HAILSTONE INNOVATIONS PVT. LTD. vs. THE ASSISTANT COMMISSIONER OF INCOME TAX,

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WP(C)/17640/2023HC KeralaKLHC01038360202315 June 2023Author: HONOURABLE MR.JUSTICE C.S.DIAS6 pages
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What did the High Court hold?

The High Court directed the third respondent (Interim Board for Settlement) to consider and dispose of the petitioners' application in accordance with law and expeditiously, at any rate, within a period of one month from the date of receipt of a certified copy of the judgment. The Court explicitly stated that it had not expressed any opinion on the merits of the application. The submission made by the learned Standing Counsel for the respondents, that the IBS would consider the maintainability as a preliminary issue and take a decision within four weeks, was recorded. The operative direction is to dispose of the application expeditiously.

What were the facts?

The petitioners, Hailstone Innovations Pvt. Ltd. and its Managing Director R.J. Williams, filed a writ petition seeking a direction to the Interim Board for Settlement (IBS) to hear and pass orders on their settlement application. Proceedings under Section 132 of the Income Tax Act, 1961, were initiated against them. They were advised to approach the Settlement Commission, but learned of its discontinuation. This Court, by Ext.P2 order, directed the acceptance of their application. Subsequently, the Bill to discontinue the Commission became an Act, which is also under challenge. Time limits for filing applications and completion of assessments were extended. The petitioners are now facing delays in proceedings under Section 153A, and the IBS observed their settlement application was not maintainable.

What were the issues?

1. Whether the Interim Board for Settlement (IBS) should be directed to hear and pass orders on the settlement application filed by the petitioners, considering the observations made by the IBS regarding its maintainability. Assessee's Contention: The petitioners argued that the IBS's stand that their application is not maintainable is untenable and sought a direction for the IBS to hear and dispose of their application. They relied on previous orders of this Court directing the acceptance of their application and subsequent extensions of time limits for filing applications and completing assessments. Revenue's Contention: The learned Standing Counsel for the respondents submitted that the IBS had heard the petitioners and would consider the question of maintainability as a preliminary issue, taking a decision on the application within four weeks from the date of the hearing.

Which sections of the Income-tax Act were involved?

Section 132,Section 153A

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE C.S.DIAS THURSDAY, THE 15TH DAY OF JUNE 2023 / 25TH JYAISHTA, 1945 WP(C) NO. 17640 OF 2023 PETITIONERS: 1 HAILSTONE INNOVATIONS PVT. LTD. DOOR NO. 4/381 B, AYYANKUNNU PO MUNDUR, THRISSUR, KERALA. PIN- 680 541. REPRESENTED BY ITS MANAGING DIRECTOR MR. R.J. WILLIAMS 2 R.J. WILLIAMS, AGED 49 YEARS VELLOTTINGAL HOUSE, ANTONY ROAD, OLLUR, THRISSUR, KERALA – 680306. BY ADVS. ANIL D. NAIR TELMA RAJU ANJANA A. AADITYA NAIR RESPONDENTS: 1 THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1,KANDOMKULATHY TOWERS INCOME TAX OFFICE OPPOSITE MAHARAJAS COLLEGE GROUND KOCHI-682 001. 2 UNION OF INDIA, REPRESENTED BY ITS SECRETARY DEPARTMENT OF REVENUE, MINISTRY OF FINANCE NORTH BLOCK, NEW DELHI- 110001, PIN - 110001 3 INTERIM BOARD FOR SETTLEMENT, IBS-2, DELHI CIVIC CENTRE MINTO ROAD, NEW DELHI- 110002, PIN - 110002 BY ADV JOSE JOSEPH THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 15.06.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 17640 OF 2023 2 Dated this the 15th day of June, 2023

JUDGMENT The writ petition is filed, inter alia, to direct the 3rd respondent to hear and pass orders on an application submitted by the first petitioner as acknowledged by Ext.P3. 2. The first petitioner is a company and the second petitioner is the Managing Director of the first petitioner. A proceeding was initiated by the respondents against the petitioners under Section 132 of the Income Tax Act, 1961. The petitioners were advised to opt for settlement by approaching the Settlement Commission. The petitioners came to learn that a decision was taken to discontinue the Commission. The petitioners challenged the decision before this Court. By Ext.P2 order, this Court directed the second respondent therein to accept the petitioners application.

WP(C) NO. 17640 OF 2023 3 Accordingly, petitioners filed an application, as evidenced by Ext.P3 acknowledgment. Later, the Bill to discontinue the Commission was made an Act, which also has been challenged before this Court in W.P(C)No.13044/2021 and is pending consideration. Thereafter, the second respondent has issued Ext.P5 order, extending the time limit for filing of application before the Commission till 30.9.2021. Subsequently, by Ext.P6 notification, the second respondent had extended the period from completion of assessment till 30.9.2021. The proceedings got extended by virtue of the above orders passed. Now, the petitioners are being held responsible for the delay in initiation of the proceedings under Section 153A. The third respondent was pleased to post the settlement application for hearing on 16.5.2023. During the course of hearing, the third respondent has observed that the application is not maintainable in law. The stand of the third respondent

WP(C) NO. 17640 OF 2023 4 is untenable. Hence, the writ petition.

3.

Heard; Sri. Anil. D. Nair, the learned Counsel appearing for the petitioners and Sri.Jose Joseph, the learned Standing Counsel appearing for the respondents.

4.

Sri. Jose Joseph, on instructions, submitted that the third respondent has heard the petitioners and would consider the question of maintainability of the application as a preliminary issue. The third respondent would take decision on the application within four weeks from today. The said submission is recorded. Having considered the pleadings and materials on record and in the light of the submission made by the learned Standing Counsel, I direct the third respondent to consider and dispose of the application, in accordance with law and as expeditiously as possible, at any rate, within a period of one month from the date of receipt of a certified copy of the judgment. I make it clear that WP(C) NO. 17640 OF 2023 5 this Court has not expressed anything on the merits of the application. The writ petition is ordered accordingly. rmm19/6/2023 C.S.DIAS, JUDGE

WP(C) NO. 17640 OF 2023 6

Appendix — schedule of exhibits
APPENDIX OF WP(C) 17640/2023 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE PANCHNAMA DATED 23.03.2020 Exhibit P2 TRUE COPY OF ORDER DATED 05.03.2021 IN WRIT PETITION NO. 5737 OF 2021. Exhibit P3 TRUE COPY OF ACKNOWLEDGMENT DATED 22.03.2021 OF RECEIPT OF SETTLEMENT APPLICATION FILED BY THE PETITIONER BEFORE THE INCOME TAX SETTLEMENT COMMISSION. Exhibit P4 TRUE COPY OF THE INTIMATION IN FORM NO.34BA FILED BEFORE THE 1ST RESPONDENT ON 22.03.2021 Exhibit P5 TRUE COPY OF NOTIFICATION NO.F.NO.299/22/2021 DATED 28.9.2021- DIRECTOR(INV .III)/174. Exhibit P6 TRUE COPY OF NOTIFICATION NO.10/2021 DATED 27.2.2021 ISSUED BY THE 2ND RESPONDENT. Exhibit P7 TRUE COPY OF RULE 9 REPORT FILED BY THE PRINCIPAL COMMISSIONER OF INCOME TAX CENTRAL CIRCLE. Exhibit P8 TRUE COPY OF THE REPLY FILED BY THE PETITIONER DATED 09.07.2022 TO RULE 9A REPORT. Exhibit P9 TRUE COPY OF POSTING NOTICE ISSUED BY THE 3RD RESPONDENT

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