STAR TELEVISION NEWS LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner herein is a non-resident company. They filed an application before the Income Tax Settlement Commission on 5th March, 2007 under Section 246-C of the Income Tax Act, 1961 (hereinafter shall be referred to as the Act) for settlement of the cases. By the present petition the petitioners seek to challenge the constitutional validity and legality of the provisions of Section 245HA(1)(iv) and Section 245HA(3) of the Income Tax Act as inserted by Finance Act, 2007 (hereinafter referred to as F.A. 2007) with effect from 1st June, 2007 as being ultra vires and violative of Article 14 of the Constitution of India.

(2.) Chapter XIX-A was inserted in the Act by Taxation Law Amendment Act, 1975 with effect from 1st April, 1976. Since then, there have been several amendments. Some of the relevant provisions with which we are concerned with and need to be considered are, Section 245C which provides for making an application by an assessee before the Settlement Commission at any stage of a case relating to them by making a full and true disclosure of their income which has not been disclosed before the Assessing Officer, the manner in which such income has been derived, the additional amount of income-tax payable on such income and such other particulars as may be prescribed The other provisions of the Section need not be adverted to. Section 245D sets out the procedure to be followed by the Commission on receipt of an application under Section 245C. Before its substitution by Finance Act 2007 Sub-section (1) mandated the Settlement Commission to call for a report from the Commissioner and on the basis of the material contained in such report and having regard to the nature and circumstances of the case, the complexity of the investigation involved therein, the Settlement Commission had to proceed with within a period of one year from the end of the month in which such application was made under Section 245C. The Application could not be rejected without giving a hearing to the applicant in terms of the first proviso and there was a time limit on the Commission furnishing the report. In terms of the second proviso if the Commission was of the opinion that the application be allowed to be proceeded with the Commission if of the opinion that further inquiry/investigation was necessary, could direct further information. Section 245D(4A) as it stood prior to Finance Act 2007 is relevant, which we may reproduce and it reads as under:

(3.) Several changes were effected in the Chapter by Finance Act, 2007. Time limits were set for completion of a particular stage of the proceedings.. Under Sub-section (2A) of Section 245 if an application was made under Section 245C before the first day of June, 2007, but an order under the provisions of Sub-section (1) of this Section, as they stood immediately before their amendment by the Finance Act, 2007 has not been made before the 1st day of June, 2007 such application shall be deemed to have been allowed to be proceeded with if the additional tax on the income disclosed in such application and the interest thereon is paid on or before the 31st day of July, 2007. In view of the explanation, 31st day of July, 2007 was deemed to be the date of the order of rejection or allowing the application to be proceeded with. Section 245D(2B) as amended provided for calling a report from the Commissioner in respect of the application within the time frame as set out.