As per case facts, petitioners DSSPL and VVM, under tax assessment, sought settlement with the ITSC/IBS, offering additional income. The High Court allowed assessments to proceed but ordered final orders ...
No Acts & Articles mentioned in this case
2026:MHC:1812W.P.(MD)Nos.10711 to 10716, 5709, 5710, 11470 to 11478 of 2025
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
ORDERS RESERVED ON : 20.04.2026
ORDERS PRONOUNCED ON : 01.06.2026
CORAM
THE HON'BLE MR.JUSTICE D.BHARATHA CHAKRAVARTHY
W.P.(MD)Nos.10711 to 10716, 5709, 5710 and 11470 to 11478 of 2025
and W.M.P.(MD) Nos.4171, 4173, 8529 and 8530 of 2025
W.P. (MD)No.10711 of 2025:
M/s.Dhanalakshmi Srinivasan Sugars Private Limited
Represented by its Managing Director S.Jagatheesan
Udumbiyam Village
Viraganoor P.O., Veppanthattai (Taluk)
Perambalur – 621 116. ... Petitioner
Vs.
1.Deputy Commissioner of Income Tax
Central Circle 2, Madurai
Ground Floor, Income Tax Office – Madurai Me
Income Tax Staff Quarters Complex
Kulamangalam Main Road
Meenambalpuram, Madurai, Tamil Nadu – 625 002.
2.Assistant Commissioner of Income Tax
Central Circle 2, Madurai
Ground Floor, Income Tax Office – Madurai Me
Income Tax Staff Quarters Complex
Kulamangalam Main Road
Meenambalpuram, Madurai, Tamil Nadu – 625 002.... Respondents
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W.P.(MD)Nos.10711 to 10716, 5709, 5710, 11470 to 11478 of 2025
PRAYER: Writ Petition filed under Article 226 of the Constitution of India
praying to issue a Writ of Declaration, to declare the any assessment order of the
2
nd
respondent in ITBA/AST/F/17/2021-22/1033708650 (1) dated 24.06.2021 for
the assessment year 2014 – 15 passed under Section 143 (3) r.w.s. 153 A of the
Act, 1961 as arbitrary, illegal and unconstitutional and pass such further or other
orders.
For the petitioners: Mr.R.Sivaraman
For the respondents: Mr.AR.L.Sundaresan
Additional Solicitor General of India
assisted by
Mr.N.Dilipkumar
Senior Standing Counsel
C O M M O N O R D E R
A.The Petitions:
M/s. Dhanalakshmi Srinivasan Sugars Private Limited (DSSPL),
incorporated under the Companies Act, 2013, and represented by its Managing
Director, S.Jegatheesan, and M/s. V.V.Mineral (VVM), a registered partnership
firm represented by its partner, S.Jegatheesan, have filed these Writ Petitions.
Both entities claim to be part of M/s. V.V. Group is a conglomerate operating
across various sectors.
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1.1 These Writ Petitions are connected to each other and, as such, are taken
up and disposed of by this common order.
B. The Facts:
2. On 25.10.2018, the Income Tax Department conducted a search under
Section 132 of the Income Tax Act, 1961 (in short, 'the Act') at the premises of
DSSPL and VVM and yet another entity, and certain materials and documents
were seized. Thereafter, on 28.11.2019, notices were issued to all three entities for
the assessment years from 2013 – 2014 to 2018 – 2019. While the proceedings
were pending, it is the case of DSSPL and VVM that they contemplated
approaching the Income Tax Settlement Commission (ITSC) under Section 245(c)
of the Act. During this period, the Government of India introduced a Finance Bill
on 01.02.2021, proposing to discontinue the ITSC and constitute an Interim
Board of Settlement (IBS) for pending cases. No new applications were filed with
effect from 01.02.2021.
2.1. On 04.03.2021, feeling aggrieved by the proposal that no new
applications shall be filed, the petitioners filed W.P.(MD) Nos. 4661, 4664, and
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4668 of 2021 to direct the IBS to take the petitioners' applications on file. A
common interim order was passed on the petitioners’ interim prayer, on the
submission that mere receipt of the petitioners’ applications would not confer any
right on them, and the ITSC was directed to receive the petitioners’
applications.
2.2. On 09.03.2021, DSSPL and VVM filed applications before the IBS
seeking additional income. The following table contains the particulars of the
assessment years, the original income disclosed by DSSPL in the returns, the
additional income offered in the applications for settlement, and the total
income:-
Assessment YearReturned IncomeAdditional Income
before the ITSC
Total Income
2013 – 14 (60,23,15,142) 7750 60,23,07,392
2014 – 15 (16,65,59,264) 2,10,28,27814,55,30,986
2015 – 16 (9,48,42,237) 14,92,15,110 5,43,72,873
2016 – 17 22,93,300 7,11,69,295 7,34,62,595
2017 – 18 1,09,01,638 9,67,93,63310,76,95,271
2018 – 19 82,65,261 1,64,77,818 2,47,43,079
2019 – 20 99,08,985 84,29,829 1,83,38,814
TOTAL (83,23,47,459) 36,31,21,7131,02,64,51,010
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2.3. Thus, it is seen that, as against the already disclosed income of
Rs.83,23,47,459/-, DSSPL offered a total income of Rs.1,02,64,51,010/-.
Similarly, the following table reflects the data with respect of VVM :
Assessment YearReturned IncomeAdditional Income
before the ITSC
Total Income
2012 – 13 79,79,120 19,69,057 99,48,117
2013 – 14 1,40,13,570 49,02,228 1,89,15,798
2014 – 15 95,45,710 26,80,229 1,22,25,939
2015 – 16 1,78,13,430 22,43,983 2,00,57,413
2016 – 17 1,52,58,760 11,60,145 1,64,18,905
2017 – 18 2,25,65,080 55,88,051 2,81,53,131
2018 – 19 (67,60,630) 0 (67,60,630)
2019 – 20 (43,41,889) 0 (43,41,889)
TOTAL 7,60,73,151 1,85,43,692 9,46,16,843
2.4. Thus, it is seen that, as against the original income of Rs.7,60,73,151/-,
additional income was offered, totalling Rs.9,46,16,843/-.
