In a recent case, single bench of the Kerala High Court held that a Writ Petition filed by the Commissioner of Income Tax (CIT) against the order of the settlement Commission.
While allowing the petition, Justice Vinod Chandran observed that the Commissioner is entitled to challenge the same since the report filed by the Commissioner before the Settlement Commission is not in the nature of adjudication.
The Court was hearing a writ petition filed by the Commissioner of Income Tax against the order of the Settlement Commission, who reduced the demand against the assessee. The assessee raised a preliminary objection that the petition is not maintainable since the Commissioner is not entitled to file a writ petition challenging the order of the Settlement Commission going by the scheme of Chapter XIX A of the Income Tax Act, 1961, being a statutory authority under the Act.
The bench noted that the instant petition is not filed from an order passed by the petitioner herein, who per-chance happens to be also an adjudicatory authority under the Act.“Chapter XIXA provides for a totally different scheme of assessment, which all the same has to be made under the provisions of the Act. The Commissioner normally would have, by himself or an authorised officer, made the assessment pursuant to the search conducted under Section 132 of the Act. But the assessee chose to approach the Settlement Commission, disclosing the undisclosed income revealed on the search and inspection; which is permissible under Section XIXA of the Income Tax Act. Hence the scheme and procedure under that Chapter has to be first understood.”
Allowing the petition, the bench said “Chapter XIXA is a code by itself and the Settlement Commission is the authority empowered to pass the order of assessment. The Commissioner does not have any adjudicatory power under Chapter XIXA and the role is more adversarial. The Commissioner is entitled to make a report on the matters specified in the application and even those not specified therein, on which the Settlement Commission is also empowered to pass orders as it deems fit; but, as is seen from sub-section (4) of Section 245D of the Income Tax Act “in accordance with the provisions of this Act”.
The Commissioner, on such reasoning, is entitled to move a writ petition before this Court, since the report filed by the Commissioner before the Settlement Commission in the application filed by the assessee is not in the nature of an adjudication, which, under Chapter XIXA, is a power conferred on the Settlement Commission.”
Read the full text of the Judgment below.