Sri Venkateshwara Rock Drills V. Union of India and Ors. Ministry of Finance Department of Revenue and Deputy Secretary (Inv III), Central Board of Direct Taxes and Additional Director of Income Tax (Inv), Interim Board for Settlement-1 and Office of Assistant Commissioner of Income Tax, Central Circle \\u2013 Hubli

WP/100534/2024

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The case involves M/s Sri Venkateshwara Rock Drills, a partnership firm engaged in construction, which faced income tax proceedings and sought settlement under Section 245C of the Income Tax Act, 1961. The firm's application was rejected by the Interim Board of Settlement on the grounds that no proceedings were pending as of 31st January 2021, following amendments made by the Finance Act, 2021. The petitioner challenged this decision, arguing that the retrospective application of the amendment unfairly excluded them from the settlement scheme. The High Court of Karnataka, referencing a similar case decided by the Madras High Court, found in favor of the petitioner, allowing the writ petition and remitting the case for a fresh decision.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 801391 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 02-02-2024
• Assessment Year: misc
• Other Referred Cases: WP Nos.13454/2021 and connected petitions, WP No.13455/2021 and connected petitions
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SHIVRAJ BALLOLLI; Y V RAVIRAJ
• Assessee Lawyers: SANGRAM KULKARNI
• Keywords: Legal propriety; Retrospective amendment; Settlement application; Unaccounted cash receipts; Income Tax Settlement Scheme
• Section: 148; 143(2); 132; 133A; 245D(4); 119(2); 245C

