Supreme Court Sets Aside Settlement Commission's Order, Remands Matter for Fresh Decision

In a recent judgment JAGDISH TRANSPORT CORPORATION & ORS. Vs UNION OF INDIA AND ORS.  , the Supreme Court of India has set aside the order passed by the Settlement Commission in the case of Jagdish Transport Corporation & Ors. v. Union of India & Ors. The court remanded the matter for a fresh decision, emphasizing the need for compliance with due procedure under the Income Tax Act, 1961.

The case stemmed from a search and seizure operation conducted under Section 132 of the Income Tax Act. Notices under Section 153A were issued to the appellants for the assessment years 1998-1999 to 2004-2005. Subsequently, the appellants filed their income tax returns under Section 153A and also submitted an application for settlement before the Settlement Commission under Section 245C(1) of the Act.

The High Court of Judicature at Allahabad, Lucknow Bench, had directed the Settlement Commission to dispose of the application by a specific date. However, in its order dated March 31, 2008, the Settlement Commission observed that it was not practicable to examine the records and investigate the case properly. Despite this observation, the Settlement Commission passed an order to comply with the High Court's directions.

The Supreme Court, in its judgment, held that the Settlement Commission's order was a nullity and not in accordance with the law. It noted that the Settlement Commission itself had acknowledged the impracticability of examining the records and providing adequate opportunity to both the applicant and the Department, as required under Section 245D(4) of the Act.

The Court further highlighted that the High Court should have remitted the matter back to the Settlement Commission for a fresh decision in accordance with the law and on its merits. However, since the Settlement Commission has been wound up, the matters pending before it are being adjudicated and decided by the interim Board constituted under Section 245AA of the Act. Thus, the Court remanded the matter to the interim Board with a request for an expeditious decision within six months.

Date: April 28, 2023

JAGDISH TRANSPORT CORPORATION & ORS. Vs UNION OF INDIA AND ORS.