TaxTMI 
TaxTMI 
2016 (8) TMI 817
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.... Settlement Application under Section 245C(1) of the Act on 30.07.2004 for settlement of its case for the block period 01.04.1996 to 13.08.2002. The Settlement Application was numbered and after hearing the petitioner, the Commission passed an order under Section 245D(1) of the Act, dated 26.04.2005, rejecting the Settlement Application. Similarly, the Settlement Applications filed by the other petitioners were also rejected and challenging the same, these Writ Petitions have been filed. 3. Before I go into the contentions raised by the parties, it would be necessary to take note of the following facts:- The petitioner M/s.Tharakan's Royal Jewellery is a partnership firm engaged in the manufacture and sale of gold and silver ornaments at Kunamkulam Trichur District, Kerala State. It is stated that the firm consists of about 13 partners, who admittedly, belong to the same family i.e., they are brothers and their respective spouses. It is stated that the business activities of the brothers and their spouses are manufacture and sale of gold and silver ornaments under the names of Tharakan's Royal Jewellery, Kunnamkulam, (Petitioner) Tharakan's Royal Jewellery, Trichu....
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....ow the determination of undisclosed income involves complexity of investigation. Therefore, it is submitted that the Commission ought to have allowed the matter to be proceeded with. The learned counsel referred to Section 245D of the Act, as it stood at the relevant point of time and submitted that the three factors mentioned therein have to be taken into consideration and the Commission has sufficient powers to call for the relevant records from the Commissioner. After examination of the records, it may direct the Commissioner to make further enquiry or investigation and furnish report and this power has been conferred on the Commission in terms of sub-section (3) of 245D of the Act and therefore, factually since there is complexity of investigation, the Commission erred in not entertaining the application. Further, it is submitted that the Commission erred in observing that additional income offered in the application is not prima facie full and true without considering the facts of the case. Therefore, the learned counsel submitted that the impugned order may be set aside and the Commission may be directed to allow the application to be proceeded with. The learned counsel place....
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.... the order of rejection of the application by the Commission was erroneous. Further, it is submitted that a bare reading of the Section 245D(1) of the Act, clearly indicates that there are three circumstances under which the Settlement Commission can entertain an application for settlement viz., (1) on the basis of the materials contained in the Commissioner's report; (2) having regard to the nature and circumstances of the case; or (3) the complexity of the investigation involved therein. The facts and circumstances set out in paragraphs 5 to 5.2, of the impugned order of the first respondent Settlement Commission and the submissions of the departmental representative before the Settlement Commission recorded in paragraph 6 of the impugned order regarding suppression of stocks and unaccounted investments and seizure of huge unaccounted stock will themselves indicate that the Settlement Applications deserves to be admitted in order to determine the undisclosed income in a realistic and reasonable manner and the rejection of the Settlement Application was unwarranted. 7. Further, it is submitted that the petitioner had filed a 'NIL' return of income to comply with t....
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....ch such income has been derived, the additional amount of income-tax payable on such income and such other particulars as may be prescribed, to the Settlement Commission to have the case settled and any such application shall be disposed of in the manner hereinafter provided. 11. The Settlement Commission has rejected the petitioner's application by the impugned orders, the correctness of which are being tested in these Writ Petitions. The submission made by the Department representative before the Commission that the undisclosed income could have been offered by the petitioners before the Assessing Officer, was found to be of considerable force. The Commission was of the view that determining the petitioners' income for the block period based on the aggression of their net wealth and cash flow statement does not present any complexity of investigation and that all the petitioners have rushed to the Commission soon after filing their block returns declaring NIL income and this buttress an attitude of non-cooperation with the department on the part of the petitioners and appears to be an attempt to obstruct the department's enquiry and examination pursuant to the fact....
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....ion making process and not with the merits of the order passed by the Settlement Commission. 15. Bearing in mind the above legal principles, I proceed to examine the contention raised by the petitioners. The Commission, on examination of the facts, the Commissioner's report, the nature and circumstances of the case, thought fit to reject the applications, as it is not a case worth to be proceeded with. The specific finding of the Commission is that there is no complexity of investigation involved. The learned counsel for the petitioner sought to project the complexity of the case by referring to the number of firms, which were carrying on business and the number of partners. Would this factor alone lead to a complexity of investigation. 16. The Commission in the impugned order took note of the submission of the Revenue that there was a large scale suppression of stock deducted at the time of search and unaccounted gold ornaments were seized, other documents relating to unaccounted investments were seized and the partner of Dix Francis admitted deriving undisclosed income in his sworn statement recorded at the time of search and the subsequent retraction after nearly a yea....
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....45D of the Act gives jurisdiction to the Settlement Commission to proceed or not to proceed with the Settlement Application filed before it, the High Court has no jurisdiction to direct the Settlement Commission to proceed expeditiously with the application submitted by the petitioner under Section 245C of the Act. 20. Thus, Courts have shown restraint in the matter and refused even to direct the Commission to expedite the process. If such is the position of law as propounded in the above referred decisions, the question would be as to whether this Court should exercise its jurisdiction and interfere with the impugned order. Considering the power granted to the Commission under Section 245D(1) coupled with the law referred to in the preceding paragraphs, the only answer to the question should be in the negative. The reasons accorded by the Commission will not be substituted by a Writ Court, more so when there is no allegation of violation of principles of natural justice nor any plea of malafide raised by the petitioners. 21. In my view, merely because there are number of partners and several firms, itself will not make the matter complex. The expression complexity of investi....
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....itioner's had filed a NIL return of income to comply with the technical requirement of clause (a) of the proviso to Section 245C(1). It is the submission of the learned counsel that in all the search and seizure operations, the assessees, who proposed to file application before the Settlement Commission would file NIL returns. 25. In my view, the contention of the petitioner that NIL return has been filed to comply with the technical requirements, cannot be countenanced. Section 245C(1) of the Act, states that an assessee may at any stage of the matter relating to him, make an application containing full and true disclosure of his income, which has not been disclosed before the Assessing Officer, explaining the manner in which such income has been derived, additional amounts of income tax payable on such income and such other particulars, as may be prescribed to the Settlement Commission to have the case settled. To be entitled to file such an application under sub-section (1) of Section 245C, the assessee is required to comply with the conditions provided in the proviso, which are as hereunder:- (a) the assessee has furnished the return of income which he is or w....