SHRI BHAWARLAL JAIN, CHENNAI V. DCIT, CENTRAL CIRCLE - II (5), CHENNAI

ITSSA 3/CHNY/2019

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 3464 (ITAT-CHENNAI)
• Duration Of Justice: 4 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 07-03-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-03-2024
• Assessment Year: misc
• Appeal Filed On: 05-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Search and seizure; Block assessment; Documents seized; Set aside
• Section: 143(3); 142(1); 80IB; 143(2)

Judgement Text

अपीलीय अिधकरण, ‘ए’ ᭠यायपीठ,चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI ᮰ीमहावीर ᳲसह, उपा᭟यᭃ एवं ᮰ी मनोज कुमार अᮕवाल, लेखा सद᭭य के समᭃ BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपीलसं./IT(SS)A No.: 03/CHNY/2019 िनधाᭅरण वषᭅ/Assessment Year: Block period 01.04.1995 to 28.12.2001 Shri Bhawarlal Jain, Flat No.4A, 68, Purasawalkam High Road, Chennai – 600 007. PAN: AAHPJ 1632N vs. The DCIT, Central Circle – II(5), Chennai. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri G. Baskar, Advocate ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri Nilay Baran Som, CIT सुनवाई कᳱ तारीख/Date of Hearing : 05.03.2024 घोषणा कᳱ तारीख/Date of Pronouncement : 08.03.2024 आदेश /O R D E R PER MAHAVIR SINGH, VICE PRESIDENT: This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals)-19, Chennai in ITA No.103/2007-08 dated 22.07.2019. The set-aside assessment was framed by the DCIT, Central Circle II(5), Chennai for the block period 01.04.1995 to 28.12.2001 u/s.153BC r.w.s. 143(3) r.w.s. 263 of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 31.12.2007. 2 IT(SS)A No. 03/Chny/2019 2. The first jurisdictional issue raised by assessee is as regards to the order of CIT(A) confirming the order of AO, which is non-est in as much as application is accepted by the settlement commission u/s.245C of the Act and once application is filed before settlement commission by assessee u/s.245C of the Act and taxes were paid on income offered, the settlement commission is seized with the entire block assessment proceedings of the assessee for the block period 01.04.1995 to 28.12.2011 and assessment order framed u/s.158BC r.w.s. 143(3) r.w.s. 263 of the Act to give effect to the revision order is bad in law. For this, assessee has raised the following grounds:- 2.1 The CIT(A) ought to have seen that the order impugned dated 31.12.2007 passed is non est in as much as once the application is accepted by the Settlement Commission all proceedings pending before lower authorities get transferred to the Settlement Commission and it is seized of the entire block assessment proceedings. 2.2 The CIT(A) failed to see that the provisions of Sec.245-I are squarely applicable in this case and as such, the order of the Settlement Commission dated 14.03.2008 covers the entire block assessment. 2.3 The CIT(A) erred in relying on the provisions of Sec.245D(4) and has also misdirected himself in his interpretation of Secs.245C, 245A and 245F of IT Act. 2.4 The CIT(A) went wrong in stating that the assessee can’t approbate and reprobate without realizing that there can be no estoppels against a statute. 3 IT(SS)A No. 03/Chny/2019 3. Brief facts are that the assessee is an individual engaged in the business of wholesale gold jewellery and refinancing the items of gold jewellery taken on pledge by the other pawn brokers and re- pledge with him. A search and seizure operation u/s.132 of the Act was conducted by the Income-tax Department on the business premises of the assessee at 4-A, Garden Apartments, 68, Purasawalkam High Road, Chennai – 84 and in his residence at 13, Abhirami Street, Chennai on 28.12.2001. Consequently, assessment u/s.158BC r.w.s.143(3) of the Act was made and assessment order was passed on 24.02.2005 determining undisclosed income at Rs.2,50,33,340/-. Subsequently, the CIT, Central-II issued revision order u/s.263 of the Act revising the above assessment order holding the same as erroneous insofar as it is prejudicial to the interest of Revenue and passed his order u/s.263 of the Act dated 26.03.2007 setting aside the assessment on the following two observations:- “1. The declared cost of construction in respect of the assessee’s property at 13, Abirami Street, Chennai-84 constructed during the block period was at Rs.18,00,000/-. A reference to valuation officer was made by the Assessing Officer and as per the report furnished, the cost of construction was estimated at Rs.31,00,600/-. The difference viz., Rs.13,00,600/- has to be treated as undisclosed income. 2. It is also seen that during the period relevant to the assessment year 1998-99 the assessee has credited his capital account with a sum of Rs.61 lakhs, the source for which is claimed to be the sale proceeds of silver 4 IT(SS)A No. 03/Chny/2019 utensils (weighting 15.5 kg.) to the tune of Rs.63,29,938/-. However, no proper evidence had been adduced in respect of this claim by the assessee.” Consequently, the AO framed assessment to give effect to the revision order of CIT, Central-II passed u/s.263 of the Act and passed the assessment order u/s.153BC r.w.s. 143(3) r.w.s. 263 of the Act dated 31.12.2007. 4. The background of the case was that the assessee was subject to search and seizure operation u/s.132 of the Act on 28.12.2001 and accordingly, assessment originally was completed u/s.158BC r.w.s. 143(3) on 24.02.2005. The assessee filed appeal before CIT(A) challenging the assessment on 11.03.2005 and also filed application before settlement commission on 07.12.2005 u/s.245(I) of the Act. The relevant dates and events for the adjudication of the present appeal before us are as under:- Date Event 28.12.2001 Order of assessment u/s.158BC r.w.s143(3) of the Act 24.02.2005 Search at assessee's premises commenced 11.03.2005 Appeal filed before the CIT(A) against order u/s.158 BC r.w.s. 143(3). 