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Cit vs Vysya Bank Ltd. And Another on 18 August, 2005

Karnataka High Court
Cit vs Vysya Bank Ltd. And Another on 18 August, 2005
Equivalent citations: 2006 282 ITR 185 KAR, 2006 282 ITR 185 Karn, 2006 152 TAXMAN 297 Kar
Author: D S Kumar
Bench: D V Kumar


D.V. Shylendra Kumar J.

The writ petition is directed against the order dated 11-12-2000, passed by the Settlement Commission functioning under Chapter XIX-A of the Income-Tax Act, 1961 (hereinafter referred to as “the Act”), an order which is at an intermediate stage and even during the pendency of the proceedings before the Settlement Commission, at the instance of the Commissioner of Income-tax Karnataka.

2. The impugned order is according to the petitioner not proper or one which virtually seeks to assume jurisdiction by the Commission when it could not have done so under the statutory provisions, particularly, under section 245C(1) of the Act and, therefore, the need for the petitioner to test the correctness or otherwise of such an order as an order involving interpretation of the provisions of section 245C(1) of the Act.

3. The brief facts leading to the petition are that respondent No. 1 scheduled bank had filed its return for the assessment years 1994-95 to 1999-2000. The assessment orders had been passed by the Assessing Officer up to the assessment year 1997-98 and for the other subsequent years they were still pending. In respect of the assessment orders that had been passed, the assessee-bank, not being satisfied, carried the matter in appeals and pending such appeals before the various statutory appellate authorities, the assessee-bank had found it appropriate to invoke the jurisdiction of the Settlement Commission under Chapter XIX-A of the Act by making an application for settlement of the cases and it is in the context of such application under section 245C(1) that controversy had arisen.

4. The controversy essentially is one wherein the Revenue had taken an objection to the effect that the assessee had not fulfilled the qualifying criteria as contemplated under section 245C and had sought to agitate the matter as a preliminary issue before the Commission and which the Commission incidentally has held under the impugned order as an application that it can proceed with.

5. It is aggrieved by such order, the present writ petition is filed by the Revenue.

6. Sri Krishna, learned counsel appearing on behalf of the petitioner, has very elaborately submitted that the commission could not have entertained the application; that there was a threshold bar, etc., that respondent No. 1- bank had not qualified for examination of its case by the Settlement Commission; that in such circumstances, the Commission could not have held that it can proceed with the application, etc.

7. The argument is sought to be as effectively countered by Sri K. R. Prasad, learned senior counsel appearing for the respondent-bank, and both learned counsel are armed with a good number of authorities in support of their submissions.

8. I have also been taken through the legislative history of the provisions of Chapter XIX-A and it is pointed out that the proviso to section 245C as it stood earlier which enabled the Commissioner to raise an objection even at the threshold to entertain an application of this nature had been later shifted to sub-section (1A) of section 245D and from the year 1991 it had been totally omitted and in the light of such legislative history, it is not open to the Commissioner to raise any such preliminary objection about the maintainability of the application itself ; that the application can be proceeded with by the Settlement Commission for determination of the application on the merits and the Commissioner, if at all, can join issue with providing such information at that stage and it is not necessary that the Commissioner should be permitted to raise a preliminary objection as to the very maintainability of the application.

9. Sri Krishna, learned counsel for the petitioner, submits that though perhaps this was one possibility, the Settlement Commission having positively recorded a finding that it can examine the application by rejecting the contentions urged on behalf of the petitioner, it has become necessary for the petitioner to test the correctness and it is for such reason that the Commissioner is before this court.

10. After hearing learned counsel, perusing the orders and submissions and examining the rival contentions, I find that the issue might not have really arisen at that stage. It is sufficient to clarify here that notwithstanding any preliminary finding or even as indicated in the impugned order, it is still open to the Commissioner to agitate or to apprise the Commission of all the aspects of the matter that he may find fit to place before the Commission when the Commission has to pass orders on the application and notwithstanding such findings by the Commission, if the Commission should hear both the applicant and the Commissioner on all aspects of the matter, the apprehension expressed by learned counsel for the petitioner is removed.

11. I am also of the view that it is not necessary to examine the legal position that may require an interpretation of the provisions of section 245C at this stage when the matter itself is still at large before the Settlement Commission and the very object of Chapter XIX-A is to settle cases, to reduce the disputes, resolving controversies and not to prolong the length of litigation. Even a cursory glance at the legislative historyr particularly, the provisions relating to section 245C as it stood earlier, section 245(1A) and the present statutory provision after the year 1991, indicates that the effort is to reduce the length of the pendency of the matter before the Settlement Commission so that the settlement is expedited and not prolonged. It is for this purpose, I am not examining any of the questions which were sought to be agitated, but make it clear that all questions are left open and any finding one way or the other in the impugned order may not be binding on either of the parties so that the Commission may be enabled to proceed with the matter and arrive at a settlement as it deems fit in accordance with the provisions of the Act. A finding or interpretation by this court at this stage should not become a stumbling block for the Settlement Commission to conclude the proceedings.

12. Accordingly, this writ petition is disposed of, observing that notwithstanding the impugned order dated 11-12-2000, it is open to the parties to urge all their contentions before the Commission at the stage of deposal of the application itself and the Commission may, independent of the findings which it has given under the impugned order, examine all the contentions and proceed to pass orders on the merits in accordance with the provisions of the Act.

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