COMMISSIONER OF INCOME TAX Vs. HARI KISHAN VIJAYVERGIA

JUDGEMENT

(1.) The intra-court appeals have been preferred as against the common order dated 13-8-2009 passed by the Single Bench in Civil Writ Petition No. 12911/2008 whereby bunch of writ applications were decided. 117 writ applications were preferred by the revenue whereas 14 writ applications were preferred by the assessees. Applications for settlement were filed before the Settlement Commission on or before 1-6-2007. The orders were passed by the Settlement Commission under section 245D(4) of the Income-tax Act, 1961 (hereinafter referred to as the Act). The revenue assailed the orders mainly on the ground that opportunity of hearing was not afforded as provided under section 245D(4) of the Act. It was also submitted that the Settlement Commission became functus officio and the proceedings stood abated in terms of the provisions of section 245HA of the Act. Assessee also raised the question during proceedings which were held before the Settlement Commission before the orders were passed. It was submitted that procedure adopted by the Settlement Commission while passing the orders is in flagrant violation of the provisions of section 245D(4) of the Act. The orders were passed without application of mind and appreciation of material on record.

(2.) The Single Bench has held that the Settlement Commission did not become functus officio. Cases have been remitted according to the procedure as provided under section 245D(4). The Single Bench has remitted the matter to the Settlement Commission to examine the same afresh, after affording opportunity of hearing to the parties and whatever amount has been deposited by the respective assessee under the orders impugned would be subject to final outcome of the applications under section 245C on orders being passed under section 245D(4). In case, refund is ordered after passing of the order, assessee would be entitled for the interest at the rate of 15 per cent per annum. The Single Bench has clarified that without influenced by observations in the order, let matters be decided afresh after due compliance of provisions of section 245D(4) of the Act. Aggrieved thereby, the revenue as well as some of the assessee have preferred the intra-court appeals.

(3.) J.K. Singhi, Senior Standing Counsel of the Income-tax Department assisted by Mr. Anuroop Singhi has submitted that the Settlement Commission has become functus officio, as such cases could not have been remitted to the Settlement Commission to decide the matter afresh. In case of the pending applications provision was that if they were not decided on or before 31-3-2008, they would be treated as abated after 31-3-2008. However, with respect to the opportunity of hearing, stand of the revenue is that it was necessary to grant them opportunity of hearing in terms of section 245D(4) of the Act which was not done. Consequently, the orders passed were illegal. Learned counsel has also submitted that it was not proper for the Single Bench to direct that in case refund is ordered, interest would be payable at the rate of 15 per cent per annum. In case of refund, interest is payable at the rate of 6 per cent per annum.