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Judgment
On 22nd November, 2021 the following order was passed by this Court:
“1. The challenge in the writ petition inter alia is to an order dated 31st July, 2018 of the Settlement Commission. One of the grounds of challenge is that the report that was to be mandatorily submitted under Rule-9 of the IT Rule Settlement (Commission) Procedure Rule, 1997 was submitted at a belated stage on 10th February, 2017 and that the Petitioner was not afforded an adequate opportunity of hearing in relation to the 31 issues raised in the said report. Another ground raised in paragraph 28 of the writ petition is that after pronouncement of the order of the Settlement Commission, the Supreme Court of India pronounced a judgment on 2nd August, 2017 in W.P. No.114 of 2014 (Common Cause v. Union of India) as a result of which the Petitioner paid substantial compensation amounts for the coal mines at Sainindupur and for Raikela Mines. According to the Petitioner, the said payments are to be treated as expenses in the hands of the Petitioner and are allowable as such for the relevant Assessment Years, i.e. 2008-2009, 2009-2010 and 2010-2011.
A development that has taken place during the pendency of the present petition is that by virtue of the Finance Act, 2021 with retrospective effect from 1st February, 2021 the Income Tax Settlement Commission stands abolished. In terms of 245 AA (1) of the Income Tax Act, 1961 (‘Act’) an Interim Board for Settlement has to be constituted by the Central Government for the settlement of ‘pending applications’. The expression “pending application” has been defined in Section 245A(eb), and means an application in respect of which no order under Section 245D (4) on or before 31st January, 2021.
In the present case, the Settlement Commission has already disposed of the Petitioner’s application before 31st July, 2018 and therefore, it cannot be considered to be a pending application. The question then arises if the Court were to agree with the Petitioner that the Settlement Commission ought to have considered the effect of payments made by the Petitioner pursuant to the judgment of the Supreme Court in the case of Common Cause v. Union of India (supra) and in the light of the stand taken by the Revenue in the additional written note of submission handed over to the Court today that such payment is not an allowable expense in the hands of the Assessee, can the matter be remanded to the aforementioned Interim Board of Settlement and if not, what are the remedies available to the Petitioner?
Mr. Chimanka, learned counsel for the Revenue Department states that he will seek instructions on the above aspects and prays for an adjournment.
Copies of any of the pleadings filed by the Petitioner in addition to the main petition and the rejoinder be served on Mr. Chimanka within one week. It will be open to the Petitioner to file before the next date its written note of submissions in response to the written note of submission filed by the learned counsel for the Revenue today.
The interim order passed earlier shall continue till the next date.
List on 21st February, 2022.”
Thereafter, on 21st February, 2022 the following order was passed:
“1. An additional written submission has been present to the Court on behalf of the Department stating that since the Settlement Commission stands abolished, there is no remedy available before it for the Petitioner and that in any event since the orders in case the Petitioner passed prior to 2021 there cannot be any revisiting of the said orders by the Commission.
A reply has been filed to the said written submission by the Petitioner on 18th February, 2022 inter alia stating that the Revenue seeking to treat the payment made by the Petitioner pursuant to the judgment of the Supreme Court in Common Cause as payment towards penalties whereas according to the Petitioner, these were compensation amounts.
The Court does not wish to express any view on the above submissions at this stage.
Mr. Chetan Sharma, learned Senior Advocate appearing for the Petitioner states that the Petitioner will be filing an additional note of written submission which shall be placed on record after advance copies thereof are given to Mr. Chimanka, learned Senior Standing Counsel for Opposite Party (Revenue).
The interim order to continue till the next date.
List on 4th April, 2022.
Today, after hearing the parties, it has been agreed between them that all the issues which were earlier decided by the impugned order dated 31st July, 2018 by the Settlement Commission including the issues raised in the present petition can be examined afresh by the Interim Board for Settlement constituted by the Central Government for settlement of ‘pending applications’ as defined under Section 245 A (eb) of the Income Tax Act, 1961 (Act).
In that view of the matter, the impugned order dated 31st July, 2018 of the Settlement Commission is hereby set aside and the entire matter which was pending before it in which the impugned order was passed is remitted to the Interim Board for Settlement to be considered afresh in accordance with law. As already mentioned all the contentions of both parties are reserved to be raised before the said Interim Board for Settlement in accordance with law. It is clarified that the concession purportedly given by the Lawyer for the Petitioner by the letter dated 25th July, 2017 will not be considered and the Petitioner is permitted to make its submissions irrespective of that letter.
The matter will now be listed before the Interim Board for settlement on 2nd January, 2023 on which date, the Petitioner will appear through counsel. It will be open to both the parties to file any additional documents and pleadings with the permission of the Interim Board which is requested to proceed with in a time-bound manner and pass a fresh order in accordance with law as expeditiously as possible.
The writ petition is disposed of in the above terms.
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