An applicant can approach the Income
Tax Settlement Commission in respect of a particular assessment year only if no
assessment order is passed by the concerned income tax authority and the
statutory time-limit for passing of assessment order for that year has not
lapsed. The proceedings are considered to be pending from the first day of the
assessment year and it is not needed that a return of income is filed or a
notice for scrutiny is issued before failing of application.
An applicant have to disclose
an additional amount of income tax before the Commission which is at least
Rupees ten lakhs. This does not include the amount of interest chargeable on
such tax. For cases involving Search and seizure assessment proceedings, the
additional amount of income tax to be disclosed is at least Rupees fifty lakhs.
Settlement Commission and Appeal
The application for settlement can
be made only during the pendency of the assessment proceedings, whereas an
appeal can be filed only after conclusion of assessment proceedings, against an
order of assessment. For approaching the settlement commission, an applicant is
required to disclose income which he has not disclosed before the Income Tax
Department and also to pay applicable tax and interest on it before filing the
application. No such conditions are needed for filing an appeal.
Who can file
application
The assessee desirous of settling his case is required
to make an application under section 245C(1) in form No. 34B prescribed under
Rule 44C(3) of the Income-tax Rules, 1962, duly signed and verified as
prescribed therein. This application is to be made in quintuplicate and has to
be accompanied by a fee of Rs. 500/-. The fee has to be paid (with a Challan)
in a branch of an authorised bank or a branch of State Bank of India or a
branch of Reserve Bank of India. Cheques, Drafts, Hundies or other negotiable
instruments sent directly to the Commission, are not acceptable.
Application to Settlement Commission
Application to
Settlement Commission can be made for following:
1. proceeding for
assessment/reassessment/recomputation under section 147
2. proceeding for
making fresh assessment under section 254 or under section 263 or under section
564
3. proceeding for assessment / reassessment for
any assessment year immediately preceding the year in which search was
conducted in case of person referred under section 153A or under section 153C
4. proceeding for the assessment year relevant to
previous year in which search was conducted or books were requisitioned under
section 132A in case of person referred under section 153A or under section
153C
5. Proceeding for assessment
for any assessment year other than the proceeding of assessment or reassessment
referred to in above clause 1 to 4.
KEY NOTE :
application can be made if any intimation under section 143(1) is received as
the me limit for issue of notice under section 143(2) has been expired or not
is not material.
Eligibility
An
applicant can approach Income-tax Settlement Commission, if the following
conditions are satisfied
[1] Pendency of
assessment proceedings [Section 245C(1)]
The Pre-condition for the
Commission to receive an application is that a case as defined under Section
245A(b) should be pending as on the date of its presentation.
An applicant can approach the Income Tax
Settlement Commission in respect of a particular assessment year only if there
is assessment proceedings is pending against him before an Assessing Officer on
the date of filing of application, i.e. no assessment order is passed by the
Assessing Officer and the statutory time-limit for passing of assessment order
for that year has not lapsed.
The various situations, when the
assessment proceedings are deemed to be initiated / pending have been provided
in Section 245A(b) and are summarized below:
|
S. No. |
Section |
Assessment
Proceedings |
Deemed to be
initiated from |
|
|
1 |
147 |
Income Escaping
Assessment |
Assessment or
Reassessment or Re-computation |
Date of issue of
notice under section 148 |
|
2 |
254 |
Case before
Appellate Tribunal |
|
Date of Order |
|
3 |
263/264 |
Revision of
assessments by Principal Commissioner
or Commissioner |
Fresh Assessment |
setting aside or
cancelling previous assessment |
|
4 |
153A |
Assessment in
case of search or requisition / related persons |
Assessment or
Reassessment for years mentioned under section 153A(1)(b) |
Date of issue of
notice under section 153(1)(A) |
|
5 |
|
Any other than
above |
Assessment or
Reassessment |
First day of the
assessment year |
Filing of return of income before
filing application for settlement is not necessary
Under the old scheme, proviso to
Section 245C(1) provided that application for settlement could be filed only if
assessee has filed return of income which was due. It was subject to lot of
criticism and the proviso has been done away with and it is no more necessary
that assessee has filed return of income before he is eligible to file
application for settlement. As pendency of proceedings is from first day of
assessment year, an assessee may instead of filing return of income due u/s.