2.5. On 29.03.2021, the Finance Bill, 2021 received the assent of the
Hon'ble President and came into force on 01.04.2021, whereby the IBS was
constituted to hear all applications pending before the ITSC as on 01.02.2021.
Under these circumstances, when the Writ Petitions filed by DSSPL and VVM
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came for further hearing on 30.04.2021, particularly regarding the extension of
interim orders, the following interim order was passed after considering the
interim order passed by the Principal Bench of this Court. Paragraph Nos. 2, 3
and 4 of the said order dated 30.04.2021 are extracted hereunder for ready
reference:-
“2.Today when the matter is taken up for hearing, the
learned Special Government Pleader has produced a copy of the
order dated 17.04.2021 passed by the Principal seat in similar
matter in W.P.No.9467 of 2021 and the relevant portion is
extracted hereunder:-
“The petitioner challenges the validity of
certain amendments to the Income Tax Act, 1961.
Simultaneously, the petitioner seeks a stay on the
assessment proceedings on the ground that if the
assessment is completed and the assessment order
implemented, the writ petition may become
infructuous.
2.It may not be appropriate to stop the
assessment process midstream. However, the order
of assessment and the steps taken pursuant thereto
will abide by the result of the writ petition.”
3.She would further state that since the order of assessment
is under progress, stopping of entire assessment would have a
bearing on the limitation and therefore, suitable direction may be
given.
4.In view of the said submission, based on the orders passed
by the Division Bench of this Court, the assessment can go on. The
order of assessment and the steps taken pursuant thereto will be
subject to the result of the writ petition.”
2.6. On 07.06.2021, when the above Writ Petitions came up for hearing, it
was reported by the learned counsel for the petitioners that the Writ Petitions had
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become infructuous. Accordingly, recording the same, the Writ Petitions were
dismissed as infructuous. At this juncture, DSSPL has filed W.P.(MD) No. 10014
of 2021, and VVM has filed W.P.(MD) Nos. 10019 and 10020 of 2021,
challenging the constitutional validity of the amendment made through the
Finance Act, 2021. Interim prayers were also made for a direction to the IBS to
treat the applications filed by them before the ITSC as pending applications. After
considering the rival submissions, the following interim order was passed, and it
is essential to extract paragraph Nos. 9 and 10 hereunder:-
“9. Be that as it may, the Assessees has a grievance before us that
if the assessment proceedings are concluded, it would greatly prejudice
their rights. In fact, the interim orders which we have referred above,
have all been granted/predicted on the said grievance. The common
thread, which passes through all these interim orders, is that it would not
be appropriate to interdict an assessment proceedings. We may also add
that the prayers sought for in the present writ petitions are for writs of
declaration and the settled legal principle is that there is a presumption as
to the validity of the statute until it is struck down. Therefore, essentially,
the interim prayer does not flow from the main prayer, but the assessees
seek for interim protection on the ground of prejudice which may be
caused to them, if the assessment proceeding is completed. Therefore,
taking note of the interim orders referred above, this Court is of the view
that the following interim protection would meet the ends of justice. The
respective Assessing Officer under whom the petitioners/assessees are
granted liberty to proceed with the assessment proceedings and the
petitioners/assessees are directed to cooperate with the assessment
proceedings which they have willingly agreed to do so as informed by
the learned counsel for the petitioner and the Assessing Officer shall
proceed to conclude the assessment, pass a final order and keep the order
in a sealed cover and not publish the same or implement the same.
10. The learned counsel for the petitioners submitted that Section
153(C) of the Act gives sufficient protection in this regard and the
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circumstances which would stand saved have been clearly spelt out in the
said provision. In any event, since the Courts have held that the
assessment proceedings can go on, this Court is of the view that the
assessment proceedings should not be interdicted and it should proceed
and passing a final order, keeping it to a sealed cover is akin to not giving
effect to the assessment order. If such procedure is adopted, the interest of
not only the assessee as well as the Department will be protected, when a
final decision is taken on the declaratory relief sought for.”
2.7. Thus, it can be seen that the respective assessing officers were granted
liberty to proceed with the assessment proceedings, conclude the assessment, and
pass the final order; however, to keep the order in a sealed cover and not to
publish or implement the same. The order was passed after holding that until the
Writ of Declaration is allowed, it is a settled legal presumption as to the validity
of the statute.
2.8. However, on 24.06.2021 and 26.06.2021, assessment orders were
passed in respect of the various years mentioned above, and they were
communicated to DSSPL as well as VVM without being kept in a sealed cover.
The following table depicts the returned income, the income originally assessed,
the additions made, the income assessed as per the assessment order, and the
additional tax that was demanded in respect of DSSPL :
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W.P.(MD)Nos.10711 to 10716, 5709, 5710, 11470 to 11478 of 2025
AY Returned
Income
Income
Assessed as per
earlier
Assessment
Order
Additions made
in Assessment
Order
Income
Assessed as per
Order dated
24.06.2021
Tax demand as
per Notice u/s
156
2013 – 14 93,50,46,0101,28,23,95,2905,39,91,43,2236,68,15,38,5133,85,91,26,188
2014 - 15 64,68,10,13082,79,94,2403,05,23,91,5853,87,96,85,8252,04,07,88,117
2015 - 16 26,59,25,08026,59,25,0801,18,42,83,4141,45,02,08,49473,76,32,725
2016 – 17 21,63,04,15021,63,05,15074,60,05,92296,23,10,07244,31,13,491
2017 - 18 3,53,93,7603,53,93,76035,93,80,60239,47,74,36216,32,03,161
2018 - 19 (1,02,17,663) - - - -
2019 – 20 (1,11,806) - - - -
TOTAL 2,99,37,24,3742,62,80,12,52013,38,90,28,59813,36,85,17,2667,24,38,63,682
2.9. Thus, it can be seen that through the assessment orders passed in
respect of various years, the total income was arrived at Rs.13,36,85,17,266/- and
the tax of Rs.724,38,63,682/- was demanded as per the notice under Section 156
of the Act.
