Vildirect: IncomeTax-caselaws-2012-VIL-784-JHR-DT

2012-VIL-784-JHR-DT

JHARKHAND HIGH COURT

W.P.(T) No. 1623 of 2008, 1624, 1625,1626,1627,1628 and 1629 of 2008

Date: 21.03.2012

MD SANAUL HAQUE, MD. TAUHEED, MD. SAYEED, MRS. SAIRUN NISHA, CHHOTANAGPUR CATTLE FOOD SUPPLY COMPANY, MD. EKRAM & MD. HUSSAIN

THE UNION OF INDIA, THE CHAIRMAN, THE INCOME TAX SETTLEMENT COMMISSIONER, THE COMMISSIONER OF INCOME TAX & THE DEPUTY COMMISSIONER OF INCOME TAX (ASSESSMENT)

For the Appellant : Mr. B. Poddar, Sr. Adv., M/s D. Poddar, M. Choudhary,P. Poddar, Advocates
For the Respondents : Mr. Deepak Roshan

BENCH

APARESH KUMAR SINGH & Prakash Tatia, JJ.

JUDGMENT

By Court These bunch of cases involve common question of law, hence, they are heard together and decided by going into the grounds taken in W.P.(T) No. 1623 of 2008.

2. Learned counsel for the petitioners submitted that the issue raised by the petitioners, in these bunch of cases, is squarely covered by the Division Bench judgment of Bombay High Court delivered in the case of Star Television News Limited Vs. Union of India & Ors. reported in (2009) 3 ITR 66 (Bom.) and equally in (2009) 184 Taxman 400 (Bom.).

3. Learned counsel for the Revenue admitted that Bombay High Court in the above judgment, delivered in the case of Star Television News Limited Vs. Union of India & Ors., decided as back as on 7th August, 2009, has not been challenged by the Revenue, to the best of his knowledge. However, learned counsel for the Revenue has not drew our attention taking contrary view to the Division Bench Judgment of Bombay High Court.

4. Learned counsel for the petitioner submitted that provision which was in force and which may have been some effect because of the amendment made in the year 2007 has been re-introduced in the year 2010, which according to learned counsel for the petitioner may be because of the reason of the binding decision of the Bombay High Court.

5. It will be appropriate to give facts of one of the cases out of these bunch of cases. The petitioner in writ petition, being W.P.(T) No. 1623 of 2008, prayed that Settlement Application filed by the assessee under Section 245D(1) of the Income Tax Act, 1961 may not be treated to be abated by virtue of insertion of Section 245 HA introduced by Finance Act of 2007 with effect from 1.6.2007. Petitioner's contention is that on 26.02.1993, the petitioner filed a Settlement Application bearing No. 3/R/147/92-IT in prescribed form before the Income Tax Settlement Commissioner in respect to previous years relevant to assessment years 1989-90 to 1992-93 (both inclusive) under Section 245D(1) of the Act of 1961 declaring additional income. On 30th July, 1991 petitioner filed another application being Settlement Application No. 3/R/27/93-94/WT before the same authority with respect to assessment year 1993-94 under Section 22C(1) of the Wealth Tax Act, 1957 declaring additional wealth. In those proceedings two separate orders were passed, one is dated 23rd August, 1993 under Section 243D(1) and another is dated 22nd December, 1999 under Section 22D(1) of the Act of 1957 respectively and allowed the said two applications of the petitioners to be proceeded with in terms of the said order. It is submitted by learned counsel for the petitioner that petitioner, through his employee, remained in touch with the office of respondent no. 2, but no date was fixed by the authority for hearing of the two Settlement Applications. The matter was not decided even till the year 2007 and, the Parliament in the year 2007 enacted Finance Act 2007 inserting several new provisions in Chapter XIX-A of the Act of 1961 as well as Chapter V-A of the Act of 1957 and inserted provisions of Sections 245D(2B), 245D(2C), 245D(2D), 245D(3), 245D(4), 245D(4A) and 245HA in the Act of 1961 and Sections 22D(2B), 22D(2C), 22D(2D), 22D(3), 22D(4), 22D(4A) and 22HA in the Act of 1957. Section 22HA of the Wealth Tax Act, 1957 provides abatement of proceeding pending before Settlement Commissioner and the similar provisions is in Section 245 HA of the newly inserted provisions in the Income Tax Act.

6. The petitioner has sought declaration that it may be declared that petitioner's applications have not been abated in view of Section 245HA of the Act of 1961 and 22HA of the Act of 1957 simply because the authority did not decide the petitioner's application in time without fault of the petitioner.

7. The issue of validity of Section 245HA read with Section 245HA(3) of the Income Tax Act, 1961 as inserted by Finance Act, 2007 was under challenge before the Division Bench of the Bombay High Court as its Constitutional validity was challenged wherein the Bombay High Court held that Section 245HA(3) has the effect of severely prejudicing the interests of applicants who in good faith made available the confidential information based on bona fide belief and a legitimate expectation that settlement orders would be passed and confidential information disclosed by such applicants would not be available to the Income Tax Authorities for use by them against such applicants. The Division Bench of the Bombay High Court further held that consequences of upholding Section 245HA(3) of the Income Tax Act, 1961 would be to cause prejudice to the interest of the applicant. Then, it has been held that provisions of Section 245 HA(1)(iv) read with Section 245HA(3) of the Act so read have to be held arbitrary, unreasonable and violative of Article 14 of the Constitution of India. The Bombay High Court also considered the various other provisions of the said enactment and so far as issue involved before us is concerned, for that it will be worthwhile to mention here that the Bombay High Court held that in a case there was no fault of the applicant and he himself is not responsible for delay in getting decision on the Settlement Application, in that situation, the application shall not abate.

8. Here in this case also the petitioner's contention is that he submitted applications in time and in accordance with law and provided all materials to the authorities concerned and the authorities concerned should have passed the appropriate order in time.

9. It is not disputed that the decision taken by the Bombay High Court has not been challenged. In view of the above decision, which is binding upon the Income Tax Department, we are of the considered opinion that the writ petition of the writ petitioners are deserves to be allowed. The Settlement Commissioner may now proceed to decide the applications, following the principles laid down in the case of Star Television News Limited Vs. Union of India & Ors., and while doing so examine whether there was fault of the petitioner and the petitioner is responsible for the delay in passing the order by the Income Tax authorities or not.

10. With the aforesaid observations, these writ petitions are allowed.

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