Law:

Section:

Section 245D of the Income-tax Act, 1961 - Settlement Commission - Procedure on application under section 245C - Petitioners had filed settlement application before Settlement Commission - Pending said applications, provisions of sections 245D(2A), 245D(2D), 245D(4A) and 245HA(1) were amended by Finance Act, 2007 - Effect of amendment is that where a settlement application has been filed under section 245C in Settlement Commission before 1-6-2007, Settlement Commission shall pass an order effectively deciding settlement application on or before 31-3-2008, failing which settlement application will abate - Petitioners challenged amended provisions, as being arbitrary and unconstitutional on ground that merely because of possible inaction on part of revenue to dispose of pending applications before specified date, same would abate and, consequently, they would be required to face regular assessment by income-tax authority - Whether even though true purpose of said amended provisions was to ensure expeditious disposal of settlement applications pending before Settlement Commission and in such situation some cut off date had to be fixed, yet that date could not be arbitrarily fixed without having any reasonable or rational basis particularly when Settlement Commission itself had filed an affidavit on 29-1-2008 admitting that it was not possible for it to dispose of all pending applications before 31-3-2008 - Held, yes - Whether in such circumstances, requirement that settlement application shall abate if an order under section 245D(4) is not made by 31-3-2008 is unfair, unjust and arbitrary and, therefore, a direction was to be issued to effect that application for settlement filed by petitioners under section 245C would not abate on 31-3-2008 - Held, yes FACTS The petitioners had filed settlement application before the Settlement Commission. Pending the applications, the provisions of sections 245D(2A), 245D(2D), 245D(4A) and 245HA(1) were amended by the Finance Act, 2007. The effect of the amendment is that where a settlement application has been filed under section 245C in the Settlement Commission before 1-6-2007, the Settlement Commission shall pass an order…

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