139(1) and even before such time expires, directly file an application for
settlement.
For purpose of maintainability of a settlement
application, a case would be pending only as long as order of assessment is not
passed and date of dispatch of service of order on assessee would not be
material for such purpose
On
07.01.2014, a search was conducted on the assessee. Thereafter, a notice under
Section 153A of the Act was issued on 02.07.2014. The assessee filed the return
of income in response to such notice on 27.11.2014. The Assessing Officer
passed the assessment orders for five assessment years in question on
15.03.2016 and the same were sent for service personally, by deputing an
Inspector of his office, to the partners of the assessee firm at its office on
15.03.2016. However, the partners refused to receive the orders. A report to
this effect was made by the Inspector and placed before the Assessing Officer,
a copy of which was produced along with an affidavit. On 16.03.2016, the
assessee filed application for settlement before the Settlement Commission.
Before the settlement bare facts were that the order of assessment dated 15.03.2016
was served on the assessee on 21.03.2016. Thus, according to the assessee, the
application for settlement having already been filed on 16.03.2016 even before
the orders of assessment were served, such application before the Settlement
Commission would be maintainable. Even if such orders were passed on
15.03.2016, as contended by the Department, since the same were not served on
the assessee, the assessment proceedings would be deemed to be pending and,
therefore, application for settlement would be maintainable. However, according
to the Department, as soon as the orders of assessment were passed.
Irrespective of dispatch of the orders of assessment or service thereof on the
assessee, application for settlement would not be maintainable. The High Court
held that for the purpose of application under Section 245C(1) of the Act, a
case would be pending only as long as the order of assessment is not passed.
Once the assessment is made by the Assessing Officer by passing the order of
assessment, the case can no longer be stated to be pending. Application for
settlement would be maintainable only if filed before the said date. Date of
dispatch of service of the order on the assessee would not be material for such
purpose. High Court dismissed the petitions filed by the assesse. (Related
Assessment years : 2010-11 to 2014-15) – [Shalibhadra
Developers v. Secretary & Ors. (2017) 291 CTR 87 : 245 Taxman 160 : (2016)
143 DTR 1 : (Guj.), Shanti Buildcon v. Secretary & Ors. (2017) 291 CTR 87 :
245 Taxman 160 (2016) 143 DTR 1 : (Guj.)]
Pendency of assessment proceedings - Time to make assessment
on return filed by assessee for assessment years 2007-08 to 2009-10 was barred
by limitation when settlement application was filed - Assessment proceedings
were not pending before Assessing Officer - Dismissal of application by
settlement commission was valid -Writ petition of assessee was dismissed
The exclusion clause in section
245A(b) comes into play only on the issue of a notice under section 148 which
was admittedly not done up to March 7, 2013, when the application for
settlement was filed by the assessee with the Settlement Commission. However,
the proceedings under section 147 / 148 by their very nature would only lie
where the earlier assessment proceedings were not pending. This is self-evident
as the jurisdictional requirement under section 147 / 148 is that income
chargeable to tax has escaped assessment. Therefore, where the assessment was
still pending (in case where returns have been filed) no occasion of income
escaping assessment can arise. The assessment will cease to be pending when the
assessment proceedings are terminated. This termination can be either when the
assessment is made or when the time to make the assessment comes to an end
under section 153. Thus, the period within which assessment could be made for
the assessment years 2007-08 to 2009-10 had admittedly expired under section
153. The time limit to make an assessment order in regular proceedings for the
assessment years 2007-08 to 2009-10 had already long expired before March 7,
2013, when the application for settlement was made by the assessee to the
Settlement Commission. Therefore, on the date of filing of the application,
i.e., March 7, 2013, before the Settlement Commission there were no assessment
proceedings pending with the Assessing Officer as they stood terminated by
efflux of time. Writ petition of assessee was dismissed. (Related Assessment
years : 2007-08, 2008-09, 2009-10) – [Shriniwas
Machine Craft (P) Ltd. v. ITSC (2014) 361 ITR 313 : 265 CTR 113 : 98 DTR
161 (Bom.)]