07.12.2005 Settlement application filed by the assessee 26.03.2007 Order passed by C..T(Central) u/s.263 of the Act 31.07.2007 Settlement application deemed to be admitted 31.12.2007 Impugned order passed by AO u/s.158BC r.w.s 143(3) r.w.s 263 21.01.2008 Present appeal filed before CIT(A) against order u/s.158BC r.w.s 143(3) r.w.s 263 of the Act 12.03.2008 Report of the CIT under Rule 9 of the ITSC Rules 14.03.2008 Final order passed by Settlement Commission u/s.245D(4) of the Act 5 IT(SS)A No. 03/Chny/2019 27.03.2008 Order of the ITAT against the order u/s.263-IT(SS)A No.85/Mds/2007 31.03.2008 Order passed by CIT(A) against the order u/s.158BC of the Act-Appeal No.CIT(A)/CHE/204/04-05 31.03.2008 Order passed by CIT(A) against order u/s.158BC r.w.s 143(3) r.w.s 263-Appeal No.CIT(A)/CHE/103/07-08 04.08.2008 Order passed by the DCIT, Central Circle giving effect to the ITSC Order 23.12.2009 Filing of Miscellaneous petition by the CIT, Central before the ITSC 25.08.2011 Order of the ITAT against the order u/s.158BC r.w.s. 143(3) r.w.s. 263 of the Act-IT(SS) (A) No.6/Mds/2010 remanding it to CIT(A) The above dates and events were not disputed and these are admitted facts. 5. The ld.counsel for the assessee before us stated that the settlement application filed by assessee on 07.12.2005 was deemed to be admitted on payment of taxes by assessee on 31.07.2007 and the impugned assessment order was passed by the AO u/s.158BC r.w.s. 143(3) r.w.s. 263 of the Act on 31.12.2007. The assessee filed appeal against this assessment order passed u/s.158BC r.w.s.143(3) r.w.s. 263 of the Act dated 31.12.2007. The final order was passed by the Income-tax Settlement Commission on 14.03.2008 u/s.245D(4) of the Act. The ld.counsel for the assessee stated that when originally appeal was pending before CIT(A) on 11.03.2005, the assessee moved to Income-tax Settlement Commission by filing settlement application dated 07.12.2005 and which was eventually considered by Settlement Commission and 6 IT(SS)A No. 03/Chny/2019 consequently assessee paid taxes on 31.07.2007. According to ld.counsel, the settlement application was deemed to be admitted on 31.07.2007. The ld.counsel for the assessee stated by inserting sub-section (2A) in the provisions of section 245D of the Act, by the Finance Act 2007, the application of settlement would be deemed to be admitted if the additional tax on the income disclosed in such application is paid on or before 31.07.2007 and in the present case, the amount seized is more than the additional tax payable with regard to additional income offered in the settlement application, the settlement application was deemed to have been admitted and allowed to be proceeded with. The ld.counsel stated that the CIT invoking the provisions of section 263 of the Act, passed an order dated 26.03.2007 setting aside the assessment and directing the AO to reframe the block assessment and enhancing income on the above two aspects as reproduced in para 3 above, before the settlement application filed by assessee on 07.12.2005 was deemed to be admitted on payment of taxes by assessee on 31.07.2007. The CIT’s order was challenged before ITAT and which was decided by the Tribunal vide order dated 27.03.2008. The AO, while giving effect to the revision order, framed the impugned assessment order u/s.158BC r.w.s. 143(3) r.w.s. 263 of the Act dated 31.12.2007 determining total income at Rs.3,36,63,880/- even after the 7 IT(SS)A No. 03/Chny/2019 settlement commission admitted assessee application on 31.07.2001 and the Tribunal set aside the order of CIT(A) remanding the matter back to the CIT(A) for fresh consideration so as to pass a speaking order that how the present appeal emanates. 5.1 The ld.counsel before us stated that when the Settlement Commission admitted application of the assessee u/s.245D(2A) of the Act, the entire proceedings before the lower authorities gets transferred to the Settlement Commission and it is seized of the entire block assessment proceedings. He stated that when the Settlement Commission has passed the final order determining the undisclosed income at Rs. 41,00,000/-, it is the only order that can be implemented and hold the field. He stated that when the Settlement Commission finally determined the undisclosed income, all the proceedings comes to a close and nothing needs to be done by the AO except to collect the taxes and that also as per the order of Settlement Commission. 6. But the CIT(A) rejected the arguments of assessee by holding that the provisions of section 245D(4) of the Act and the order passed u/s.263 of the Act, these are under two separate provisions and do not overlap. The CIT(A) held that the case before Settlement 8 IT(SS)A No. 03/Chny/2019 Commission refers to a case which may be put before the AO because the provisions of section 245I of the Act clearly states that the order passed by Income Tax Settlement Commission shall be conclusive as to the matter stated therein and no matter covered by such order be reopened in any proceedings under this Act or under any other law for the time being in force. The CIT(A) confirmed the order of AO by observing as under:- 5.1. I have gone through the submission made during the appelate proceedings and the Submissions made by appellant before ITAT, Settlement Commission and gone through the assessments framed in this case. 5.2. Firstly, the perusal of the submissions of the Appellant before the Hon'ble ITAT clearly brings out the fact that the proceedings u/s 263 as per assessee's own submission before the Tribunal are independent of the proceedings before the ITSC. This view also gains support from the provisions contained in Section 245F(4) of the Income Tax Act contained in Chapter XIX A that describes the provisions of settlement of cases before the Hon'ble ITSC. The section states "for the removal of doubt, it is hereby declared that, in the absence of any express direction by the ITSC to the contrary, nothing in this Chapter shal effect the operation of provisions of this Act in so far as they relate to any matters other than those before the ITSC". This section specifically states that the provisions of the Income Tax Act would apply to all those matters not before the ITSC. The perusal of the facts of the present case clearly show that the issues emanating from the CIT(Central)'s order u/s 263 were not before the ITSC and are in appeal before the CIT(A) and thus can be adjudicated independently. This has been the stand of the Appellant before the ITAT and also gets its support from the provisions of law as quoted above. 