The case* is an appeal before the Division Bench of the Hon’ble High Court of Madras preferred by the Government against an Order in favour of the a Writ Petitioner. The writ petition was filed to quash the Order of the Settlement Commission rejecting an application under Section 245C of the Income Tax Act, 1961 and to pass fresh orders admitting the application for settlement. The Hon’ble Single Bench while examining the stages enumerated under Section 245D, was of the considerate view that the question of full and true disclosure and the discharge of tax liability at all stages prior to the final hearing under Section 245D(4), should be seen only in the context of issues offered for settlement.
The Hon’ble Single Bench with regard to Section 245D of the Act had concluded that the decision of the Hon’ble Supreme Court in the case CIT Vs. Express Newspapers Limited [(1994) 206 ITR 443 (SC)] was applicable only in context of the provision before the 2007 amendment. The contentions by the revenue where reliance was placed on the decisions of Abdul Rahim Vs. ITSC [(2018) 96 taxmann.com 571] & Mr.Hassan Ali Khan Vs. Settlement Commission [(2008) 299 ITR 127] are cases wherein suppression of materials and the non-satisfaction of the Commission with regard to an application were sufficient grounds for rejection of the application. The court after due consideration of the facts and circumstances, held that there were no failure on part of the applicant Company as to disclosure of facts and particulars and had recorded that the Settlement Commission while considering an application under Section 245C, is entitled to adjudicate issues of law at the stage of Section 245(D4) of the Act.
On appeal by the Department, the Hon’ble Division Bench was of the opinion that the Single Bench had rightly allowed the petition and interfered with the Order of the Commission and therefore, dismissed the appeal by its Order dated 04.09.2020 and had directed the Settlement Commission to proceed in accordance with law and to take a final decision after affording the Assessee a reasonable opportunity.
*Deputy Commissioner of Income Tax & Ors Vs. M/s. Hitachi Power & 2 Ors, MHC/WA/581/2020