Kerala HC Allows Settlement Application Filed Post Cut-Off | Rejects Interim Board’s Strict Limitation View | Covid Extension Orders Apply To Income Tax Settlement Cases
Isabella Mariam
The High Court of Kerala Division Bench of Justice Dr. A.K. Jayasankaran Nambiar and Justice P.M. Manoj held that the appellant is permitted to pursue the settlement application filed on 17.03.2022 before the Interim Board for Settlement. The Court set aside the rejection of the application by the Interim Board and directed that the application be considered on merits for the relevant assessment years. The Bench clarified that the directions issued would not apply in relation to the assessment year 2021–2022, as the appellant did not satisfy the pre-condition for settlement in that year. The Court disposed of the connected writ appeals accordingly.
The writ appeals WA No. 188 of 2025 and WA No. 430 of 2025 were filed against the judgment dated 22.08.2024 of the learned Single Judge in WP(C) No. 44271 of 2023. WA No. 188 of 2025 was filed by the Union of India, while WA No. 430 of 2025 was filed by the assessee. Both appeals involved a common issue and were disposed of by a common judgment.
WA No. 188 of 2025 challenged the learned Single Judge’s conclusion that search proceedings under Section 132 would fall within the ambit of “case” under Chapter XIX-A of the Income Tax Act, 1961. The Court noted that the issue had already been considered in its earlier judgment dated 20.06.2025 in WA No. 2042 of 2024 and connected cases, wherein the Court set aside the learned Single Judge’s finding to that extent and held that the Revenue’s appeals were allowed in part. The Court had also declared that the CBDT order dated 28.09.2021 imposing an additional eligibility requirement as on 31.01.2021 (read as 31.03.2021) was ultra vires its powers under Section 119(2)(b) of the Act.
WA No. 430 of 2025 was filed by the assessee, contending that although notices under Section 153A were received between 31.03.2021 and 30.09.2021, the application for settlement could only be filed on 17.03.2022. The appellant’s counsel submitted that permission to take copies of seized materials and digital devices was granted only on 04.10.2021, after which the settlement application and fees were filed. The application was rejected by the Interim Board for Settlement on 14.12.2023 on the ground that no proceedings were pending as on 31.01.2021.
The appellant relied on an interim order dated 11.03.2022 of the High Court in WP(C) No. 23567 of 2021, permitting provisional filing of the settlement application within seven days from the order date. Accordingly, the application was filed on 17.03.2022.
The Court examined the applicability of the Supreme Court’s orders in Suo Motu Writ Petitions extending limitation periods due to the COVID-19 pandemic, which granted a minimum limitation period of 90 days from 01.03.2022 where limitation expired between 15.03.2020 and 28.02.2022.
The Court recorded: “Inasmuch as WA No.188 of 2025 preferred by the Union of India is concerned, the challenge in the said Writ Appeal has in fact been considered by this Court in a batch of Writ Appeals (judgment dated 20.06.2025 in WA No.2042 of 2024 and connected cases) that were disposed with the following directions.”
It stated: “We set aside the impugned judgment of the learned Single Judge to the extent it holds that search proceedings under Section 132 would also fall within the ambit of 'case' in relation to the respondent assessees for the purposes of Chapter XIX-A of the I.T. Act. The writ appeals preferred by the Revenue are allowed to that limited extent.”
The Court further recorded: “We find that the provisions of the CBDT order dated 28.09.2021, to the extent it lays down an additional condition that the assessees should satisfy the eligibility requirements as on 31.01.2021 (to be read as '31.03.2021'), is ultra vires the power conferred on the CBDT under Section 119(2)(b) of the I.T. Act.”
On WA No. 430 of 2025, the Court stated: “The only distinction that is sought to be made by the appellant in WA. No.430 of 2025 is with regard to the last date for preferring the application before the Interim Board for Settlement, so as to obtain the benefit of the directions in our earlier judgment.”
It recorded: “In this connection, we find that while considering the limitation period specified under the provisions of Chapter XIX of the Income Tax Act dealing with settlement cases, the orders passed by the Supreme Court in MA. Nos.665 of 2021 and 21 & 29 of 2022 (Suo Motu Writ Petitions extending the period of limitation), especially the order dated 10.01.2022, clearly states, inter alia, that 'in cases where the limitation would have expired during the period between 15.03.2020 and 28.02.2022, then notwithstanding the actual balance period of limitation remaining, and all persons shall have a limitation period of 90 days from 01.03.2022'.”
It observed: “Extending the benefit of the aforesaid direction of the Supreme Court to the case at hand, we find that inasmuch as the appellant herein had filed the application for settlement on 17.03.2022, which is well within the time granted by the Supreme Court taking note of the Covid pandemic situation that had arisen in the country, the appellant herein can be permitted to pursue his application that was filed before the Interim Board for Settlement on 17.03.2022.”
The Court directed that WA No. 430 of 2025 was allowed by setting aside the impugned judgment of the learned Single Judge to that extent. It held that the appellant shall be entitled to pursue the application for settlement before the Interim Board for Settlement as directed in its earlier judgment dated 20.06.2025 in WA No. 2042 of 2024 and connected cases.
The Court further directed that the Interim Board for Settlement shall consider the application for settlement filed by the appellant for the assessment years 2015-2016 to 2020-2021 for the purpose of settlement.
It clarified that none of these directions would apply in relation to the assessment year 2021-2022, which was also the subject matter of WA No. 430 of 2025, since the appellant did not satisfy the pre-condition for availing the benefit of settlement for that year.
The Court concluded by disposing of WA No. 188 of 2025 and WA No. 430 of 2025 by following its judgment dated 20.06.2025 in WA No. 2042 of 2024 and connected cases, as modified by the directions issued in this judgment.
Advocates Representing the Parties
For the Petitioners: Shri. Aditya Unnikrishnan, Advocate; Shri. Jehangir D Mistri (Senior Advocate); Shri. R. Sivaramana, Advocate; Shri. Anil D. Nair (Senior Advocate); Smt. Vandana Vyas, Advocate; Smt. B.R. Varshini, Advocate; Smt. Nivedita A. Kamath, Advocate; Smt. Binisha Baby, Advocate; Shri. Harikrishnan K.U., Advocate; Shri. Aravind Rajagopalan Menon, Advocate
For the Respondents: Shri. Navaneeth N. Nath, CGC; Smt. Susie B. Varghese, Advocate; Shri. Jose Joseph, Standing Counsel, Income Tax Department, Kerala
Case Title: Union of India and Ors. vs. Thomas Joseph
Neutral Citation: 2025:KER:47350
Case Number: WA Nos. 188 & 430 of 2025
Bench: Justice Dr. A.K. Jayasankaran Nambiar, Justice P.M. Manoj