2.10. Similarly, in respect of VVM, the following table depicts the data,
AY Returned
Income
Income
Assessed as per
earlier
Assessment
Order
Additions made
in Assessment
Order
Income
Assessed as per
Order dated
24.06.2021
Tax demand as
per Notice u/s
156
2012 – 13 79,79,120 2,31,85,4806,93,08,9509,24,94,4303,72,18,954
2013 – 14 1,40,13,57014,22,78,93061,21,15,97675,43,94,90643,13,71,914
2014 - 15 95,45,710 4,42,33,56022,73,62,45427,15,96,01416,50,59,478
2015 - 16 1,78,13,4304,29,31,38024,89,98,01729,19,29,39764,27,07,930
2016 – 17 1,52,58,760 -46,39,20,62247,91,79,38227,52,00,069
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AY Returned
Income
Income
Assessed as per
earlier
Assessment
Order
Additions made
in Assessment
Order
Income
Assessed as per
Order dated
24.06.2021
Tax demand as
per Notice u/s
156
2017 - 18 2,25,65,080 -1,80,09,21,1901,82,34,86,27099,09,87,858
2018 - 19 (67,60,630) - - - -
2019 – 20 (43,41,889) - - - -
TOTAL 7,69,73,15125,26,29,3503,42,26,27,2073,17,39,01,0022,54,25,46,203
Thus, it can be seen that a total income of Rs.317,39,01,002/- was assessed,
and a tax liability of Rs.254,25,46,203/- was demanded.
2.11. On 09.07.2021, the Special Leave Petitions filed by DSSPL and VVM
against the aforementioned interim order passed in W.P.(MD) Nos. 10014, 10019
and 10020 of 2021 came up for hearing before the Hon’ble Supreme Court of
India. It was reported that assessment orders had already been passed, and liberty
was sought to assail the assessment order. The SLP was sought to be withdrawn,
and accordingly, the Hon’ble Supreme Court of India permitted the SLP to be
withdrawn with the liberty prayed for.
2.12. Thereafter, contempt petitions were filed in Cont. Petn. Sr. Nos.
30488 and 30484 of 2021 for willful disobedience of the earlier interim orders.
When the Contempt Applications came up for hearing, the Assessing Officer
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passed supplementary orders, categorically stating that the assessment orders
shall not be given effect and the resultant demand shall be kept in abeyance,
pending the finality of the Writ Petitions filed before this Court, and that the
resultant demand will not be enforced until such time. The same was recorded,
and upon further request of the assessee, it was clarified that the time limit for the
assessee to challenge the said assessment orders will start only on the disposal of
the Writ Petitions, and the period during the pendency of the Writ Petition was
directed to be excluded. It is relevant to reproduce verbatim the extract of
paragraph Nos. 5 to 9 of the said order, which reads as follows:-
“5.Pursuant to these observations, the learned Senior Standing
Counsel sought for a days time, to get necessary instructions from the
department and accordingly, today the learned senior standing counsel
for the Revenue has produced an order passed by the Assessing Officer,
dated 15.07.2021 and by way of illustration, we refer to the order in the
case of the Assessee M/s.V.V.Minerals, Tirunelveli, dated 15.07.2021.
The order reads as follows:
“ORDER
The Assessment Orders in the case of the
assessee for the Assessment Years 2012 – 14 to AY
2019 – 20 were passed and uploaded in ITBA on
24/25.06.2021. There is an interim order of the
Hon'ble Madurai Bench of Madras High Court dated
11.06.2021 (cited under ref) which clearly directed
that - “Assessment proceedings should not be
interdicted and it should proceed and passing a final
order, keeping to a sealed cover is akin to not giving
effect to the assessment order. If such procedure is
adopted that the interest of not only the assessee as
well as the department will be protected, when the
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final decision is taken on the declaratory relief sought
for. “This direction was not brought to the attention of
the Assessing Officer or other officers in the
hierarchy. As a result, the above mentioned
assessment orders were passed in ITBA and the
assessment orders were communicated to the
assessee, which was against the direction of the
Hon'ble High Court.
When the matter came up before the Hon'ble
High Court on 15.07.2021, the Hon. High Court has
pronounced the orders that an order has to be passed
to the effect that the assessment order shall not be
given effect and the resultant demand shall be kept in
abeyance pending the finality of the Writ Petitions
filed by the assessee before the Hon'ble High Court
challenging the abolition of Income Tax Settlement
Commission. Under these circumstances, the above
mentioned assessment orders shall not be given effect
and the resultant demand shall be kept in abeyance
pending the finality of the Writ Petitions (cited under
ref) filed in the Hon'ble High Court and the resultant
demand will not be enforced until such time.”
6. In the light of the above order, this Court is of the considered
view, the interest of the assessee has been sufficiently protected and as
the Assessing Officer has in no uncertain terms stated that the
assessment order shall not be given effect to and the resultant demand
shall be kept in abeyance, pending the finality of the Writ Petitions filed
before this Court and the resultant demand will not be enforced until
such time.
7. It is submitted by the learned counsel for the petitioner that in
the event, there arises a need for the assesses to challenge the
assessment order, which have been passed and uploaded and now
agreed to be not given effect to, then the assessee's interest should be
protected.
8. We have heard Mr.T.R.Senthilkumar, learned senior standing
counsel on the above submission.
9. The Assessee's request appears to be reasonable. Therefore,
we make it clear that in the event, the assessee is required to challenge
the assessment orders which have been now passed by the Assessing
Officer and kept in abeyance, by way of filing an appeal or otherwise,
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the period from, the date of filing the writ petition i.e., on 09.06.2021
till the Writ Petitions are disposed of shall be excluded, while
computing limitation.”
