Law:

Section:

Section 245D, read with sections 245HA and 245E of the Income-tax Act, 1961 - Settlement Commission - Procedure on application under section 245C - As a result of insertion of sub-section (4A) in section 245D with effect from 1-6-2007, Settlement Commission was under legal obligation to decide application filed on or before 1-6-2007 by 31-3-2008, otherwise proceedings pending before it would stand abated as provided under section 245HA(1) - Assessees, whose applications were pending before Settlement Commission, filed writ petitions wherein Court directed Commission to decide all pending applications on or before 31-3-2008 - Taking note of number of assessments pending and paucity of time, Commission observed that it was impracticable for Settlement Commission to examine records and investigate cases for proper settlement and to afford an opportunity of hearing to parties as contemplated under section 245D(4), but in order to follow direction of Court, it passed order before 31-3-2008 by itself assessing incomes of assessees for being taxed - Whether since Settlement Commission had failed to afford a reasonable opportunity of hearing and to examine records as per statutory requirement of law and had passed impugned orders without due application of mind, impugned orders were in violation of section 245D(4) and, therefore, were not legally sustainable - Held, yes - Whether in such circumstances matters were to be remitted back to Settlement Commission to decide applications of assessees after affording an opportunity of hearing to parties and after due compliance of section 245D(4) - Held, yes FACTS As a result of amendment made by the Finance Act, 2007, whereby sub-section (4A) was inserted in section 245D with effect from 1-6-2007, a legal obligation was cast upon the Settlement Commission to decide applications filed on or before 1-6-2007 by 31-3-2008, otherwise proceedings pending before it would stand abated as provided under section 245HA(1). The assessees, who had already made full and true disclosure before the Settlement Commission about their income and had also paid tax at the time of admission of their application, filed writ petitions wherein the…

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