1999 (12) TMI 6 - HC - Income Tax

Court upholds Settlement Commission's orders & block assessment, emphasizing limited scope of review. Correct procedure followed.

The court upheld the Settlement Commission's orders and the block assessment conducted by the Assistant Commissioner, dismissing the writ petitions and ... - Issues Involved:1. Legality of block assessment under Chapter XIV-B of the Income-tax Act.2. Scope of judicial review of the Settlement Commission's order.3. Consideration of undisclosed income versus other income in block assessment.Summary:1. Legality of Block Assessment under Chapter XIV-B:A search was conducted on the residential premises of the assessee on December 14, 1995, revealing investments in movable and immovable properties and benami business activities. A notice u/s 158BC of the Income-tax Act, 1961, was issued, and the assessee declared undisclosed income of Rs.1,50,000. The Assistant Commissioner of Income-tax determined the undisclosed income at Rs.66,58,300 based on available materials. The assessee and his family filed applications before the Settlement Commission, which passed orders on December 21, 1998. The petitioners later filed miscellaneous applications to recompute the undisclosed income, which were rejected by the Settlement Commission on May 14, 1999, as the order u/s 245D(4) had become final.2. Scope of Judicial Review of the Settlement Commission's Order:The petitioners challenged the Settlement Commission's orders, arguing that the block assessment should be confined to income detected from search records. The court noted that the judicial review of the Settlement Commission's decisions is very restricted, focusing on the legality of the procedure rather than the validity of the order. Citing precedents, the court emphasized that judicial review concerns the decision-making process, not the decision itself.3. Consideration of Undisclosed Income versus Other Income in Block Assessment:The petitioners contended that only undisclosed income should be considered for block assessment, and other income should be assessed regularly u/s 143. The court found that the Assistant Commissioner assessed only the undisclosed income as defined u/s 158B(b) and that the Settlement Commission's order was based on the petitioners' applications disclosing full and true income. The court concluded that it could not re-evaluate whether the income assessed was undisclosed or not, as the Settlement Commission followed the correct procedure.Conclusion:The court dismissed the writ petitions and connected miscellaneous petitions, upholding the Settlement Commission's orders and the block assessment conducted by the Assistant Commissioner. The court found no merit in the petitioners' arguments and emphasized the limited scope of judicial review in such matters.