5.3. It may be relevant to mention here that the appeal before the Hon'ble Settlement Commission was made u/s 245C on 7/12/2005. As per section 245C (1) "An assessee may, at any stage of a case relating to him, make an application in such form and in such manner as may be prescribed". Here 9 IT(SS)A No. 03/Chny/2019 the term at any stage of the case (as highlighted and emphasized in previous sentence) needs to be examined in a little detail. The term case is defined in section 245A(b) as ""case"66 means any proceeding for assessment under this Act, of any person in respect of any assessment year or assessment years which may be pending before an Assessing Officer on the date on which an application under sub-section (1) of section 245C is made." The assessee is entitled to make an application before Settlement Commission at any stage of a case. The term case is one which is pending before the assessing officer. Thus when the appellant filed application before the ITSC (Income Tax Settlement Commission) the case that was pending before the assessing officer was the original assessment framed in appellant case on 24/02/2007 and were lying in appeal before CIT(A) (appeal filed on 11/03/2007) on the date of filing application u/s 245C before ITSC. The matters and issues raised in the order passed by CIT (Central) u/s 263 did not exist at that time as also the subsequent assessment order passed by the assessing officer. 5.4. It is observed that during the Proceedings before the Settlement Commission the appellant also did not bring the issues in the second assessment order before the ITSC or the matters that were part of the order passed by CIT u/s 263. These proceedings were concluded on 14/3/2008 that were much later than 31/12/2007 the date on which the second assessment order u/s 143(3) r.w.s 263 was passed by the assessing officer. The reason for the same that can be interpreted from the submissions of the appellant before the ITAT is that appellant is convinced that these proceeding are independent of the issues before Settlement Commission and it did not wish to settle those issues before the settlement commission and intends to resolve them through alternate appellate machinery available. 5.5. Moreover in the present case the order u/s 263 was passed by the CIT (Central) prior to the amendment to section 245F(2) and the consequence to the same had to be given by passing of an order. The section 245C(4) however provides, " For the removal of doubt, it is hereby declared that, in the absence of any express direction by the Settlement Commission to the contrary, nothing in this Chapter shall affect the operation of the provisions of this Act in so far as they relate to any matters other than those before the Settlement Commission." It has been noted that there has not been any express direction of the Settlement Commission on this issue nor the appellant brought the issue before the Settlement Commission. 10 IT(SS)A No. 03/Chny/2019 5.6. Secondly, the section 245l also states that" the order passed by the ITSC shall be conclusive as to the matter stated therein and no matter covered by such order be reopened in any proceedings under this Act or under any other law or the time being in force" This section emphasizes the order of the ITSC is conclusive to the matters stated therein. That is the matters that are not stated therein the conclusiveness would not uphold. The same is the appeal of the Appellant before this ITAT wherein they have categorically stated. “the CIT(A) erred in concluding that Appellant's appeal become infructuous in view of the order passed by ITSC when the order of ITSC is no way relevant to the impugned provisions that had emanated from the order passed u/s 263 by the CIT” 5.7. Thus the Appellant's decision in asserting that the two provisions are independent based on the assertion made by the Appellant before the Tribunal on which basis the Hon'ble Tribunal set aside the issue are also getting support from the relevant provisions of law contained in Section 245F(4) and Section 245 . However in the present submissions before this office the appellant is arguing that only Settlement order should prevail and the assessment order should be quashed. The appellant cannot be allowed to approbate and reprobate. In the facts and circumstances of the present case when there were apparently two parallel proceedings and there was no overlap of issues. The issues before the Settlement Commission were different and issues before assessing officer post order u/s 263 was passed was also different. Had that not been the interpretation then Settlement Commission would have cancelled the appellant's order of Settlement Commission holding it to be obtained by misrepresentation. 5.8. In view of the foregoing discussion, it is held that the two provisions are separate if the matter contained therein do not overlap in any way. 5.9. Secondly, the case before the ITSC refers to a case which may be pending before the Assessing Officer. The assessment was not pending before the AO when the appellant moved the ITSC. Aggrieved, now assessee is in appeal before the Tribunal. 