2018 (8) TMI 723 - HC - Income Tax

Court upholds Income Tax Settlement Commission's order on tax disputes for 2008-2013, emphasizing limited judicial review

The court upheld the order of the Income Tax Settlement Commission, dismissing the petition challenging the settlement of tax disputes for Assessment ... Settlement of case u/s 245D - Disclosure of additional income at the stage of 245D(4) - failure to make a true and full disclosure in its application for settlement - genuineness of labour charges claimed - Genuineness of receipt of consideration in the absence of evidence of providing any service - Held that:- This finding of the Commission has not been shown to be perverse in any manner. In the context of the finding of the Commission merely because the Applicant has offered some further amount as income voluntarily at the stage of 245D(4) of the Act, would not ipsofacto lead to a conclusion that there was failure to fully and truly disclose the income in its application for settlement. This move so when the Commission itself records a finding that the disclosure made in the application for settlement is true and full, notwithstanding the offering of further income by the Respondent. Where the view taken by the Commission is a possible view then interference under Article 226 of the Constitution of India in our extraordinary jurisdiction is not warranted. - Decided against the revenue. Issues:Challenge to order of Income Tax Settlement Commission under Section 245D4 of the Income Tax Act, 1961 for settlement of tax dispute for Assessment Years 2008-09 to 2013-14. Grievances include failure to make true and full disclosure, acceptance of expenses as labour charges, and acceptance of receivables without evidence of services rendered.Analysis:1. Disclosure of Additional Income:The petitioner raised concerns regarding the disclosure of additional income at the stage of Section 245D(4) of the Act, alleging a failure to make a true and full disclosure. However, the Commission independently found that there was a full and true disclosure in the application made by the respondent for settlement. The Commission noted that the additional offer made by the respondent did not dilute the character of full disclosure. The court upheld the Commission's finding, stating that the voluntary offer of additional income does not automatically imply a failure to disclose fully and truly. The court emphasized that the Commission's decision was not shown to be perverse, and as long as the disclosure in the application was deemed true and full, the additional voluntary offer did not affect its validity.2. Labour Charges and Receivables:Regarding the acceptance of expenses shown as labour charges and the amount receivable from Mr. M.N. Navale, the Commission accepted the explanations provided by the respondent after considering the submissions and available material on record. The court found that the views taken by the Commission on these issues were not shown to be perverse. It reiterated that interference under Article 226 of the Constitution of India was not warranted when the Commission's views were reasonable and based on available evidence. Therefore, the court upheld the Commission's decisions on these matters, emphasizing that the Commission's decisions were within the realm of possible views and did not warrant judicial interference.3. Legal Parameters for Judicial Review:The court highlighted the legal principles governing the judicial review of decisions by the Settlement Commission. It noted that in the absence of appellate remedy, a Writ Court could not function as an Appeal Court. The court cited precedents to emphasize that the High Court's extraordinary jurisdiction could only be invoked if the Commission's order was without jurisdiction or contrary to the provisions of the Act. The court clarified that its role was to ensure the legality of the decision-making process rather than delve into the merits of the decisions themselves. As long as the Commission's decisions were within the bounds of the law and supported by a possible view, the court would not interfere with them.In conclusion, the court dismissed the petition challenging the order of the Income Tax Settlement Commission, emphasizing that the Commission's decisions were based on reasonable grounds and did not warrant judicial intervention.