SettlementCommission may, in accordance with the provisions of thisAct, pass such order as it thinks fit on the matters covered bythe application and any other matter relating to the case notcovered by the application, but referred to in the report ofthe Principal Commissioner or Commissioner. (4A) The Settlement Commission shall pass an order undersub-section (4),— (i) in respect of an application referred to in sub-section (2A)or sub-section (2D), on or before the 31st day of March,2008; (ii) in respect of an application made on or after the 1st dayof June, 2007 but before the 1st day of June, 2010, withintwelve months from the end of the month in which theapplication was made; (iii) in respect of an application made on or after the 1st dayof June, 2010, within eighteen months from the end of themonth in which the application was made. ****************** [(9) On and from the 1st day of February, 2021, theprovisions of sub-sections (1), (2), (2B), (2C), (3), (4), (4A),(5), (6) and (6B) shall apply to pending applications allottedto Interim Board with the following modifications, namely:— (i) for the words "Settlement Commission", wherever theyoccur, the words "Interim Board" shall be substituted;(ii) for the word "Bench", the words "Interim Board" shall besubstituted; (iii) for the purposes of this section, the date referred to insub-section (2) of section 245M shall be deemed to be dateon which the application was made under section 245C andreceived by the Interim Board; 19/35 WP-5862-2021.doc [(iv) where the time-limit for amending any order or filing ofrectification application under sub-section (6B) expires on orafter the 1st day of February, 2021, but before the 1st day ofFebruary, 2022, such time-limit shall be extended to the 30thday of September, 2023.] ***************** Option to withdraw pending application 245M. (1) ***************** (2) Where the option under sub-section (1) is not exercisedby the assessee within the time allowed under that sub-section, the pending application shall be deemed to havebeen received by the Interim Board on the date on whichsuch application is allotted or transferred to the InterimBoard under sub-section (3). ****************** 19/35 WP-5862-2021.doc [(iv) where the time-limit for amending any order or filing ofrectification application under sub-section (6B) expires on orafter the 1st day of February, 2021, but before the 1st day ofFebruary, 2022, such time-limit shall be extended to the 30thday of September, 2023.] ***************** Option to withdraw pending application 245M. (1) ***************** (2) Where the option under sub-section (1) is not exercisedby the assessee within the time allowed under that sub-section, the pending application shall be deemed to havebeen received by the Interim Board on the date on whichsuch application is allotted or transferred to the InterimBoard under sub-section (3). ****************** 18On 18[th] March 2021, i.e., the date on which petitioner madeits application, the law, as it stood then, entitled petitioner to make theapplication in terms of Section 245C of the Act. Section 245C of the Act, on 18[th] March 2021, provided “Anassessee may, at any stage of a case relating to him, make an application insuch form and in such manner as may be prescribed, and containing a fulland true disclosure of his income which has not been disclosed before theAssessing Officer, the manner in which such income has been derived, theadditional amount of income-tax payable on such income and such otherparticulars as may be prescribed, to the Settlement Commission to have thecase settled and any such application shall be disposed of in the mannerhereinafter provided:” The word ‘case’ is defined in Section 245A(b) of the Act tomean case "any proceeding for assessment under this Act, of any person inrespect of any assessment year or assessment years which may be pendingbefore an Assessing Officer on the date on which an application undersub-section (1) of Section 245C is made.” Explanation (iiia) to Section245A(b) of the Act, which is applicable to this case at hand provides that“a proceeding for assessment or reassessment for any of the assessmentyears, referred to in clause (b) of sub-section (1) of Section 153A in case ofa person referred to in Section 153A or Section 153C, shall be deemed tohave commenced on the date of issue of notice initiating such proceedingand concluded on the date on which the assessment is made;” Therefore, as on 18[th] March 2021, the proceedings ofpetitioner for the Assessment Years 2014-15 to 2020-21 fell within themeaning of ‘case’ and petitioner had made a valid application as per Section245C(1) of the Act. On 18[th] March 2021, there was no prohibition onpetitioner to make such an application. 19The fact that the Finance Bill, 2021 had been presented beforeparliament proposing to insert sub-section (5) to Section 245C of the Act,which was to provide that “no application shall be made under this sectionon or after the 1[st] February 2021”, could not bar petitioner from making theapplication on 18[th] March, 2021. On 18[th] March, 2021 the Finance Bill,2021 did not have the force of law and was merely a Bill which may or may not be enacted or which may be enacted in a different form. Undisputably,the Finance Bill, 2021 till the same was enacted, did not become law.Admittedly, the Finance Act, 2021 was notified with effect from 1[st] of April,2021, before which petitioner had already filed a valid application whichhas also been accepted by the Settlement Commission. 19The fact that the Finance Bill, 2021 had been presented beforeparliament proposing to insert sub-section (5) to Section 245C of the Act,which was to provide that “no application shall be made under this sectionon or after the 1[st] February 2021”, could not bar petitioner from making theapplication on 18[th] March, 2021. On 18[th] March, 2021 the Finance Bill,2021 did not have the force of law and was merely a Bill which may or may not be enacted or which may be enacted in a different form. Undisputably,the Finance Bill, 2021 till the same was enacted, did not become law.Admittedly, the Finance Act, 2021 was notified with effect from 1[st] of April,2021, before which petitioner had already filed a valid application whichhas also been accepted by the Settlement Commission. 