11 IT(SS)A No. 03/Chny/2019 7. The admitted facts are that in consequent to search conducted on the premises on 28.12.2001 u/s.132 of the Act, block assessment was framed vide order u/s.158BC r.w.s. 143(3) of the Act on 24.02.2005. Against this block assessment order, assessee filed appeal before CIT(A) on 11.03.2005 and in the mean time also filed application before Settlement Commission on 07.12.2005. In the mean time, the CIT, Central-II passed revision order u/s.263 of the Act dated 26.03.2007 but assessee’s application was considered by Settlement Commission and taxes were paid on 31.07.2007 whereby assessee before Settlement Commission admitted the additional income offered and paid additional taxes payable in the form of seized amount by the Department and in term of the above provisions of section 245D(2A) of the Act, the application was deemed to have been admitted and proceeded with. In the mean while, the AO framed assessment order on 31.12.2007 giving effect to the order passed by CIT, Central-II, Chennai u/s.263 of the Act determining the income at Rs.3,36,63,880/-. Against this order, assessee preferred appeal before CIT(A), who vide his order in Appeal No.CIT(A)/CHE/103/07-08 dated 31.03.2008 dismissed the appeal. The assessee against this order of CIT(A) preferred further appeal before ITAT and ITAT vide its order in IT(SS)A No.6/MDS/2010 dated 25.08.2011 set aside the order of CIT(A) and 12 IT(SS)A No. 03/Chny/2019 remanded the matter back to the file of the CIT(A) for fresh consideration. Now the assessee’s counsel before us made a short point that when the settlement commission admitted the application u/s.245D(2A) of the Act, the entire proceedings before the Income- tax Authorities, in relation to the present assessee for entire block assessment proceedings gets transferred to the settlement commission and it is seized with the assessment of entire block assessment proceedings. According to ld.counsel, hence the assessment order framed by AO in consequence of revision order u/s.263 of the Act dated 31.12.2007 passed u/s.158BC r.w.s. 143(3) r.w.s.263 of the Act is bad in law and vitiated. 8. On the other hand, the ld.CIT-DR stated that the provisions of section 245(I) of the Act clearly states that the order passed by the Income Tax Settlement Commission shall be conclusive to the matter stated therein and no matter covered by such order be reopened in any proceedings under this Act. He stated that the relevant provision emphasizes with the order of Settlement Commission is conclusive to the matter stated therein but the matters that are not stated therein, the same can be reopened by the Income-tax authorities as done by the PCIT revising the assessment order of the AO u/s.263 of the Act. The ld.counsel drew 13 IT(SS)A No. 03/Chny/2019 our attention to the finding given by the CIT(A) that when the assessee filed application before Income Tax Settlement Commission, the case that was pending before AO was original assessment framed in assessee’s case on 24.02.2007 and was lying in appeal before CIT(A) on the date of filing of application u/s.245C of the Act. He stated that the proceedings before Settlement Commission clearly reveals that the assessee also did not bring the issues in the second assessment order before Income Tax Settlement Commission or that the matter were part of the orders passed by CIT u/s.263 of the Act. Hence, the assessee admitted that there should be two proceedings under these provisions and they will not overlap. In reply, the ld.counsel stated that the CIT, who is incharge of this case and representing before Income Tax Settlement Commission is duty bound to give all the details of pending proceedings before the Settlement Commission and the Revenue has failed in their duty to bring on record the order of AO pending before him in the original round by virtue of assessment set aside by ITAT. But in any case, the ld.counsel stated that the Settlement Commission passed final order u/s.245D(4) of the Act on 14.03.2008. The settlement Commission passed the order assessing the income of the assessee which has become final and there is no challenge to the same till date by the Department. 14 IT(SS)A No. 03/Chny/2019 9. We have heard rival contentions on this jurisdictional issue and gone through the facts and circumstances of the case. The only short point before us is whether the AO passed assessment order giving effect to the revision order u/s.158BC r.w.s. 143(3) r.w.s.263 of the Act dated 31.12.2007 when the assessee filed application before Settlement Commission on 07.12.2005 and moreover Settlement Commission of the assessee was deemed to be admitted on 31.07.2007 before Settlement Commission by assessee that the seized amount being much more than the additional taxes payable, with regard to additional income offered in the settlement application, the settlement application was deemed to be have been admitted and allowed to be proceeded with u/s.245D(2A) of the Act. This issue has been dealt by Hon’ble Supreme Court, as referred by ld.counsel for the assessee, in the case of CIT vs. Express Newspaper Ltd., (1994) 206 ITR 0443, wherein the Hon’ble Supreme Court has considered this issue vide para 4 as under:- 11.For a proper delineation of the jurisdiction of the Commission, it is necessary to bear in mind the language of sub-section (1) of Section 245-C. It provides that at any stage of a case relating to him, an assessee may make an application to the Commission disclosing fully and truly income which has not been disclosed before the Assessing Officer. He must also disclose how the said income has been derived by him besides certain other particulars. This means that an assessee cannot approach the Commission for settlement of his case with respect to income already disclosed before the Assessing Officer. An application under Section 245-C is maintainable only if it discloses income which has not been disclosed before the Assessing Officer. The disclosure contemplated by Section 245-C is thus in 15 IT(SS)A No. 03/Chny/2019 the nature of voluntary disclosure of concealed income. Unless the income so disclosed exceeds Rs 50,000, the application under Section 245-C is not maintainable. It is equally evident that once an application made under Section 245-C is admitted for consideration (after giving notice to and considering the report of the Commissioner of Income Tax as provided by Section 245-D) the Commission shall have to withdraw the case relating to that assessment year (or years, as the case may be) from the assessing/appellate/revising authority and deal with the case, as a whole, by itself. In other words, the proceedings before the Commission are not confined to the income disclosed before it alone. Once his application is allowed to be proceeded with by the Commission, the proceedings pending before any authority under the Act relating to that assessment year has to be transferred to