OUSEPH MATHEW and CO. vs INCOME TAX OFFICER and Others

A.S. VENKATACKALA MOORTRY, J.:

The petitioner is a partnership firm. It was assessed to Income Tax for the first time for the asst. yr. 1974-75 granting registration to it under s. 185 of the IT Act by order dt. 6th March, 1975. Subsequently, assessments were completed for the years 1975-76, 1976-77 and 1977-78 and the firm was allowed continuation of registration upto the asst. yr. 1980-81. For the purpose of considering the issue that is involved in this Original Petition, it is not necessary to mention the entire factual details. Suffice to say, that the petitioner filed returns for 1978-79 and the assessment for the said year was pending. At that stage, the petitioner filed a petition before the Settlement Commissioner to have the case settled in terms of s. 245C of the Indian IT Act. The Settlement Commissioner by order dt. 25th Jan., 1991 cancelled the registration given to the petitioner for the asst. yrs. 1975-76 and 1976-77 under the provisions of s. 184(7) of the Act. However, in the said order the Settlement Commissioner granted immunity from prosecution to the petitioner-firm and held that no penalty need be imposed under s. 271(1)(c) of the IT Act. The above facts are admitted by both the parties.

The point that is now taken by the petitioner is that return filed for the years 1978-79 is for the period ending 31st March, 1979 and that cancellation of registration under s. 186 of the Act can be made only within a period of eight years from 1st March, 1979, i.e., on or before 31st March, 1987. This is made clear in the first proviso to s. 186(1) of the IT Act. Hence, the contention is that the order passed by the Settlement Commissioner in the year 1991 long after which is the last date, viz., 31st March, 1987, cancelling the registration is one without any authority, power or jurisdiction.

The contention of the Department is that Chapter XIX-A of the IT Act is in the nature of self-contained Chapter and the applications filed under s. 245C will be disposed of as per the provisions of that Chapter and the Settlement Commissioner is not in anyway bound by the other provisions of the Act, in particular s. 186 of the Act. It is further submitted that the amendment by way of Finance Act, 1987, was introduced w.e.f. 1st June, 1987 only for the purpose of removing a doubt in this regard.

The point for consideration in this Original Petition is as to what are the powers of the Settlement Commissioner in the sense that whether he can cancel a registration even after a long period of eight years, i.e., calculating 8 years from the date of ending of the assessment year concerned (here in this case, 31st March, 1987). Or in other words, to put it straight and direct whet-her the words occurring in s. 245D(8) "For removal of doubts" would refer to and qualify both first part of the said section as well as the second part or whether it will apply only to the first part. If the answer is that it applies to both the parts, then the petitioner has to fail. 5. Sec. 245D(8) of the IT Act reads :

"For the removal of doubts, it is hereby declared that nothing contained in s. 153 shall apply to any order passed under sub-s. (4) or to any order of assessment, reassessment or recomputation required to be made by the AO in pursuance of any directions contained in such order passed by the Settlement Commission (and nothing contained in the proviso to sub-s. (1) of s. 186 shall apply to the cancellation of the registration of a firm required to be made in pursuance of any such directions as aforesaid)."

Admittedly, this was introduced only on Ist June, 1987, i.e., long after the last date, according to the petitioner, viz., 31st March, 1987. By a reading of this section, viz., s. 245D(8), for the purpose of this case, three aspects have to be taken note of. Firstly, in s. 245D(8), after mentioning about the first part clause and while referring to the second one, the word "and" is used. Secondly, if the intention of the legislature is to separate and delink the second part clause, then they would have very well dealt with the second part clause by a separate sentence or a separate paragraph as 245D(9). Thirdly, while construing the provisions of the Act, if the words are plain and there is no unambiguity (sic-ambiguity), then, the Courts have to go by the meaning conveyed under the provisions of the Act. Of course, the learned counsel for the petitioner places before this Court the notes and clauses and submitted that there is nothing to indicate that the amendment was introduced only for the purpose of removal of doubts. It has to be pointed out, the deliberations before the Parliament while passing the Finance Bill has not placed before this Court for consideration, for the same might throw some light. In this situation, this Court has to proceed only on the basis that the words "for removal of doubts" would apply to both parts/clauses in the said sub-section.

In this view of the matter, there are no merits in the original petition and the same is hereby dismissed.