2.13. On 17.09.2021, the Central Board of Direct Taxes (CBDT) issued a
press release stating that taxpayers eligible to file applications before the ITSC as
on 01.02.2021 could file the same on or before 30.09.2021. This was followed by
a CBDT order bearing reference No. 299/22/2021 – Dir (Inv-III)/174, dated
28.09.2021, issued in exercise of its power under Section 119(2)(b) of the Act,
thereby extending the period for filing applications up to 30.09.2021 for
taxpayers eligible to file applications as on 31.01.2021.
2.14. It is stated that the report of the Principal Commissioner of Income
Tax was called for with reference to the petitioners’ settlement application, and
the same was submitted on 08.06.2022. Objections were made to the applications
filed by the DSSPL and VVM. After filing the reply and rejoinder, etc., a common
order dated 20.11.2023 rejected the applications as not admitted, on the ground
that the applicants had failed to make full and true disclosure of their income. The
order was passed under Section 245D(4) of the Act.
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2.15. On 17.11.2023, in a batch of Writ Petitions challenging the
constitutional validity of the provisions of the Finance Act, 2021 and the CBDT
circular, the Division Bench of this Court (to which I am a party rendering the
Judgment) decided Jain Metal Rolling Mills Vs. Union of India
1
, holding the
provisions of the Act, as well as the retrospective abolition of the ITSC, as valid,
while reading down the circular and the provisions, and holding that all persons
whose cases were pending up to 31.03.2021 will be eligible to approach the IBS
as per the extended date.
2.16. When the Writ Petitions in W.P.(MD) Nos. 10014, 10019 and 10020
of 2021 came up for hearing on 21.08.2024, the Division Bench, noting the above
ruling, held that the Writ Petitions are to be disposed of in terms of the
aforementioned Judgment in Jain Metal Rolling Mills' case (cited supra). Even
while disposing of the above Writ Petitions, it was contended by DSSPL and
VVM that the assessment orders passed in the meanwhile would not survive.
However, the request was turned down, keeping it open to the petitioners to urge
the said contention before the learned Single Judge, where the rejection order of
IBS is being questioned. It has to be noted that the petitioners have filed W.P. No.
1(2023 156 taxmann.com 513 Madras)
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19948 of 2024, challenging the order of rejection passed by the IBS. It is
contended by the petitioners that since the order of the IBS was passed on
20.11.2023, further fresh orders relating to the assessment in respect of the
respective years should have been passed on or before 20.11.2024, as per Section
245 H A (1) (2) of the Act.
2.17. Thus, it is contended that after the aforementioned limitation period
expired on 16.12.2024, the petitioners were informed that the assessment orders
were no longer kept in abeyance, in view of the disposal of the W.P.(MD) Nos.
10014, 10019 and 10020 of 2021, and that arrears of tax were demanded from the
petitioners. On 12.12.2024, the petitioners submitted a reply stating that when the
assessment orders were passed, disregarding the directions of the Court, and
subsequently kept in abeyance, the orders had become void ab initio, and fresh
orders had not been passed within a period of one year. The earlier assessment
orders had all become infructuous, in view of the fact that the department did not
choose to pass fresh assessment orders within the limitation period.
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2.18. According to the petitioners, the Writ Petition filed by them
challenging the order of the IBS in W.P.(MD) No. 19948 of 2024 was withdrawn
in view of the expiry of the limitation period. It is thereafter that the recovery
notice was issued on 31.01.2024, stating that, since the application was not
admitted by the IBS, the impugned assessment orders stood automatically
restored and, as such, were given effect to.
2.19. Challenging the recovery order issued in respect of DSSPL, W.P.No.
5709 of 2025 was filed. Challenging the recovery notice issued to VVM, W.P.No.
11471 of 2025 was filed. This apart DSSPL had filed the following Writ Petitions
for declaration of the assessment orders with reference to the various assessment
years mentioned below, to declare the assessment order as arbitrarily illegal and
unconstitutional and the following table depicts the same:-
Sl.
No.
WP Petitioner name Prayer AY Assessed total
income
1.5709 Dhanalakshmi
Srinivasan Sugars
Declaration
Assessment order
dated 24.06.2021
2013-2014602,307,392
2.5710 Dhanalakshmi
Srinivasan Sugars
Certiorari
Recovery order
dated 31.12.2024
2013-2014111,89,45,440
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3.10711 Dhanalakshmi
Srinivasan Sugars
Declaration
Assessment order
dated 24.06.2021
2014-2015
14,55,30,986
4.10712 Dhanalakshmi
Srinivasan Sugars
Declaration
Assessment order
dated 24.06.2021
2015-2016 5,43,72,873
5.10713 Dhanalakshmi
Srinivasan Sugars
Declaration
Assessment order
dated 24.06.2021
2016-2017 7,34,62,595
6.10714 Dhanalakshmi
Srinivasan Sugars
Declaration
Assessment order
dated 24.06.2021
2017-201810,76,95,271
7.10715 Dhanalakshmi
Srinivasan Sugars
Declaration
Assessment order
dated 24.06.2021
2018-2019 2,47,43,079
8.10716 Dhanalakshmi
Srinivasan Sugars
Declaration
Assessment order
dated 24.06.2021
2019-2020 1,83,38,814
2.20. Similarly, VVM has filed the following Writ Petitions in respect of
the following years for the very same prayer of declaration as contained in the
table below:-
Sl.
No.