Assessment was
completed under section 143(1) – Assessment was held to be not pending –
Application was held to be not maintainable
Assessee filed an application before settlement
commission for the Assessment Years 2005-06 to 2011-12. Revenue contended that
for the Assessment Years 2005-06 to 2008-09 the returns were processed under
section 143(1) and no further proceedings were pending hence the application
was not maintainable. Settlement Commission rejected the objections and held
that the application was maintainable. Revenue file the writ petition. The
Court held that the assessments had become timebarred without any notice under
section 143(2) or even final time-limit for passing orders, even if such
notices were issued, had expired by the time assessee filed his application for
settlement before Settlement Commission, application for settlement qua these
years was not maintainable. Writ petition of revenue was allowed. (Related
Assessment years : 2005-06 to 2008-09) – [CIT
v. ITSC (2013) 259 CTR 329 : 218 Taxman 49 (Guj.)]
Application –
Maintainability – When there is no pendency of proceedings, application is not
maintainable
The assessee had filed returns in respect of Assessment
Years 2004-05, 2005-06, 2007-08 and 2008-09. On 05.08.2011 the assessee filed
an application before Settlement Commission seeking a settlement of its cases.
The revenue opposed application contending that application was not
maintainable as no case was pending before any Income-tax Forum. The settlement
commission overruled objection of revenue and decided to entertain the
settlement application. The revenue filed the writ petition and raised the
question. “Whether proceedings are to be deemed to remain ‘pending’ for the
purposes of section 245A(b) when the time-limit for completion of assessment
under section 143 or section 144 has expired”. The Court held that since no
proceedings under Income-tax Act were pending at time of filing of application,
Settlement Commission was not right in admitting assessee’s application. Where
by application of section 153, an assessment order can no longer be made,
proceeding, for purposes of section 245A, would have to be construed as
terminated. (Related Assessment years : 2004-05, 2005-06, 2007-08, 2008-09) – [CIT v. ITSC (2013) 259 CTR 318 : 212 Taxman
511 : 87 DTR 178 (Del)]
Case – Pendency of
assessment – Circular – Notice – Limitation – Application filed before expiry
of period to complete the assessment under section 153 was held to be valid
The assessee has filed application before the settlement
commission for the AY. 2010-11 on 14th November 2012. When application was
filed the period to complete the assessment under section 153 had not expired
however the period to issue notice under section 143(2) had expired. Revenue
contended that the Settlement Commission had no jurisdiction to entertain the
application as no case was pending. The Court held that in view of Circular no
3 of 2008 dated 12th March, 2008, the Settlement Commission had rightly
accepted the assessee’s application for settlement. Circular is binding on
revenue and the revenue has not till date withdrawn the circular to the extent
it clarifies that it is immaterial for the purpose of filing an application
before Settlement Commission whether the time limit for issuing notice under
section 143(2) has expired or not. A beneficial interpretation to the word
‘case‘ in section 245A(b) given by the Circular dated 12th March 2008 issued by
the CBDT is understandable so as to mitigate / lessen the rigour of the
definition of the word ‘case’. Settlement Commission rightly accepted the
assessee’s application for settlement. Petition of revenue was dismissed.
(Related Assessment year : 2010-11) – [CIT
v. ITSC (2013) 262 CTR 28 : 92 DTR 409 (Bom.)]
In Varinder K. Arora, In re, it was
held that assessment proceedings would be treated to be pending till the
assessment order is served on the applicant. In the said case, the assessment
order had been served on the applicant on 02.04.2009 after the application was
filed on 31.03.2009. It was that the proceeding for assessment were pending on
31.03.2009 as per clarification issued by the CBDT in the Circular No.3 of 2008
dated 12.03.2008 and as such the assessee’s application deserved to be admitted
under section 245D(1). – [Varinder K. Arora, In re (2009) 180 Taxman 412
(ITSC Mumbai)]
Income
Tax assessment completes on date of order, irrespective of service, CBDT
rectifies 6 year old mistake
CIRCULAR
NO. 16/2014, dated 17.11.2014
Subject:- Clarification in respect
of Circular No.3 of 2008 dated
12.03.2008 of CBDT – regarding
Chapter XIX-A of the Income-tax Act,
1961 contains provisions relating to settlement of cases by the Income-tax
Settlement Commission (ITSC). The provisions contained in the said chapter were
amended by Finance Act, 2007 and a Revised Settlement Scheme was put in
place. Explanatory Circular No. 3/2008 dated
12.03.2008 issued by CBDT vide para 61 (comprising sub paras 61.1 to 61.17)
deals with Revised Settlement Scheme.