20The amendments made by the Finance Act, 2021, despite beingretrospective in nature by their insertion being with effect from 1[st] February2021, would not affect the vested right of petitioner to have the assessmentof petitioner being settled as per the procedure prescribed in Chapter XIX-Aof the Act. Section 245C(5) of the Act provides that “No application shall bemade under this section on or after 1[st] February 2021.” The words “shallbe made” can only be interpreted as having effect from the date of itsnotification and cannot apply from an earlier date. The sub-section refers toa prohibition on an assessee from taking action, i.e., prohibition on filing anapplication under Section 245C of the Act. However, when an action hasalready been performed, the retrospective amendment cannot set at naughtor prohibit the performance of the action, as, admittedly, the action hasalready been performed and now, cannot be taken back. Petitioner havingalready made an application on 18[th] March 2021, at which point of time,the amendment not having been on the statute, cannot by way of aretrospective amendment, be prohibited from making an application. If thelegislature wanted to treat the applications, which have been filed between 22/35 WP-5862-2021.doc 1[st] February 2021 and 1[st] April 2021 as invalid and bad in law, thelegislature would have instead provided that “Any application filed underthis section on or after 1[st] February 2021, shall be treated as null and void.”The provisions, as presently worded, cannot apply to a completed act of anassessee and hence, the application of the assessee cannot be treated asinvalid. 21In any view of the matter, the application having been validlyfiled, a vested right has accrued to petitioner and such vested right cannotbe taken away by the legislature unless the same is done expressly or bynecessary implication. It has not been so done by the amendmentsintroduced by the Finance Act, 2021. The Hon’ble Apex Court in Shah Sadiq& Sons(Supra) was concerned with the issue of allowability of carryforward and set off speculation loss. As per the Income Tax Act, 1922, setoff of the loss was allowed indefinitely. In the Income Tax Act, 1961,however, a time limit had been prescribed for such set off of carry forwardloss. The Hon’ble Apex Court held that assessee had a vested right in theyear of loss to carry it forward and set it off against subsequent businessprofit and such vested right has not been taken away in the subsequentamendment, either by express words or by necessary implication. TheHon’ble Apex Court, accordingly, held that assessee would be entitled to setoff of the earlier speculation loss against the profits even after the 1961 Act.In our view, Shah Sadiq & Sons(Supra) supports the view that a right 23/35 WP-5862-2021.doc 23/35 WP-5862-2021.doc which had accrued to approach the Settlement Commission till thenotification of the Finance Act, 2021 on 1[st] April 2021 stood vested in theeligible assessees and the said rights continued to be capable of beingenforced not with standing the amendment of the relevant provisions. Inthe present case also, assessee (petitioner) having filed a valid application,has a vested right to be entitled to the process of settlement fordetermination of income of petitioner for the years of which suchapplication has been made. Therefore, the amendment in Chapter XIXwould not render the application of petitioner invalid or bad in law.Further it is not the case of petitioner that petitioner has a vested right tobe adjudicated by the Settlement Commission as per the erstwhileprovisions. Petitioner’s case is that as the application of petitioner has beenvalidly filed, petitioner has a vested right to the extent that petitioner’sapplication being treated as a valid and pending application, which shouldbe considered and adjudicated as per the amended law by the InterimBoard. 22The decision of the Hon’ble Apex Court in the case of HowrahMunicipal Corporation & Ors.(Supra) relied upon by Mr. Suresh Kumarwould not be applicable to the facts of the present case. In the said case,respondent-company (Ganges Rope) had applied for sanction forconstruction of a complex for 7 floors. As the sanction was not grantedwithin the prescribed period, Ganges Rope approached the High Court. The High Court ultimately directed the Corporation to grant sanction upto4[th] floor. The High Court further held that Ganges Rope would be at libertyto apply for further sanction if the same was permissible at a later date.Before Ganges Rope could apply for further sanction, the State Governmentamended the building rules restricting the height of the building to theprescribed level depending upon the width of the street. In view of theamended rules, Ganges Rope was not entitled to sanction of the balancefloors. Ganges Rope argued before the Hon’ble Apex Court that it (GangesRope) had a vested right of its further application being considered on thebasis of the building rules as they stood prior to the amendment of thebuilding rules. The Hon’ble Apex Court rejected the contention of GangesRope holding that the order of the High Court did not create a vested rightin favour of Ganges Rope. The Hon’ble Apex Court held that the word“vest” has acquired a meaning as “an absolute or indivisible right”. TheHon’ble Apex Court also noted that the vested right cannot becountenanced against public interests and convenience which are sought tobe served by amendment of the building rules and the resolution of theCorporation issued thereupon. Therefore, the issue before the Hon’ble ApexCourt was completely different; as firstly, the Hon’ble Apex Court was notconcerned with a case of retrospective amendment and, secondly, theHon’ble Apex Court came to conclusion that the order of the High Court didnot result in a vested right to Ganges Rope. However, in the present case,petitioner would fulfill the definition of vested right as expressed by theGauri Gaekwad Hon’ble Apex Court. Petitioner had already filed an application which hasbeen accepted as a valid application on the date of making such applicationwhich has given petitioner an absolute and indefeasible right to the processof sett