Commission and the entire case for that assessment year will be dealt with by the Commission itself. The words "at any stage of a case relating to him" only make it clear that the pendency of proceedings relating to that assessment year, whether before the Assessing Officer or before the appellate or revisional authority, is no bar to the filing of an application under Section 245-C so long as the application complies with the requirements of Section 245-C. 12. Section 245-D prescribes the procedure to be followed by the Commission on receipt of an application under Section 245-C. Sub-section (1) is relevant for our purpose. As originally enacted, the sub-section read as follows: " (1) On receipt of an application under Section 245-C, the Settlement Commission shall call for a report from the Commissioner and on the basis of the materials contained in such report and having regard to the nature and circumstances of the case or the complexity of the investigation involved therein, the Settlement Commission may, by order, allow the application to be proceeded with or reject the application: Provided that an application shall not be rejected under this subsection unless an opportunity has been given to the applicant of being heard: Provided further that an application shall not be proceeded with under this sub-section if the Commissioner objects to the application being proceeded with on the ground that concealment of particulars of income on the part of the applicant or perpetration of fraud by him for evading any tax or other sum chargeable or imposable under the Indian Income Tax Act, 1922 (XI of 1922) or under this Act has been established or is likely to be established by any income tax authority in relation to the case." 16 IT(SS)A No. 03/Chny/2019 13.By Finance Act, 1979 the second proviso was omitted and subsection (I A) was inserted, with effect from April 1, 1979. Sub-section (I A) read as follows: "(1-A) Notwithstanding anything contained in sub-section (1), an application shall not be proceeded with under that sub-section, if the Commissioner objects to the application being proceeded with on the ground that concealment of particulars of income on the part of the applicant or perpetration of fraud by him for evading any tax or other sum chargeable or imposable under the Indian Income Tax Act, 1922 (1 of 1922), or under this Act, has been established or is likely to be established by any income tax authority, in relation to the case: Provided that where the Settlement Commission is not satisfied with the correctness of the objection raised by the Commissioner, the Settlement Commission may, after giving the Commissioner an opportunity of being heard, by order, allow the application to be proceeded with under sub- section (1) and send a copy of its order to the Commissioner." 14.It is this sub-section read with sub-section (1) which is relevant for the purposes of this case. We may, however, mention that sub-section (I-A) has since been deleted and a proviso introduced in sub-section (1) as the second proviso, which reads as follows: "[Provided further that the Commissioner shall furnish the report within a period of one hundred and twenty days of the receipt of communication from the Settlement Commission in case of all applications made under Section 245-C on or after the date on which the Finance (No. 2) Act, 1991, receives the assent of the President and if the Commissioner fails to furnish the report within the said period, the Settlement Commission may make the order without such report.]" 15. It is not necessary to notice the effect of the above legislative change brought about in 1991. 16. As originally enacted the main limb of sub-section (1) provided that on receipt of an application under Section 245-C, the Commission shall call for a report from the Commissioner with respect to the application. The decision whether to "allow the application to be proceeded with or reject the application" had to be taken (a) on the basis of the material contained in the Commissioner's report and (b) having regard to the nature and 17 IT(SS)A No. 03/Chny/2019 circumstances of the case or the complexity of the investigation involved therein. The first proviso said that no such application shall be rejected unless an opportunity of hearing is afforded to the applicant. The second proviso to sub-section (1), however, provided that Commission shall not proceed with the application filed under Section 245-C, if the Commissioner objected to the application being proceeded with on the ground that "concealment of particulars of income on the part of the applicant or perpetration of fraud by him for evading any tax or other sum chargeable or imposable under the Indian Income Tax Act, 1922 (XI of 1922) or under this Act has been established or is likely to be established by any income tax authority in relation to the case". If the Commissioner objected on the ground aforesaid, the Commission could not proceed with the application under Section 245-C. (It is not necessary to decide for the purpose of this case whether the mere objection of the Commissioner sufficed and whether the Commission had no power to examine the correctness of the said objection.) By the Finance Act, 1979 the second proviso was deleted. The main limb of sub-section (1) and the first proviso, however, remained untouched. In place of the second proviso, sub- section (I-A) was introduced. The effect of this amendment was that the Commissioner's objection ceased to be final and conclusive. The proviso to sub-section (I-Al) empowered the Commission to examine whether the objection of the Commissioner was correct or not. After hearing the Commissioner, if the Commission was satisfied that the objection of the Commissioner was not correct, it could proceed with the application. 