2. Para 61.2 of Circular No.3 of
2008 reads:-
“61.2 under the
existing provisions, an assessee may make an application to the Commission at
any stage of the proceedings in his case pending before any Income-tax
Authorities. After 31st May, 2007, an assessee can make an application to the
Commission only during the pendency of the proceedings before the Assessing
Officer. It is further clarified that (a) since intimation under section 143(1)
is not an assessment order, there will be no bar in filing an application for
settlement subsequent to receipt of an intimation under section 143(1). It is
not material whether time-limit for issue of notice under section 143(2) has
expired or not; (b) the assessment shall be deemed to have been completed only
on the date of service of assessment order to the applicant”.
3. It has been inadvertently stated
in para 61.2 of Circular No.3 of 2008 that the assessment shall be deemed to
have been completed only on the date of service of assessment order to the
applicant. This statement is not in consonance with the provisions contained in
Explanation to clause (b) of section 245A of the Income-tax Act which, inter
alia, provides that a proceeding for assessment of any assessment year shall be
deemed to have concluded on the date on which the assessment is made.
4. In view of the above, para 61.2
of Circular No.3 of 2008 is replaced with the following with effect from the
1st day of June, 2007:-
“61.2 Under the
existing provisions, an assessee may make an application to the Commission at
any stage of the proceedings in his case pending before any Income-tax
Authorities. After 31st May, 2007, an assessee can make an application to the
Commission only during the pendency of the proceedings before the Assessing
Officer. It is further clarified that (a) since intimation under section 143(1)
is not an assessment order, there will be no bar in filing an application for
settlement subsequent to receipt of an intimation under section 143(1). It is
not material whether time-limit for issue of notice under section 143(2) has
expired or not; (b) the assessment shall be deemed to have been completed on
the date on which the assessment order is passed.”
[2] Minimum amount of additional income tax on
the income [Proviso to section 245C(1)]
The additional tax payable on additional
income offered must exceed Rs. 10,00,000/-. If the case is in pursuance of
notice under section 153A or 153C, the additional tax payable has to exceed Rs.
50,00,000/-. If however, despite being a case in pursuance of notice under
section 153A or 153C, if the case is connected to a case for which application
has been filed, and such connection is as prescribed under the Act, than the
additional tax payable has to exceed Rs. 10,00,000/-. The mode of computation
of additional tax is provided by sub-section (1A) to (1D) of section 245C.
If the application is for more than one
assessment year, than additional tax shall be determined as prescribed for each
of the assessment year and the aggregate thereof shall be treated as additional
tax payable as per the application.
Such tax &
interest thereon shall be paid before filing of application. Proof shall be
attached.
Minimum Additional
Income Tax [Proviso (i) to Section 245C(1)]
Additional income-tax paid while making settlement application
must exceed threshold stated in the provisions i.e.
|
Before 31.05.2007 |
Provision from
01.06.2007 amended by Finance Act 2007 |
Provision from
01.06.2010 amended by Finance Act 2010 |
|
Rs. 1,00,000 |
Rs. 3,00,000 |
(i) In case of specified person in whose case notice under
section 153A/153C have been issued as a consequence of search -
The additional tax payable on additional income offered must exceed Rs.
50,00,000/- |
|
(ii) In case of other assessee’s who are related to the
specified person who has preferred settlement application as lead case and
have been issued notices under section 153A/ 153C of the Act - The additional
tax payable on additional income offered must exceed Rs. 10,00,000/- |
||
|
(iii) In any other cases - The additional
tax payable on additional income offered must exceed Rs. 10,00,000/- |
Applicant must pay additional amount of income-tax on the additional
income disclosed in settlement application along with interest u/s 234A,234B,
234C and 234D thereon at the time of filing of Settlement Application and
furnish proof of making payment thereof in the settlement application.
