- (1.) The batch of cases concerns Section 245-D of the Income Tax Act, 1961 as it stood prior to 1991 and thereafter, prior to the amendment in 1991 Sections 245- d (1) and (1-A) read thus: "245-D.(1) On receipt of an application under Section 245-C, the Settlement Commission shall call for a report from the Commissioner and on the basis of the materials contained in such report and having regard to the nature and circumstances of the case or the complexity of the investigation involved therein, the Settlement Commission, may, by order, allow the application to be proceeded with or reject the application : Provided that an application shall not be rejected under this Sub-section unless an opportunity has been given to the applicant of being heard. (1-A) Notwithstanding anything contained in Sub-section (1) , an application shall not be proceeded with under that Sub-section if the Commissioner objects to the application being proceeded with on the ground that concealment of particulars of income on the part of the applicant or perpetration of fraud by him for evading any tax or other sum chargeable or impossible under this Act, has been established or is likely to be established by any Income Tax Authority, in relation to the case : Provided that where the Settlement Commission is not satisfied with the correctness of the objection raised by the Commissioner, the Settlement Commission may, after giving the Commissioner an opportunity of being heard, by order, allow the application to be proceeded with under Sub-section (1) and send a copy of its order to the Commissioner. "by the amendment in 1991, Sub-section (1-A) was omitted and Sub-section (1) reads thus : "245-D.(1) On receipt of an application under Section 245-C, the Settlement Commission shall call for a report from the Commissioner and on the basis of the materials contained in such report and having regard to the nature and circumstances of the case or the complexity of the investigation involved therein, the Settlement Commission may, by order, allow the application to be proceeded with or reject the application : Provided that an application shall not be rejected under this Sub-section unless an opportunity has been given to the applicant of being heard: Provided further that the Commissioner shall furnish the report within a period of one hundred and twenty days of the receipt of the communication from the Settlement commission in case of all applications made under Section 245-C on or after the date on which the Finance (No. 2) Act, 1991 receives the assent of the President and if the Commissioner fails to furnish the report within the said period, the Settlement Commission may make an order without such report. "
(2.) The Respondents in each of these appeals had filed applications under Section 245-C before the Settlement Commission. The Settlement Commission had, under the provisions of Section 245-D, called for a report from the Commissioner and the Commissioner had objected to the applications being proceeded with. The objections of the Commissioner were upheld and the applications were not proceeded with. After the amendment in 1991 of Section 245-D, whereby Sub-section (1-A) was omitted altogether, the Respondent made fresh applications to the Settlement Commission in regard to the same years for which they had applied earlier and the settlement Commission entertained these applications. Its Full Bench in birumal Gaurishankar Jain and Co. v. Income Tax Settlement Commission [ (1992) 195 ITR 792 (ITSC) ] found that, having regard to the omission of Subsection (1-A) as aforestated, the Settlement commissioner was entitled to do so. The Union of India is in appeal against the entertainment of the applications of the Respondents as aforestated.
(3.) On a previous occasion, time was sought by the Union of India to segregate those cases in which the applications had been rejected only on the ground of the Commissioner's objection under the said Sub-section (1-A) from those where the settlement Commission had rejected the applications for the reasons that are stated in Subsection (1).;