WP Petitioner namePrayer AY Assessed total
income
1.11470 VV MineralsDeclaration
Assessment order
dated 26.04.2021
2012-2013 9,24,94,430
2.11471 VV MineralsCertiorari
Recovery notice
dated 31.12.2024
2012-2013
to
2019-2020
362,05,85,969
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3.11472 VV MineralsDeclaration
Assessment order
dated 24.06.2021
2013-201475,43,94,906
4.11473 VV MineralsDeclaration
Assessment order
dated 24.06.2021
2014-201527,15,96,014
5.11474 VV MineralsDeclaration
Assessment order
dated 25.06.2021
2015-201629,19,29,397
6.11475 VV MineralsDeclaration
Assessment order
dated 24.06.2021
2016-201747,91,79,382
7.11476 VV MineralsDeclaration
Assessment order
dated 24.06.2021
2017-2018182,34,86,270
8.11477 VV MineralsDeclaration
Assessment order
dated 30.06.2021
2018-2019 NIL
9.11478 VV MineralsDeclaration
Assessment order
dated 30.06.2021
2019-2020 NIL
C.Petitioners' Arguments :
3. Mr. R. Sivaraman, the learned counsel appearing on behalf of the DSSPL
and VVM, would submit that these individual assessment orders were passed in
contempt of the directions issued by this Court. Subsequently, on the basis of the
orders passed in the contempt petitions, the orders were kept in abeyance on
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16.07.2021. Based on the CBDT circular, since the petitioners' cases were
pending as of 31.01.2021, their applications are deemed valid. Thus, the
petitioners were eligible assessees, and their applications were taken on record
and proceeded with under Section 245D of the Act.
3.1. The IBS is vested with jurisdiction over the files of the petitioners, and
as per Section 245 F of the Act, all the powers of the Income Tax Authority stood
vested in the IBS exclusively. Therefore, in view of the subsequent developments,
including the CBDT circular and ultimately the Division Bench upholding the
provisions and the CBDT circular, except to read down with reference to the
period between 01.02.2021 to 31.03.2021, the applications having not been
rejected at the outset, as mentioned in Section 245 D of the Act, and when the
applications were allowed to be proceeded with, including calling for a report
from the Principal Commissioner and after grant of hearing, the matter was being
considered, the assessment authority completely lacked jurisdiction on the date on
which the assessment orders were passed. Therefore, the assessment orders are
void ab initio and were passed without jurisdiction.
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3.2. The only course open to the assessing authority was to pass fresh
orders within one year of the dismissal of the petitioners’ applications on
20.11.2023, as prescribed under Section 245 HA read with Section 153 of the Act,
which was not done in this case. Therefore, the petitioners are entitled to the
prayers made in all these writ petitions.
3.3. The learned counsel would rely upon the Judgment of the Division
Bench of the Delhi High Court in Rohit Kumar Gupta Vs. Principal
Commissioner of Income-tax, Central-II
2
, more specifically paragraphs 42 to 45
and 50 to 58, to contend that unless and until the fresh orders were passed within
a period of one year from the date of dismissal of the application by the Interim
Settlement Commission, the Writ Petitions are liable to succeed. The learned
counsel would rely upon the Division Bench Judgment of the Gujarat High Court
in Yogeshwar Developers Vs. Union of India
3
to contend that when the matters
were pending before the Settlement Commission, there would be no jurisdiction
for the regular assessing authorities to proceed further. Paragraphs 6 and 8 of the
said Judgment are specifically referred to.
2 (2019) 109 taxmann.com 257 (Delhi)
3(2022) 138 taxmann.com 469 (Gujarat)
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3.4. The learned counsel referred to the Judgment of the Division Bench in
the Jain Metal Rolling Mills' case (cited supra) regarding the validity of the
CBDT circular and the other provisions to contend that the petitioners’
application shall be treated as an eligible application as per the CBDT circular.
The Judgment of the Gujarat High Court in Sanjay Sevantilal Shah Vs. Interim
Board for Settlement (IBS) – 1
4
is also relied upon.
3.5. The learned counsel would take this Court exclusively to the
discussions contained in the Judgment of the Hon’ble Supreme Court in
Commissioner of Income Tax, Mumbai Vs. Damani Brothers
5
, more
specifically by pointing out paragraph No. 11, and would submit that it was a case
where it was held that the commission had jurisdiction to deal with the income
disclosed in the returns and being dealt with by the assessing officers. The same
would not apply to the fact situation, and the Judgment itself categorically states
that the Income Tax Authorities are free to proceed until the commission further
decides to proceed with the petition. The same cannot be relied upon by the
authorities to uphold the assessment order that is void.
4(2024) 160 Taxmann.com 255 (Gujarat)
5(2003) 3 SCC 86
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3.6. The learned counsel would rely on the decision of the ITSC itself in
Om Metals & Minerals (P.) Ltd. In re Vs. S.K.Roy and others
6
, to contend that
only those orders passed before the decision of the Income Tax Settlement
Commission to proceed with the matter alone would survive. Accordingly, it is
his contention that the Writ Petitions praying for a declaration should be allowed.
3.7. The learned counsel would rely upon the Judgment of the Hon’ble
Supreme Court of India in Brij Lal Vs. Commissioner of Income Tax,
Jalandhar
7
to contend that Sections 245 D (1) and (4) of the Act are two distinct
stages and that the jurisdiction of the authorities is only up to the stage of Section
245 D (1) of the Act. For the same proposition, the Judgment in Commissioner of
Income Tax v. Anjum M.H. Ghaswala and others
8
is also relied upon.
3.8. Alternatively, the learned counsel would submit that the interim order
of this Court was originally to pass the assessment order and keep it in a sealed
cover. When this was violated, the violation was directed to be rectified, and the
6(1992) 193 ITR 57 (ITSC) (SB)
7(2010) 194 Taxman 566 (SC)
8(2001) 119 Taxman 352 (paragraph -27)
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order again went into abeyance. Once the right of the Income Tax authorities
arose after the IBS dismissed the application on 20.11.2023, the Income Tax
authorities ought to have communicated the assessment order to the petitioners.
Without any communication, it cannot be said that the orders have been passed. If
the orders were not communicated within the one-year limitation period available
to the authorities, any subsequent communication of the orders or any further
notice issued will have no effect.