Judgement Text

" - 1 - NC: 2024:KHC-D:2322 WP No. 100534 of 2024 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 2ND DAY OF FEBRUARY, 2024 BEFORE THE HON'BLE MR JUSTICE HEMANT CHANDANGOUDAR WRIT PETITION NO. 100534 OF 2024 (T-IT) BETWEEN: M/S SRI VENKATESHWARA ROCK DRILLS REPRESENTED BY ITS AUTHORISED SIGNATORY MR. AHMED BASHA CEREAL SAHEB AGED: 55 YEARS, OCC. BUSINESS, HAVING MY CURRENT ADDRESS AT 76/77, 1ST CROSS, AKASH PARK, KUSUGAL ROAD, KESHWAPUR HUBLI, KESHWAPUR,, DHARWAD, KARNTAKA-580023. …PETITIONER (BY SRI. SANGRAM S. KULKARNI., ADVOCATE) AND: 1. UNION OF INDIA AND ORS. MINISTRY OF FINANCE DEPARTMENT OF REVENUE, NORTH BLOCK, NEW DELHI-110001. 2. DEPUTY SECRETARY (INV III), CENTRAL BOARD OF DIRECT TAXES MINISTRY OF FINANCE, DEPARTMENT OF REVENUE GOVERNMENT OF INDIA, NORTH BLOCK, NEW DELHI-110001. 3. ADDITIONAL DIRECTOR OF INCOME TAX (INV). INTERIM BOARD FOR SETTLEMENT-1, 9TH FLOOR, LOK NAYAN BHAWAN, KHAN MARKET, NEW DELHI-110003. SUJATA SUBHASH PAMMAR Digitally signed by SUJATA SUBHASH PAMMAR Date: 2024.02.14 07:10:08 +0530 - 2 - NC: 2024:KHC-D:2322 WP No. 100534 of 2024 4. OFFICE OF ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE – HUBLI, C.R. BUILDING, NAVANAGAR, HUBBALLI, KARNATAKA-580025. …RESPONDENTS (BY SRI. SHIVARAJ BALLOLLI, FOR R1 SRI. Y.V. RAVIRAJ., ADVOCATE FOR R2 TO R4) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO, I) ISSUE AN APPROPRIATE WRIT, ORDER OR DIRECTION OF LIKE NATURE READING DOWN SECTION 245(C)(5) OF INCOME TAX ACT, 1961 AS AMENDED BY THE FINANCE ACT, 2021 BY REMOVING THE RETROSPECTIVE LAST DATE OF 1ST FEBRUARY 2021 AS 31ST MARCH 2021. II) TO ISSUE A WRIT OF CERTIORARI OR A WRIT IN THE NATURE OF CERTIORARI OR ANY OTHER APPROPRIATE WRIT, ORDER OR DIRECTION, CALLING FOR THE RECORDS OF THE PETITIONERS CASE AND AFTER GOING INTO THE LEGALITY AND PROPRIETY THEREOF AND TO QUASH AND SET ASIDE THE IMPUGNED ORDER PASSED U/S ORDER U/S 245D(4) OF THE ITA DATED. 30TH AUGUST 2023 (ANNEXURE P-7) OF THE INCOME TAX ACT 1961 FOR THE AY 2015-16, 2016-17 AND 2019-2020. VIDE ANNEXURE-A. III) PASS AN ORDER DIRECTING THE RESPONDENTS TO THE PETITIONER THE LEGAL COST INCURRED IN CONNECTION WITH THE PRESENT PROCEEDINGS. THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT MADE THE FOLLOWING: - 3 - NC: 2024:KHC-D:2322 WP No. 100534 of 2024 ORDER The order dated 30.08.2023, passed by respondent No.3, vide Annexure-A, by which, the application submitted by the petitioner under section 245C of the Income Tax Act for settlement of cases has been rejected on the ground that there was no pending proceedings as on 31.01.2021. 2. The petitioner is a registered partnership firm engaged in the business of construction of apartments and survey under section 133A of the Income Tax Act was conducted on the business premises of the petitioner and search and seizure under section 132 of the Income Tax Act was also conducted on the business premises on 30.09.2019. During the survey, various documents which were incriminating in nature were impounded, which contained details of unaccounted cash receipts by the petitioner. 3. Notices under section 148 and 143(2) of the Income Tax Act were issued during the month of February 2021 and March 2021 for initiating reassessment process, which compelled the petitioner to approach respondent No.3 under Section 245C of the Act. The Central Government, vide Finance Act, 2021, abolished the Income Tax Settlement Scheme Commission and an interim board of settlement was constituted to deal with the pending application and proviso to section 245B was inserted, wherein it is stated that the Income Tax Settlement Commission as constituted shall ceased to operate on or after the first day of February 2021, and the Finance Act, - 4 - NC: 2024:KHC-D:2322 WP No. 100534 of 2024 2021 was made retrospective in operation w.e.f. 1st February 2021. 4. The respondent No.2, taking into consideration the difficulties faced by the assessees, in exercise of power under Section 119(2) of the Income Tax Act, issued a press release on 7th September 2021, extending the time limit for filing an application before the Interim Board of Settlement from 31st March 2021 up to 30th September 2021. The application submitted by the petitioner for settlement of cases was rejected by the respondent No.3 stating that, as on 31st January 2021, no notice was issued under Sections 148 and 143 of the Income Tax act. 5. The Division Bench of the Hon’ble High Court of Judicature at Madras in WP Nos.13454/2021 and connected petitions has held that, all the applications in respect of the petitioners therein even in respect of the cases arising between 01.02.2021 to 31.03.2021 shall be deemed to be pending applications for the purposes of consideration by the Interim Board, and wherever they are rejected on the ground that, they did not have a case pending as on 31.1.2021, such orders shall stand set aside, and the applications shall be deemed to be pending applications for the consideration by the Interim Board. 6. The issue involved in this petition having already been examined by the Division Bench of the Hon’ble High Court of Judicature at Madras, the application submitted by the petitioner under section 245C of the Income Tax Act shall be deemed to be pending application for consideration by the - 5 - NC: 2024:KHC-D:2322 WP No. 100534 of 2024 Interim Board. Therefore, this petition also requires to be disposed of in light of the order passed by the Division Bench of the Hon’ble High Court of Judicature at Madras. Accordingly, I pass the following: ORDER i) The petition is allowed ii) The impugned order dated 30th August, 2023 passed by respondent No.3 at Annexure-A is hereby quashed. iii) The matter is remitted to the respondent No.3 for taking decision afresh on the application submitted by the petitioner in light of the order passed by the Hon’ble High Court of Judicature at Madras in WP No.13455/2021 and connected petitions (disposed of on 17.11.2023). Sd/- JUDGE BKM CT:GSM List No.: 2 Sl No.: 33 "