The court emphasized the exclusive jurisdiction of the Interim Board over settlement applications filed after 31.01.2021 and the impact of circulars issued by the CBDT in determining the validity of assessment orders passed during the pendency of such applications.

JUDGMENT :

BHARGAV D. KARIA, J.

1. Learned advocate Mr. B.S. Soparkar for the petitioner tendered the draft amendment. The same is allowed in terms of the draft. To be carried out forthwith.

2. Heard learned Senior Advocate Mr. S.N. Soparkar assisted by learned advocate Mr. B.S.Soparkar for the petitioner and learned Senior Standing Counsel Mr. Varun Patel with learned advocate Mr. Dev D. Patel for respondent No.2.

3. Rule returnable forthwith. Learned advocate Mr. Dev D. Patel waives service of notice of rule for the respondent No.2.

4. Having regard to the controversy involved in this petition in narrow compass, with the consent of learned advocates appearing for the respective parties, the matter is taken up for final hearing.

5. By this petition under Articles 226 and 227 of the Constitution of India, the petitioner has prayed for the following reliefs:

“(a) Quash the order passed by the Respondent No.1 dated 27.12.2023 at Annexure A and Direct the Respondent No.1 to pass a fresh order u/s. 245D(4) in the case of the petitioner on merits and in accordance with law.

(aa) quash and set aside the assessment orders passed by the Respondent No.3 on 27.07.2021 for the Assessment years 2013- 14 to Assessment Years 2018-19 at Annexure CA1, CA2, CA3, CA4, CA5, CA6 and CA7.

(b) Pending the admission, hearing and final disposal of this petition, stay implementation and operation of the impugned order dated 27.12.2023 at Annexure A.”

6. Brief facts of the case are as under :

6.1 The applicant is engaged in the business of share trading activities through stock exchange and outside stock exchange, facilitation of dematerialization of shares held physically, advisory/consultancy services, other ancillary activities connected to shares/stock market/money leading against security obtained. The petitioner derived income from partnership firm (only A.Y. 2019-20) besides income from dividend, capital gains and other sources in other years.

6.2 A search proceedings u/s. 132 of the Income Tax Act, 1961 [for short ‘the Act’] was initiated at the business premises of the petitioner on 06.03.2018.

6.3 A notice u/s. 153A for the A.Y. 2013-14 to 2018-19 and u/s. 143(2) for A.Y. 2019-20 on 22.10.2020 was issued.

6.4 Section 245B of the Income Tax Act, 1961 (for short ‘the Act’) was amended by the Finance Act,2021 which provides that Income Tax Settlement Commission shall cease to operate w.e.f. 1st Day of February,2021. Further, it has also been provided that no application for settlement can be filed on or after 01.02.2021.

6.5 During the pendency of assessment proceedings, the applicant filed petitions before the Income Tax Settlement Commission [‘ITSC’ for short] on 30.03.2021.

6.6 The petitioner upon filing the aforesaid petition, intimated respondent Nos.2 and 3 assessing officer (AO) about the same on the same date by filing Form 34BA to drop the assessment proceedings. Despite the same, the AO completed the assessment proceedings and passed the assessment orders on 27.07.2021 on the ground that the petition was filed before the Hon’ble ISTC after the cessation of settlement commission.

6.7 The aggrieved petitioner has also filed appeal challenging the assessment orders before the Commissioner of Income Tax (Appeals).

6.8 Meanwhile, in order to provide relief to the taxpayers who were eligible to file application as on 31.01.2021 but could not file the same due to cessation of ITSC vide Finance Act,2021, the Central Board of Direct Taxes (CBDT) issued a press release on 07.09.2021 giving taxpayers an opportunity to file application for settlement by 30.09.2021 if the assessee who were eligible to file application for settlement on 31.01.2021 for the assessment years for which the application is sought to be filed and; where the relevant assessment proceedings of the assesses are pending as on the date of filing the application for settlement.

6.9 The petitioner thereafter sent a communication dated 29.09.2021 to respondent no.1 stating that since he has duly sa