3.9. The learned counsel would rely upon the Division Bench Judgment of
this Court reported in (1930) LW Volume XXXI 487 Kavanna, Vana, Ena
Swaminathan alias Chidambaram Pillai Vs. Lakshmanan Chettiar and
Another
9
, more specifically on page No. 494, where the phrase '30 days after
making the order' was considered, and it was held that unless the order was
pronounced in the presence of the parties, only the communication of the order
would amount to making the order itself. The learned counsel would rely upon
the Constitutional Bench Judgment of the Hon’ble Supreme Court of India in
State of Punjab Vs. Amar Singh Harika
10
, more specifically paragraph No. 10, to
9(1929) SCC OnLine Mad 218
10(1966) SCC OnLine SC 48
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contend that the order has to be communicated to the person affected by it, and
until the order is communicated, the authority can even challenge the order, and it
cannot even be recorded as provisionally incorrect. The learned counsel would
also rely upon the Constitution Bench Judgment of the Hon’ble Supreme Court in
Bachhittar Singh Vs. State of Punjab and Another
11
, more specifically
paragraph No. 10, where it has been categorically held that an order can only be
effective after it is communicated to the officer or it is otherwise published.
3.10. Therefore, it is the contention of the learned counsel that even
assuming for a moment that the assessment order was passed pending the
proceedings, it was very much open to the authorities who communicated the said
orders to do so within the period of limitation available to them, and since they
did not, the Writ Petitioners are entitled to succeed.
D.Respondents' Arguments:
4. Per contra, Mr.AR.L.Sundaresan, the learned Additional Solicitor
General of India, appearing on behalf of the respondents, would submit that this
Court, by way of interim orders, permitted the assessment authorities to proceed
11(1962) SCC OnLine SC 11
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with the assessment. By the interim order dated 30.04.2021, after considering the
plea made on behalf of the authority that the assessment should be completed
within the period of limitation, permission was granted for the assessment to
continue, and it would ultimately be subject to the result of the Writ Petition.
When those Writ Petitions in W.P. (MD) Nos. 4661 of 2021, etc., were dismissed
as infructuous, a second interim order was granted in W.P. (MD) No. 10014 of
2021, etc., whereby liberty was specifically granted to the assessing officer to
proceed with the assessment, conclude it, pass the final order, and keep the order
in a sealed cover, without publishing or implementing the same.
4.1. However, when the same was erroneously communicated to the
petitioners and the contempt petition was filed, the demand of tax pursuant to the
assessment order was directed to be kept in abeyance by an order dated
16.07.2021. Thus, it is clear that when the petitioners' applications before the
commission were directed to be received and thereafter considered only on the
strength of the interim orders of the Court, having relied upon one limb of the
interim order, the petitioners cannot take exception to the other limb of the
interim order. This Court has passed the above series of orders, balancing the
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rights of the revenue and the assessees. As such, once the final decision of the
IBS went against the petitioners, the orders came into force automatically, and as
per the interim order, the petitioners should have filed a further appeal against the
order within the time from the date of dismissal of the Writ Petitions by the
Division Bench of this Court. The same has now become final, and accordingly,
recovery notices were issued.
4.2. The learned Additional Solicitor General of India would rely on the
Judgment of the Hon'ble Supreme Court of India in Hope Plantations Ltd Vs.
Taluk Land Board, Peermade and another
12
to contend that this is an issue
estoppel against the petitioners. The learned ASG would thereafter submit that
questions of bar or jurisdiction of the assessing officer should be raised at the
earliest opportunity, and that a belated challenge to the same is barred by the
statutory framework under Section 124 of the Act. Section 124 (3) mandates that
the assessees must raise an objection to the jurisdiction within one month of
receipt of notice under Section 142 (1) of the Act, or before the completion of the
assessment.
12(1999) 5 SCC 590
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4.3. The learned ASG would rely upon the Judgment in Deputy
Commissioner of Income Tax (Exemptions) and another Vs. Kalinga
Institute of Industrial Technology
13
to contend that the conduct of the petitioners
amounts to a waiver of the plea. He would rely upon the Judgment of the Hon'ble
Supreme Court of India in Commissioner of Income-tax Vs. Damani
Brothers
14
to contend that unless specific orders have been passed deciding to
proceed with the application, the settlement authority does not assume
jurisdiction. Until the orders of assessment were passed, no such order had been
passed, and the assessment proceedings were completed on 24.06.2021 itself, and
therefore, on the day when the assessment orders were passed, it cannot be said
that the jurisdiction stood divested. Once the authority has jurisdiction, the
assessment orders cannot be challenged by way of Writ Petition, and the
petitioners have an effective alternative remedy under Section 246-A of the Act,
and the Writ Petition should not be entertained in view of the dictum of the
Hon'ble Supreme Court of India in Commissioner of Income Tax and others Vs.
Chhabil Dass Agarwal
15
and Kone Elevator India Pvt. Ltd. Vs. Assistant
Commissioner of Income-tax
16
.
13(2023) 454 ITR 582
14(2003) 259 ITR 475 (SC)
15(2014) 1 SCC 603
16(2013) 355 ITR 139
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4.4. The learned ASG would also submit that the petitioners are
continuously litigating the matter. After suppressing their income, they have never
approached the Court with clean hands. Therefore, the Writ Petitions are liable to
be dismissed.
E. Consideration and Findings:
5. I have considered the rival submissions made on either side and perused
the material records of the case.
5.1. It is essential to advert to the relevant provisions before proceeding to
consider the issues in the present cases. Section 245 A (b) of the Act defines the
term 'Case'. Case means any proceedings for assessment under this Act of any
person in respect of any assessment year or years which may be pending before
the assessing officer on the date on which the application under sub-section (1) of
Section 245 C of the Act is made. A person whose case is pending is entitled to
make an application under Section 245 C of the Act at any stage of the case, make
a full and true disclosure of his income which was not disclosed before the
assessing officer, and have the case settled by the settlement commission. Section
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245 D prescribes the procedure on receipt of the application under Section 245 C
of the Act, which mandates that the ITSC, within 7 days from the date of receipt
of the application, issue a notice to the applicant requiring him to explain why the
application made by him be allowed to be proceeded with, and, on hearing the
applicant, within a period of 14 days from the date of application, by an order in
writing, reject the application or allow the application to be proceeded with. Even
if no order has been passed, the application will be deemed to have been
proceeded with. In respect of the applications being proceeded with, reports have
to be called for from the Principal Commissioner, and after examining the records
and giving the applicant an opportunity to be heard, the ITSC/IBS is entitled to
pass such orders. It is essential to extract Section 245 F (1) and (2) of the Act,
along with the provisos on which reliance is placed by the learned counsel for the
petitioners.
