ORDER
T.V.K. Natarajachandran, Accountant Member
1. These are three sets of appeals by the assessee one against the quantum and the other against order under Section 185 pertaining to assessment years 1981-82, 1982-83 and 1983-84. These appeals arise out of similar and combined orders of the CIT(A), Ahmedabad dated 17-1-1989 wherein he has dismissed the appeals by the assessee for these years on the ground that the settlement petitions filed by the assessee were accepted by the Settlement Commission vide their order No. 10/CC/149/83-IT dated 26-12-1988. The assessee is in appeal against the impugned orders of the CIT(A) on several grounds namely the learned CIT(A) had no jurisdiction to pass the impugned order in view of the provisions of Sub-section (2) of Section 245F of the I.T. Act, 1961. The impugned order having been passed without jurisdiction is bad in law and therefore deserves to be cancelled and the status quo ante ordered to be restored. Further common ground taken by the assessee is that the learned CIT(A) ought to have appreciated that just because the appellant’s income-tax settlement application for the assessment years have been admitted it was not open to him to dismiss the appellant’s appeals against the assessment orders passed by the ITO under Section 144 of the I.T. Act, 1961. For this reason as well the impugned orders deserved to be cancelled and the status quo ante be restored. The assessee is a registered firm which carries on business of trading in metals, cast iron scrap, pig iron, chemicals and minerals. Consequent to the search operation conducted in the business premises of the assessee both at Bombay and at Ahmedabad the assessments for the Assessment years 1981-82, 1982-83 and 1983-84 came to be completed ex parte under Section 144 of the I.T. Act, 1961 for non-compliance with the several statutory notices. The status of the assessee has been taken as Unregistered Firm (URF) by rejecting registration claimed by the assessee for these years.
2. The assessee appealed against the orders of the assessing officer both on quantum and on registration. Finding that the petitions filed by the assessee before the Settlement Commission were accepted by the Settlement Commission as per the order No. 10/CC/149/83-IT, dated 26-12-1988 the Commissioner of Income-tax (Appeals) dismissed the appeals only on that ground and without going into the merits of the various grounds of appeal raised by the assessee. Hence the appeals by the assessee before the Tribunal.
3. At the time of hearing the learned counsel for the assessee reiterated the common grounds taken by the assessee in these appeals. According to him the impugned orders passed by the CIT(A) would jeopardise the interest of the assessee in case the Settlement Commission thought it fit, to send back the case to the assessing officer for non-cooperation of the assessee with the Settlement Commission as contemplated in Section 245HA the assessee would have no remedy to seek as the appeals filed by the assessee before the CIT(A) stood dismissed. He further pointed out that inasmuch as the ITO has already passed the assessment orders and orders refusing registration he would only issue demand notice and enforce the collection. In that case the assessee has to seek remedy by an appeal before the CIT(A) but there would be legal hurdles in admission of appeal. Therefore he urged that the right course for the CIT(A) would have been to keep the appeals pending till the final disposal of the case before the Settlement Commission and thereafter dismiss the appeal as infructuous. Even though the Settlement Commission has accepted the applications still the spectre of sending back the case to the ITO is haunting the assessee and therefore alternative remedy would be lost by the orders of the CIT(A) dismissing the appeals based only on the admission of the applications for settlement. Therefore he prayed that the orders of the CIT(A) should be set aside and the matter should be restored to him for keeping in abeyance in the interest of justice.
4. The learned D.R. on the other hand supported the orders of the CIT(A). According to him the Settlement Commission would be passing orders under Sub-section (4) of Section 245D r.w.s. 245HA (1).
5. We have duly considered the submissions of the parties. Sub-section (1) of Section 245F provides that in addition to the powers conferred on Settlement Commission under Chapter XIX-A it shall have all the powers which are vested in an income-tax authority in this Act. Sub-section (2) thereof provides where an application made under Section 245C has been allowed to be proceeded with under Section 245D the Settlement Commission shall until an order is passed under Sub-section (4) of Section 245D have subject to provisions of Sub-section (3) of that section exclusive jurisdiction to exercise the powers and perform the functions of the income-tax authorities in this Act in relation to this case. Sub-section (3) which contains a non obstante clause and which overrides Sub-section (2) provides that notwithstanding anything contained in Sub-section (2) and in the absence of any express direction to the contrary by the Settlement Commission, nothing contained in this section shall affect the operation of any other provision of this Act requiring the applicant to pay the tax on the basis of self-assessment in relation to the matters before the Settlement Commission. For our purpose Sub-section (2) is relevant which confers, on the admission of application for settlement, exclusive jurisdiction to Settlement Commission to exercise the powers and functions of an income-tax authority under this Act in relation to that case. In view of this statutory provision the CIT(A) cannot exercise jurisdiction and powers until the Settlement Commission passes order under Sub-section (4) of Section 245D. The statutory intention is very clear because the assessee could not be allowed to proceed before both the authorities namely the CIT(A) and the Settlement Commission at the same time for the same matter. It is for this reason exclusive jurisdiction has been conferred on the Settlement Commission which alone could exercise the powers and functions of income-tax authorities under this Act in relation to that case. Further as pointed out by the learned counsel for the assessee the spectre of the Settlement Commission restoring the case under Section 245HA (1) back to the assessing officer in the event of the non-cooperation of the assessee looms large till an effective order is passed under Sub-section (4) of Section 245D. The proper course for the CIT(A) would have been to keep the matter in abeyance till the disposal of the case by the Settlement Commission in which event the proceedings would have become infructuous and liable to be dismissed on that score. The CIT(A) also has not decided the appeals on merits of the case and inasmuch as the matters were pending before the Settlement Commission by admission of the application for settlement filed by the assessee the question of going into the merits of the case also did not arise. Considering all these factual and legal position we set aside the orders of the CIT(A) and restore them to his file for keeping them in abeyance till the matters are settled by the Settlement Commission by passing an effective order under Sub-section (4) of Section 245D of the I.T. Act, 1961, so that in case the matter is not settled the appeals would revive and the could agitate the matter afresh before the CIT(A) on merits of the case.
6. In the result the appeals are allowed.