Settlement
of cases - Conditions - Settlement Commission can admit application for
settlement when additional income and additional tax liability is disclosed for
some years and there is no additional income/additional tax for remaining years
as long as additional tax payable on income disclosed in application exceeds
threshold limits specified in proviso to section 245C(1)
The Special Bench
of the Settlement Commission was to consider a question ‘whether in an
application for settlement under section 245C(1) covering more than one
assessment year, the applicant must mandatorily disclose additional income not
disclosed before the Assessing Officer, for each assessment year covered by the
application and on such additional income there must be a liability to pay tax
for each such year especially in view of amendments brought about in proviso to
section 245C(1), read with section 245A(b) by Finance Acts 2007 and 2010,
thereby rendering decision of Special Bench in Airtech (P) Ltd. v. Income Tax
Settlement Commission (1994) 20 ITR (AT) 21 (ITSC), no longer good law?’. The
Bench, by a majority view, concluded that Settlement Commission can admit an
application for settlement when additional income and additional tax liability
is disclosed for some years and there is no additional income/additional tax
for remaining years as long as additional tax payable on income disclosed in
application exceeds threshold limits specified in proviso to section 245C (1).
The Bench held that there is no specific condition laid down in law that there
should be additional income disclosed in every assessment year or that there
should be additional tax liability on such additional income disclosed in every
year, covered by the application and that the amendments made in proviso to
section 245C (1), read with section 245A (b) by Finance Act 2007 and 2010, have
no direct bearing on the above conclusions. – [Neptune Developers & Construction (P) Ltd., In re (ITSC-Mumbai)
(2017) 248 Taxman 500 : 55 ITR 484 (Mum) (Trib) (SB) (ITSC)]
[3] Full &
true disclosure with manner of income not disclosed before the Assessing
Officer [Section 245
H(1)]
Section
245C(1) requires that the application must contain a full and true disclosure
of income, not disclosed before the Assessing officer. This is one of the
important conditions for a valid application for settlement.
What does full and true disclosure mean
What constitutes
full and true disclosure can be determined on facts of each case. One can say
that requirement of section 245C(1) are fulfilled if:
(i) All material facts are disclosed, and
(ii) Computation of
income offered on the basis of such primary material facts is bonafide , fair
and reasonable .
Condition of full and true disclosure prescribed twice –
section 245C and 245H
The need to make
full and true disclosure in an application for settlement cannot be over
emphasized. Though an assessee has to make full and disclosure even in return
of income as required by section 139, the said condition in Chapter XIX A is
prescribed twice. Section 245C prescribes conditions for a valid application
and one of the main conditions is full and true disclosure of income. The same
condition is again prescribed in Section 245H. Section 245H prescribes
immunities that may granted by the ITSC and the conditions on satisfaction of
which the said immunities may be granted. One of the prescribed conditions in
section 245H is that applicant has made full and true disclosure of income.
As per Section 245H(1), the Settlement
commission has power to give immunity from penalty/ prosecution provision, if
the following conditions are satisfied
(a)
co-operates with the proceedings of the commission
(b)
makes true and full disclosure of his income,
(c)
the manner in which such income has been derived. There
is no need to substantiate the manner of
earnings, which is a requirement for lower rate of penalty under section 271AAB
of the Act.
Filing of Return [Proviso (i) to Section
245C(1)]
|
Before 31.05.2007 |
Provision from
01.06.2007 amended by Finance Act 2007 |
Provision from
01.06.2010 amended by Finance Act 2010 |
|
The assessee
should have furnished the return of income |
No such specific
requirement |
No such specific
requirement |
[4] Applicant must pay additional amount of income-tax on
the additional income disclosed in settlement application along with interest
Applicant
must pay additional amount of income-tax on the additional income disclosed in
settlement application along with interest under section 234A,234B, 234C and
234D thereon at the time of filing of Settlement Application and furnish proof
of making payment thereof in the settlement application.
Payment of
Additional Income Tax [Proviso (ii) to Section 245C(1)]
|
Before 31.05.2007 |
Provision from
01.06.2007 amended by Finance Act 2007 |
Provision from
01.06.2010 amended by Finance Act 2010 |
|
Should be paid
within 35 days of receipt of admission order |
Additional Income
Tax and Interest should have been paid prior to filing of application |
Additional Income
Tax and Interest should have been paid prior to filing of application |
Calculation
of Additional Tax payable
For the purpose of proviso to section 245C (1),
Additional Tax-payable shall be calculated as follows :-
(a) In case the
applicant has not furnished return prior to date of application, tax shall be
calculated on the income disclosed in the application as if it is the total
income and such tax shall be the additional amount of income tax payable.