“245F.Powers and procedure of Settlement Commission. (1) In
addition to the powers conferred on the Settlement Commission under
this Chapter, it shall have all the powers which are vested in an income-
tax authority under this Act.
(2) Where an application made under section 245C has been allowed to
be proceeded with under section 245D, the Settlement Commission
shall, until an order is passed under sub-section (4) of section 245D,
have, subject to the provisions of sub-section (3) of that section,
exclusive jurisdiction to exercise the powers and perform the
functions of an income-tax authority under this Act in relation to the
case:
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[Provided that where an application has been made under section 245C
on or after the 1st day of June, 2007, the Settlement Commission shall
have such exclusive jurisdiction from the date on which the application
was made:
Provided further that where
(1) an application made on or after the 1st day of June, 2007, is rejected
under sub-section (1) of section 245D; or
(ii) an application is not allowed to be proceeded with under sub-section
(2A) of section 245D, or, as the case may be, is declared invalid under
sub-section (2C) of that section; or
(iii) an application is not allowed to be further proceeded with under sub
section (2D) of section 245D,
the Settlement Commission, in respect of such application shall have
such exclusive jurisdiction upto the date on which the application is
rejected, or, nor allowed to be proceeded with, or, declared invalid, or, not
allowed to be further proceeded with, as the case may be.]”
(Emphasis supplied)
5.2. Section 245 HA of the Act relates to the abatement of proceedings
before the settlement commission. The dates on which the proceedings will abate
are mentioned in Section 245 HA of the Act, which gives the assessing officer
liberty to dispose of the case in accordance with the provisions of the Act, as if no
application had been made at all. It is essential to extract Sections 245 H A (1)
and (2) of the Act for ready reference:
“245HA.Abatement of proceeding before Settlement
Commission. (1) Where
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(i) an application made under section 245C on or after the 1st day of
June, 2007 has been rejected under sub-section (1) of section 245D; or
(ii) an application made under section 245C has not been allowed to be
proceeded with under sub-section (2A) or further proceeded with under
sub-section (2D) of section 245D; or
(ii) an application made under section 245C has been declared as invalid
under sub-section (2C) of section 245D; or
[(iiia) in respect of any application made under section 245C, an order
under sub-section (4) (4) of of s section 245D has been passed not
providing for the terms of settlement; or]
(iv) in respect of any other application made under section 245C, an
order under sub-section (4) of section 245D has not been passed within
the time or period specified under sub-section (4A) of section 245D,
the proceedings before the Settlement Commission shall abate on the
specified date.
Explanation. For the purposes of this sub-section, "specified date"
means-
(a) in respect of an application referred to in clause (1), the day on
which the application was rejected;
(b) in respect of an application referred to in clause (ii), the 31st day of
July, 2007;
(c) in respect of an application referred to in clause (iii), the last day of
the month in which the application was declared invalid;
[(ca) in respect of an application referred to clause (iiia), the day on
which the order under sub-section (4) of section 245D was passed not
providing for the terms of settlement;]
(d) in respect of an application referred to in clause (iv), on the date on
which the time or period specified in sub-section (4A) of section 245D
expires.
(2) Where a proceeding before the Settlement Commission abates,
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the Assessing Officer, or, as the case may be, any other income-tax
authority before whom the proceeding at the time of making the
application was pending, shall dispose of the case in accordance
with the provisions of this Act as if no application under section
245C had been made.” (Emphasis supplied)
5.3. The proviso to Section 153 (2) of the Act prescribes the limitation
period of one year from the date of abatement of proceedings for completion of
the assessment proceedings.
5.4. Adverting to the case on hand, it can be seen that the
proceedings against the petitioners commenced with a search and seizure in 2018
and the issue of notices under Section 153 A of the Act in 2019. As such, as of
31.01.2021, the petitioners had a case pending. However, until the Financial
Bill was introduced with effect from 01.02.2021, and thereafter, no applications
for settlement were made by these petitioners. For the first time, they approached
this Court by way of W.P.(MD) Nos. 4661 of 2021, etc., and by an interim order
dated 04.03.2021, their applications were directed to be received. Thereafter, by
an order dated 30.04.2021, the assessment authorities were permitted to proceed
with the assessment, and it was observed that the assessment would ultimately be
subject to the result of the Writ Petitions. It must be noted that the interim order
was only to receive the application and not to proceed with it.
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5.5. After the said interim orders, the Finance Act, 2021 came into force
with effect from 01.04.2021, retrospectively abolishing the ITSC with effect
from 01.02.2021 and constituting an IBS. Only those applications that were
pending up to 31.01.2021 were directed to be transferred to the IBS. Thus, when
the Act came into force, the petitioners had no opportunity to file an application
with the ITSC for consideration by the IBS. When they challenged the
constitutional validity of the provisions, an interim order was granted on
11.06.2021, which is extracted supra.
5.6. The Division Bench specifically considered that until the
provisions are set aside, the constitutional validity should be presumed, and in
that context permitted the assessing authority to go ahead and complete the
assessment; however, it directed that the final order be kept in a sealed cover and
not to publish or implement the same. Accordingly, when the final orders were
passed on 24.06.2021, they were communicated to the petitioners on 25.06.2021.
Obviously, the said act was directly in violation of the interim order. When the
contempt petition was filed, further orders were passed undertaking that the
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assessment orders would not be given effect and the demands would be kept in
abeyance, pending the Writ Petition. The same was expressly approved. Not
stopping with that, it was further held that the limitation period would start only
from the date of disposal of the Writ Petition. The entire order dated 16.07.2021
was extracted supra. Therefore, it can be seen that the order was passed on
24.06.2021 and communicated to the petitioners, and the communication also
received the seal of approval of this Court, with the further embargo to keep the
demand alone in abeyance and safeguard the petitioners' rights with reference to
limitation.