9.1 Further, as replied by ld.counsel for the assessee, the judgment of Hon’ble Allahabad High Court in the case of Smt. Neeru Agarwal vs. Union of India (2011) 330 ITR 422 (Allahabad) has considered identical aspect interpreting the provisions of section 245I of the Act and held as under:- 17. The argument of the learned Senior Counsel for the petitioner, on the other hand, is that finality has been attached to the order of Settlement Commission by section 245-I of the Act. The said section provides that every order of settlement passed under sub-section (4) of section 245D shall be conclusive as to the matters stated therein and no matter covered by 18 IT(SS)A No. 03/Chny/2019 such order shall, save as otherwise provided in this Chapter, be reopened in any proceeding under the Act. In other words, the income-tax authorities have no Jurisdiction either to issue the impugned notice or to pass the impugned order, notwithstanding para 7 of the order of the Settlement Commission. Assuming for the sake of argument that the ground on which the notice was given was not covered by the application, even then it cannot be a ground to issue the impugned notice in view of plain language of sub- section (4) of section 245D. 18. Section 245F(4), reference of which has been made in the order of Settlement Commission, provides that in the absence of any express direction by the Settlement Commission to the contrary, nothing in Chapter XIX-A shall affect the operation of the provisions of this Act insofar as they relate to any matters other than those before the Settlement Commission. The notice has been issued in purported exercise of power under section 245D(4), already reproduced above. Under sub-section (4) of section 245D power has been conferred on the Settlement Commission to pass such order as it thinks fit on the matters covered by the application as also any other matter relating to the case not covered by the application, but referred to in the report of the Commissioner under sub-section (1) or sub-section (3) of section 245D. Secondly, it is not the case of the department that the ground on which the notice has been issued to the petitioner was a matter which was not referred in the report of the Commissioner under sub-section (1) or sub-section (3) of section 245D. 19. The aforesaid section should be read conjointly with section 245-I of the Act which attaches finality and conclusiveness to every order of settlement. Legislative intent is loud and clear. The order passed by the Settlement Commission has been treated to be conclusive. It can be recalled only under the circumstance if it is subsequently found by the Settlement Commission that the order was obtained by fraud or misrepresentation of facts, as per sub-section (6) of section 245D of the Act. On a conjoint reading of sub-sections (4) and (6) of section 245D and sections 245F(4) and 245-I, it would appear that except in the case of fraud or misrepresentation of facts, the order passed by the Settlement Commission is final and conclusive and binding on all the parties. This appears to be so because the Settlement Commission was constituted to reduce the life span of litigation and to provide speedy remedy to an assessee who voluntarily discloses his/her undisclosed income for hassle free settlement of the case. The very use of the words "settlement of cases" are indicative of the fact 19 IT(SS)A No. 03/Chny/2019 that the provision has been made to settle the case in its entirety for ever and leave no issue open for subsequent decision. 20. The facts found and documents seized in search operation were matters which relate to the settlement of undisclosed income of the petitioner and therefore, were subject-matter of consideration of the Settlement Commission. It cannot be said that such matters are maters other than those before the Settlement Commission. 9.2 Similarly, the Hon’ble High Court of Delhi in the case of Omaxe Ltd., vs. ACIT, (2012) 254 CTR 370 held as under:- 13.We are afraid that the submission of the Revenue overlooks the fact that in the return the assessee had claimed deduction of Rs.78,99,00,509/- u/s. 80IB (10) and it was only after claiming such deduction that the net taxable income was declared at Rs.89,20,76,630/-. The Assessing Officer issued notices under Section 143(2) and 142(1) on 12.07.2007 but even before the questionnaire was issued the petitioner had approached the Settlement Commission by an application filed on 31.05.2007. Under Section 245F(1), the ITSC, in addition to the powers conferred on it under Chapter XIX-A, shall have all the powers which are vested in an income-tax authority under the Act. By virtue of the provisions of Section 245F (2) once the application for settlement was filed and an order was passed allowing the application to be proceeded with, it was the ITSC which has the exclusive jurisdiction to exercise the powers and perform the functions of an income tax authority under the Act relating to the case, till the final order of settlement is passed under Section 245D (4). Thus the moment the application of the assessee was allowed to be proceeded with by the ITSC till the final order of the settlement is passed on 17.03.2008, it WP( C) 1451/2013 Page 7 was the ITSC which had exclusive jurisdiction in relation to the assessee's case. Therefore, all matters which could be examined by the Assessing Officer could be examined by the ITSC in these proceedings, including the assessee's claim for deduction under Section 80IB (10). The total income of the assessee for the assessment year 2006-07 has been computed by the ITSC at Rs.89,38,76,630/- which is Rs.18,00,000/- more than the income of Rs.89,20,76,630/- declared by the petitioner, which figure is after the petitioner claimed deduction of Rs.78,99,00,509/- under Section 80IB (10). It is irrelevant that no undisclosed income was offered by the petitioner in regard to the housing project. Again a harmonious reading of the 20 IT(SS)A No. 03/Chny/2019 provisions of the statute would show that it does not postulate the existence of two orders, each of a different income tax authority, determining the total income of an assessee for the same assessment year. If the contention of the Revenue is accepted, not only will the finality of the order of settlement be disturbed, but it will also result in different orders relating to the same assessment year and relating to the same assessee being allowed to stand. We have grave doubts whether such a result, which is likely to create chaos and confusion in the tax administration could have been intended. The order of the ITSC can be reopened only in cases of fraud and misrepresentation and in no other case. 14. Moreover, as earlier pointed out, it is difficult to say that the deduction under Section 80IB (10) was not a matter covered by the order of the ITSC. In the return itself the assessee had claimed the deduction and it was also before the ITSC when the total income was determined by the ITSC in its final order, that took into consideration the deduction claimed and thus formed part of the various matter decided in the final order. Therefore, even factually it is not possible to accept the contention of the Revenue that the deduction under Section 80IB (10) was not a matter covered by the final order of settlement.” 