INCOME TAX ACT, 1961

Section 245C Section 245D(2C)

Settlement Commission - Admission of application under section 245C - Violation of provisions of section 245D(2C) - Allowability or otherwise of hearing opportunity to CIT(DR)

Settlement Commission admitted assessee's applications under section 245D(1). Pr. CIT had virtually accepted the admission of the assessee's application as he had nowhere directly or indirectly indicated that the income disclosed by the petitioner was not full and true. For the purpose of decision under section 245D(2C) the Settlement Commission allowed hearing opportunity to CIT(DR) and after that application filed by assessee treated as invalid. Held: When sub-section (2C) which requires an opportunity of being heard to be given to the applicant only if the application is to be declared invalid, the question of Pr. CIT or CIT raising any objection to the application at this stage, does not arise. In the opinion of this Court, insofar as the record of the case and other material on record is concerned, consideration of the same is contemplated at the third stage of the proceedings under section 245D(4) and not at the stage of sub-section (2C). Section 245D(2C) does not contemplate affording an opportunity of hearing to the CIT (DR) and at best, the CIT(DR) may be heard to deal with any submissions made by the assessee, if called upon by the Settlement Commission. However, under no circumstances can the CIT (DR) be permitted to raise objections against the admission of the application at the threshold and to make submissions on the basis of material on record to supplement the report submitted by the Pr.CIT in the manner as had been done in this case. The impugned order passed by the Settlement Commission being in breach of the provisions of section 245D(2C) and also being in breach of the principles of natural justice, inasmuch as at the stage of section 245D(2C), the Settlement Commission had placed reliance upon material other than the report, could not be sustained.

Followed:Sree Balaji Nagar Residential Association v. State of Tamil Nadu (2015) 3 SCC 353 (SC). Distinguished:CIT v. B.N. Bhattacharjee (1979) 1 Taxman 348 (SC) : 1979 TaxPub(DT) 1026 (SC).

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