5.7. Thus, it can be seen that on the date on which the assessment orders
were passed, the applications were not made as per the provisions of the Act
before the ITSC or IBS. The right was expressly curtailed by Section 245C only
up to 31.01.2021, and no application was made by the petitioners until the
allowed date. Thus, by exercise of extraordinary Writ Jurisdiction, the
applications were directed to be received. The applications were just received,
and no orders were passed rejecting the applications or proceeding with them
further as per the Scheme of the Act. No such exercise could have been done.
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Everything was dependent upon the interim directions that were issued by the
Courts of Law. Therefore, on the date the assessment orders were passed, it
cannot be said that the exclusive jurisdiction with reference to assessment also
vested with the ITSC/IBS rather than with the respective authorities.
5.8. Though subsequently, when the CBDT issued the press release on
07.09.2021 and the subsequent circular as per the provisions under Section 119
(2) (b) of the Act, the time for filing the applications was extended until
30.09.2021. Still, as per Section 245C of the Act, as originally enacted, no
application could have been made on or after 01.02.2021. Only by virtue of the
Judgment in Jain Metal Rolling Mills' case (cited supra), the said provision was
read down by reading the last date of 01.02.2021 as 31.03.2021, and the
petitioners' right to make an application got crystallized. The petitioners’
contention that, even otherwise, the petitioners had a right cannot be accepted.
5.9. It is only in that context that the petitioners' Writ Petitions
challenging the very same provisions came up for hearing, and Writ Petitions
were also disposed of on the same terms by the Division Bench of this Court on
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21.08.2024. A prayer was made to hold that the assessment orders would not
survive. The said prayer was not granted. However, liberty was granted to the
petitioners to agitate the said issue in the Writ Petitions filed by them
challenging the order of the IBS.
5.10. However, for reasons best known to them, the petitioners chose to
withdraw the Writ Petitions, and the assessment orders were never
challenged in those proceedings. Thus, the petitioners’ applications were
received only on the strength of the interim order, and when the impugned order
of assessment was passed, exclusive jurisdiction never vested in the ITSC/IBS.
With the Finance Act, 2021, coming into force, Section 245C (5) read as follows:
“(5). No application shall be made under this Section on or after 01/02/2021”.
5.11. The petitioners’ applications were not made before 01.02.2021. The
right to make the application itself crystallized only after the Judgment dated
17.11.2023 in Jain Metal Rolling Mills' case (cited supra), whereby the aforesaid
provision was read down and made “on or after 31.03.2021”. By that time, the
assessment orders had already been passed. In those specific writ petitions filed
by the petitioners, the assessment orders were never set aside. Earlier, by the
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Order in the contempt petition, they were validated, the demand was kept in
abeyance, and the petitioners’ limitation was saved until the disposal of the writ
petition. Thus, the petitioners and the department will be bound by the Orders
inter-parties. For the petitioners to file an appeal, the limitation period will run
from the date of disposal of the writ petitions. As a matter of fact, under Section
245HA (2) of the Act, which is extracted supra, it can be seen that once the
proceedings stood abated, the authorities are entitled to proceed as if the
applications were never made.
5.12. Therefore, in this case, jurisdiction never became exclusively vested,
and in view of the peculiar scenario, there was never a case for following the
procedure of rejecting the application or allowing it to proceed further under
Section 245D (1) of the Act. In such a scenario, when the assessment authority
was expressly empowered by the interim orders of the Court, which permitted the
petitioners also to make an application, while directing the authorities to receive
the same, the petitioners, having accepted said orders of the Court, will be bound
by the liberty that is granted by the very same orders of the Court. As such, when
the order of assessment has been passed based on the express liberty that is
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granted by the Court, it cannot now be contended that the authority did not have
jurisdiction.
5.13. With reference to the argument relating to the communication of the
order within a period of one year, the orders were already
communicated, and, in fact, the contempt petition itself was filed aggrieved of the
same. The order passed in the contempt petition does not undo the
communication, nor does it direct the authorities to re-communicate the order
after the disposal of the Writ Petition. On the other hand, only the demand and
enforcement are kept in abeyance, and, in fact, the petitioners were given the right
to challenge the order immediately after the disposal of the Writ Petitions. A
proper reading of the order passed in the contempt petition shows that the period
of limitation for filing the appeal, etc., would start from the date of disposal of the
Writ Petitions in W.P.(MD)Nos.10014, 10019 and 10020 of 2021. Thus, even
though there can be no quarrel over the proposition that an order would come into
effect only after service, in this case, the orders have been served, and the Court
only directed that the demand alone be kept in abeyance. Therefore, the said
contention made by the learned counsel for the petitioners is without any merit.
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F. The Result:
6. For all the above reasons, these Writ Petitions are bound to fail and
accordingly stand dismissed. No costs. Consequently, the connected
miscellaneous petitions are closed.
01.06.2026
Jer (2/2)
Neutral citation : Yes
Note:Registry is directed to type individual cause title for each cases and issue
order copies accordingly.
To
1.The Deputy Commissioner of Income Tax
Central Circle 2, Madurai
Ground Floor, Income Tax Office – Madurai Me
Income Tax Staff Quarters Complex
Kulamangalam Main Road
Meenambalpuram, Madurai, Tamil Nadu – 625 002.
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2.The Assistant Commissioner of Income Tax
Central Circle 2, Madurai
Ground Floor, Income Tax Office – Madurai Me
Income Tax Staff Quarters Complex
Kulamangalam Main Road
Meenambalpuram, Madurai, Tamil Nadu – 625 002.
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W.P.(MD)Nos.10711 to 10716, 5709, 5710, 11470 to 11478 of 2025
D.BHARATHA CHAKRAVARTHY, J.
Jer
Pre-Delivery Order made in
W.P.(MD)Nos.10711 to 10716, 5709, 5710 and 11470 to 11478 of 2025
and W.M.P.(MD) Nos.4171, 4173, 8529 and 8530 of 2025
01.06.2026
(2/2)
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