9.3 Similarly, the Hon’ble High Court of Bombay in the case of Mandhana Industries Ltd., vs. PCIT, (2019) 103 taxmann.com 301 held as under:- 31. On reading the provisions contained in Chapter XIX-A of the Act, a clear picture that emerges is that an assessee can apply for settlement of a case as long as same is pending. Once such an application is filed (and in case of application filed before 1.6.2007) allowed to proceed further, all powers vested in income tax authority would vest in Settlement Commission in relation to such a case. The Settlement Commission would continue to enjoy such exclusive jurisdiction till the application is either rejected, declared as invalid or not allowed to proceed further. As provided in sub- section (2) of Section 245HA, where the proceedings before the Settlement Commission abate, the Assessing Officer or the Income Tax Authority as the case may be before whom the proceedings at the time of making the application is pending, would dispose of the case in accordance with the provisions of the Act as if no application under Section 245C has been 21 IT(SS)A No. 03/Chny/2019 made. Likewise under sub-section (7) of Section 245D, where a settlement becomes void, the proceedings with respect to the matters covered by the settlement shall be deemed to have been revived from the stage at which the application was allowed to be proceeded and the concerned income tax authority would complete such proceedings at any time before expiry of two years from the end of financial year in which the settlement became void. These provisions make it abundantly clear that a case could either be dealt with by the concerned income tax authority or the Settlement Commission but not both. As long as the application for settlement is pending before the Settlement Commission, the Settlement Commission enjoys exclusive jurisdiction over the case, to the exclusion of the any authority ousting the jurisdiction of the concerned income tax authority. Where the application for settlement either abates or becomes void, the Authority before whom the proceedings were pending on the date of filing of the application for settlement would pass order in terms of provisions of the Act. The Act, thus envisages only one order concerning a case of the assessee, it may either be an order of settlement passed by the Settlement Commission or an order of assessment passed by the Assessing Officer but not both. We are conscious, the proviso to sub-section (5) of Section 245BA mentions a case or a matter which can be referred to a bench of three members of the Commission. This distinction, however, can be easily explained. In a given situation a 'case' may require attention of three members. Situation may also arise where only a matter arising in a case but not the entire case may require reference. Even Mr. Mistri, learned counsel for the petitioner did not argue to the contrary. His contention, if we understand correctly was that the Settlement Commission would pass order only in respect of matters before it and no other. Therefore, the revenue authorities while giving effect to the order of Settlement Commission are bound to consider issues which are not part of settlement proceedings. 32. In our opinion, such a contention cannot be accepted. We have referred to the relevant provisions contained in Chapter XIX-A of the Act and come to the conclusion that once an application for settlement of a case is filed before the Settlement Commission and is allowed to pass through various stages under Section 245D of the Act, it is only the Settlement Commission which can pass any order concerning such a case. At all stages, the Act refers to a case for which an application for settlement can be filed, a case which the Settlement Commission considers for settlement, a case the Commission either allows to be settled or does not allow to be so settled. The Act does not envisage a return of an assessee to be split into two parts, 22 IT(SS)A No. 03/Chny/2019 one for consideration before the Settlement Commission by way of settlement and another for normal assessment at the hands of the Assessing Officer or the appellate or the revisional authority. In other words, if an application for settlement is allowed and the case is settled, the entire assessment for the assessment years in question would stand settled. On the other hand, if such an application is rejected, not allowed to be proceeded further or declared as void or abates, the concerned Authority wold proceed further from the stage at which the proceedings were pending when the application for settlement was made and would get time prescribed under the said chapter to complete such assessment. In fact, this is how the petitioner also understood the provisions. This is evident from the fact that in its application for settlement to the Commission, it prayed for determination of the income of the assessment years concerned. The prayer of the petitioner in its application was not restricted only to the undisclosed income disclosed in the application. 