Facts of the Case

The petitioner, Bishan Das Goyal HUF, filed a writ petition challenging the order dated 19.12.2017 passed by the Income Tax Settlement Commission under Section 245D(1) of the Income Tax Act, 1961.

The challenge was limited to the finding that the settlement application filed under Section 245C(1) was invalid for Assessment Years 2012-13, 2013-14, and 2014-15.

The Commission held that no assessment proceedings were pending for the relevant assessment years; hence, the application was not maintainable.

 Issues Involved

  1. Whether a settlement application under Section 245C(1) of the Income Tax Act is maintainable in the absence of pending assessment proceedings.
  2. Whether the Settlement Commission erred in rejecting the application on the ground that no “case” existed under Section 245A(b).

 Petitioner’s Arguments

  • The petitioner contended that the Settlement Commission wrongly rejected the application.
  • It was argued that the application under Section 245C should be considered valid even for the relevant assessment years.
  • The petitioner sought interference with the Commission’s order to the extent it declared the application invalid.

 Respondent’s Arguments

  • The Revenue argued that no assessment proceedings were pending for the relevant assessment years.
  • Since no notice under Section 148 had been issued and the time limit for assessment had expired, no “case” existed under Section 245A.
  • Therefore, the settlement application was not maintainable.

 Court’s Findings / Order

  • A “case” under Section 245A(b) requires a pending assessment proceeding.
  • In the present matter, the time for assessment had expired and no reassessment proceedings under Section 147/148 were initiated.
  • Therefore, no proceedings were pending for the relevant assessment years.
  • The Court relied on its earlier judgment in Sushil Kumar Goyal & Ors. v. Principal Commissioner of Income Tax-1 & Ors.

Accordingly, the Court found no infirmity in the Settlement Commission’s decision and dismissed the petition.

 Important Clarification

  • Filing a settlement application under Section 245C is not permissible unless a valid “case” is pending.
  • Mere filing of returns without pending proceedings does not satisfy the requirement under Section 245A.
  • Expiry of limitation for assessment extinguishes the existence of a “case”.

 Sections Involved

  • Section 245C – Application for settlement of cases
  • Section 245D(1) – Procedure on receipt of application
  • Section 245A(b) – Definition of “case”
  • Section 139 – Filing of return of income
  • Section 147 – Income escaping assessment
  • Section 148 – Issue of notice for reassessment

 Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/VIB18052023CW26932019_190043.pdf

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