(b) In case applicant has furnished a return prior to
date of application, additional income shall be calculated as under :
|
S. No. |
Particulars |
Amount (in Rs.) |
|
(i) |
Total
Income returned |
10,00,000 |
|
(ii) |
Add: Income
disclosed in settlement application |
80,00,000 |
|
(iii) |
TOTAL = (i) + (ii) |
90,00,000 |
|
(iv) |
Additional
amount of Income-tax (iii) – (i) + (ii) |
xxx |
Adjustment
of asset seized under section 132 or requisitioned under section 132A
With
effect from 01.06.2015, the asset seized under section 132 or requisitioned
under section 132A may also be adjusted against the amount of liability arising
on an application made before the Settlement Commission under sub-section (1)
of section 245C.
While computing income on which tax is payable under
section 245C, carried forward losses are to be set off
It
was held that the computation of additional tax would have to be done after
allowing set off of the unabsorbed depreciation against the income disclosed in
the application for settlement. In other words, while computing income on which
tax is payable u/s.245C, carried forward losses are to be set off. – [Gobind
Builders & Developers v. ITSC (2009) 309 ITR 167 : (2008)
216 CTR 75 (Bom)]
The said judgment
was differed by the Hon’ble Gujarat High Court in Unipon (India) Ltd. v. ITSC,
order dated 09- 16.04.2014 and a different view has been upheld:
“26. Under
the circumstances, the contention of the counsel for the petitioner that the
term “total income” should be construed as defined under section 5 of the Act
for the purpose of calculation additional tax of an applicant for settlement of
a case cannot be accepted. This is for multiple reasons. Firstly, as discussed
earlier clause (ii) of sub section (1B) of section 245C of the Act gives rise
to deeming fiction where total income has to be considered as if the aggregate
of the total income returned and the income disclosed would be the total
income. Such deeming fiction must be allowed its full effect. Secondly, the
very same clause uses the term “total income” returned in a different context
and the aggregate of the total income returned and the income disclosed which
would partake the character of a total income for this limited purpose.
Thirdly, such deeming fiction cannot be discarded by bringing into
consideration such term used elsewhere by the legislature. It is well known the
legislature provides for definition of various terms frequently used in the statutes.
The definition section usually comes with the expression “unless the context
otherwise provides” or “unless there is anything repugnant to”. Such definition
section defines various terms repeatedly used in a statute which would carry
the meaning as contained in the definition. It is also well known that the
statute defines often times terms for the special purpose of a section or even
for a subsection. Examples are replete in the Act itself where the definitions
are provided only for the purposes of a particular section or even a
subsection. In the present case, this formula which contains a special
definition for a special purpose would, therefore, have its effect only for
section 245C. Being a special provision it would prevail over any other general
term of a concept contained in the Act. Section 245C(1) of the Act also
requires the applicant to provide besides other details, true and full
disclosure of his income which has not be disclosed before the Assessing
Officer and amount of income tax payable on “such income”. Reference to “such
income” thus is the income disclosed in the settlement application which was
not disclosed before the Assessing Officer.
27. The
reason for the legislature to provide a simple formula is not far to seek. As
noted, the different stages before the settlement commission once an
application is made by the assessee for settlement of his case, comes with time
frame. Even the final order which the settlement commission may pass has a
deadline beyond which if no order is passed, the proceedings would abate. At a
stage where the settlement commission is required to ascertain where an
assessee applicant has paid the additional tax with interest thereon only upon
which application can be allowed to proceed further, no complex exercise or
verification is envisaged. If the concept of total income contained in the Act
is imported at such a stage, it can give rise to multiple disputes and lengthy
debates with respect to the total income of an assessee and whether full tax on
such income has been paid or not. At such a stage, the legislature does not
envisage the commission to go into a complex exercise of ascertaining the total
income of the assessee and further ascertaining his tax liability on such
income. The legislature has, therefore, provided for a simple formula possible
of a simple arithmetical application. It may be that in a given case the
assesse may be entitled to a refund once the Settlement Commission passes its
final order. Such isolated case, however, would not govern the interpretation
of sub sections (1B) and (1C) of Section 245C. Any such interpretation would
give rise to complex consideration by the Settlement Commission of the
assessee’s total income not as defined in sub section (1B) to but as otherwise
understood and referred to in Section 5 of the Act. Likewise, the computation
of the tax on such total income and the resultant liability of the assessee for
paying additional tax also would become a complex exercise. In income tax
proceedings multiple claims, of deductions and exemptions give rise to often
times complex considerations. Often the liability itself is fluctuating due to
court pronouncements. Sometimes a legal question or interpretation of a
provision may be in the virgin field not covered by any Court judgment. The
legislature never intended that at the stage of ascertaining whether the
assessee has deposited the additional tax on an application made for settlement
of the case, such complex exercise should be undertaken by the Settlement
Commission. Further, in our opinion, accepting any such interpretation would
defeat the very purpose of introducing the simplicity of computation of “total
income” of an assessee for the purpose of the said provision and his liability
to pay additional tax with interest thereon.