33. We are not called upon to decide whether before the Settlement Commission, the petitioner could have either in the application for settlement or later on raised the contention that though in the return filed, offered to tax, the subsidy in reality was not taxable. What we are called upon to answer is whether the petitioner having filed an application for settlement who had raised no dispute during the entire settlement proceedings till the settlement was ordered by the Commission, can now urge the Assessing Officer to entertain such a question or urge the Commissioner of Income Tax to examine such an issue in exercise of revisional powers. Answer to the question has to be in the negative. Any other view, this would give rise to the two parallel proceedings in relation to the same assessment years concerning the assessee which in our opinion, the Act does not envisage. 9.4 We have gone through the provisions of Chapter XIX-A and noted that the object of the scheme of the Settlement Commission is for the settlement of cases under the chapter. A case, according to us is defined to mean any proceeding for assessment under the Act which is pending before the Assessing Officer on the date when 23 IT(SS)A No. 03/Chny/2019 an application for settlement is made under Section 245C of the Act. The assessment is the subject of the case which is to be settled. An assessee who moves the Settlement Commission under Section 245C of the Act has to do so on the basis of a true and full disclosure of his income which has not been disclosed before the revenue. Disclosure of income which has not been disclosed before the revenue is essential to the validity of the application. The application is to have the case settled. Under sub-section (1B) of Section 245C of the Act, where the income disclosed in the application relates to one previous year, if the applicant has furnished a return in respect of total income of that year, the tax has to be calculated on the aggregate of the total income returned and the income disclosed in the application as if such aggregate were the total income. The Settlement Commission is empowered to call for a report of the Commissioner at two stages. In both the cases the report of the Commissioner is not a condition precedent for the Settlement Commission to proceed further with the settlement of the case. If the Commissioner does not submit his report to the Settlement Commission, that does not bring an end to the proceeding before the Settlement Commission. On the contrary, both the second proviso to sub-section (2C) and the proviso to sub- section (3), make it abundantly clear that the Settlement 24 IT(SS)A No. 03/Chny/2019 Commission is empowered to proceed further even in a situation where the Commissioner does not furnish a report within the prescribed period. Once the Settlement Commission is seized of the proceedings and an application under Section 245C of the Act has been allowed to be proceeded with under Section 245D of the Act, the Settlement Commission has exclusive jurisdiction to exercise the powers and to perform the functions of an income tax authority under the Act in relation to the case. When the Settlement Commission decides to proceed with a case under Section 245D(1) of the Act, it assumes exclusive jurisdiction in regard to the assessment. That is because the Settlement Commission is then seized of the case in respect of which a settlement is sought and the expression "case" itself is defined to mean any proceeding for assessment under the Act which is pending before the AO. The Act does not contemplate a parallel proceeding before the Settlement Commission and before the AO, once the Settlement Commission has decided to proceed with the application under Section 245D(1) of the Act. So long as the proceedings remain before the Settlement Commission, it is that authority alone which has jurisdiction in all matters pertaining to assessment. The jurisdiction of the Settlement Commission is to pass orders (i) on matters covered by the application; and (ii) on any other matter relating to the case, not 25 IT(SS)A No. 03/Chny/2019 covered by the application but referred to in the report of the Commissioner. In the present case before us also the situation is exactly identical as search was conducted on the assessee’s premises on 28.12.2001 and the block period consists of 01.04.1995 to 28.12.2001. The original block assessment was completed by the AO u/s.158BC r.w.s. 143(3) of the Act vide order dated 24.02.2005 which was appealed against and assessee moved settlement application before settlement u/s.245C of the Act on 07.12.2005. Subsequently, the CIT(Central), which is CIT(Admin) of the case passed revision order u/s.263 of the Act on the assessment framed u/s.158BC r.w.s.143(3) of the Act vide order dated 26.03.2007 and thereafter the AO passed order giving effect to the revision order passed by CIT(Central) u/s.158BC r.w.s. 143(3) r.w.s. 263 of the Act on 31.12.2007. It is that point that on 31.07.2007, settlement application was admitted by settlement commission as the assessee has paid taxes and settlement application was admitted u/s.245D(1) of the Act. Hence, this case is parallel, where the AO has now power to pass any order but to refer the same to settlement commission. 9.5 In view of the above, we are of the view that the assessment framed u/s.158BC r.w.s. 143(3C) r.w.s. 263 of the Act vide order 26 IT(SS)A No. 03/Chny/2019 dated 31.12.2007 and the consequent order i.e., the impugned order of CIT(A) in ITA No.103/2007-08 dated 22.07.2019 is without jurisdiction and hence, both are set aside on this very jurisdictional issue and allowed the appeal of assessee. 9.6 Since we have allowed the assessee’s appeal on jurisdictional issue and quashed the assessment order passed in consequent to revision order, we need not to go into the merits of the case, which has become academic. 10. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 8 th March, 2024 at Chennai. Sd/- Sd/- (मनोज कुमार अᮕवाल) (MANOJ KUMAR AGGARWAL) लेखा सद᭭य/ACCOUNTANT MEMBER (महावीर ᳲसह ) (MAHAVIR SINGH) उपा᭟यᭃ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 8 th March, 2024 RSR आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy to: 1. अपीलाथᱮ/Appellant 2. ᮧ᭜यथᱮ/Respondent 3. आयकर आयुᲦ /CIT 4. िवभागीय ᮧितिनिध/DR 5. गाडᭅ फाईल/GF.