28. The
Bombay High Court in case of Gobind Builders and Developers vs. Income
Tax Settlement Commission and Ors. (supra) has adopted somewhat
different approach. The court has held that what is payable under sub section
(1) of section 245C is the tax on total income which would mean whatever
allowance or disallowance that the assessee was entitled to the same would also
be available. We are unable to persuade ourselves to adopt this interpretation.
In our opinion bringing the concept of total income for computing the
assessee’s liability to deposit additional tax while making application for
settlement would amount to ignoring the deeming fiction created by the
legislature in Clause (ii) of sub section (1B) of Section 245C. For the
computation of such additional tax payable the total income would be the total
returned income added by the disclosed income by the assessee.” – [Unipon (India) Ltd. v. ITSC, order dated
09- 16.04.2014 (Guj)]
[5] Fee for Settlement Application [Section 245C(2)]
Every application made under section
245C(1) shall be accompanied by such fees as may be prescribed. (Fees of Rs.
500/- are payable as settlement fees) and the paid challan has to be enclosed
with the application as proof of payment. Fees payable are per application irrespective
of number of assessment years for which application is preferred.
[6] Once in life
time [Section 245K(2)]
In respect of
application made on or after 01.06.2007, if application is allowed to be
proceeded with under section 245D(1), assessee shall not be entitled to make an
application ever again. The scope of this section is further widen w.e.f.
01.06.2015 that any person related to the person who has already approached the
Settlement Commissions once, also cannot approach settlement commissions
subsequently. The definition of related persons has also been expanded.
Paper Book
If
the applicant submits any documents or statements or other papers, to rely on,
He shall submit in the form of Paper Book.
(a) Such documents & papers shall be - Printed
or type-written in double space,
(b) Attested : by the applicant as true copy. .
(c) Paper Book containing such papers shall be
properly
(d) Indexed : giving brief description & the
authority before whom filed,
(e) Numbered : in continuation to the previous
paper book, if any,
(f) Binded : the preferred binding is spiral. .
(g) Such paper book shall be submitted in seven
copies. [Rule 7]
Preparation of paper books, etc. [Rule 7 of Income-Tax Settlement Commission (Procedure) Rules,
1997]
Text of Rule
7
PREPARATION
OF PAPER BOOKS, etc. –
(1) If the applicant proposed to
refer to or rely upon any documents or statements or other papers, during the
course of hearing under sub-section (4) of Section 245D of the Act, he may
submit seven copies of a paper books containing such papers duly indexed and
numbered, within thirty days of the receipt of an order under sub-section (2C)
of Section 245D, or within thirty days of the date by which the application was
required to be declared invalid but has not been so declared:
PROVIDED that the Commission may, in
appropriate cases, condone the delay and admit the paper book.
(2) If the Commissioner proposes to
refer to or rely upon any documents or statements or other papers during the
course of hearing under sub-section (4) of Section 245D of the Act, he may
submit seven copies of a paper book containing such papers duly indexed and
numbered along with his report referred in rule 9.
(3) The papers referred to in
sub-rules (1) and (2) must be legibly written or type-written in double space
or printed and each paper shall be certified as a true copy by the party filing
the same, or his authorised representative and indexed in such a manner as to
give a brief description of the documents, with page numbers and the authority
before whom it was filed.
Filing of affidavit
[Rule 8 of Income-Tax
Settlement Commission (Procedure) Rules, 1997]
Where a fact, which is not borne out
by or is contrary to the record relating to the case, is alleged in the
settlement application (including the annexure and the statement or other
documents accompanying such annexure), it shall be stated clearly and concisely
and supported by a duly sworn affidavit.
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