TaxTMI 
TaxTMI 
2015 (2) TMI 1184
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.... The search and seizure operation was carried out on the respondent No.1 company at the business premises as well as the residential premises of the Directors of Company. Thereafter, the assessment of the relevant Assessment year from 2002 - 03 to 2006 - 07 had been completed under Section 153A/153C and assessment proceedings for the Assessment Years 2007 - 08 and 2008 - 09 is pending due to stay granted by the Apex Court in Petition (S) for Special Leave to Appeal (C) No (s).18937/2012. 4. During the course of the assessment proceedings the Assessing Officer made a reference under Section 92 CA to the TPO after taking approval of Commissioner of Income Tax - I, Indore, for the assessment year 2007-08 & 2008-09. 5. The TPO has forwarded a copy of order under Section 92CA of the Act dated 29.10.2010 to the Assessing Officer as well as respondent No.1 company separately for the assessment year 2007 - 08 & 2008 - 09. 6. The respondent No.1 company filed writ petition bearing Nos.2229/2011 & 2230/2011 for both the Assessment years before this Court on 14.5.2012. This Court dismissed the writ petitions on account of alternative remedy. The assessing company did not accept the a....
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....ndore with final opportunity to furnished the report of Rule 9 of SCP Rule 1997 on or before 12.1.2015. It is also stated by the Settlement Commission in its letter that "please note that, in case no report is received in this case on or before 12.1.2015, the Commission shall proceed further without the report to initiate 245D(4) proceeding". The department being aggrieved by order dated 18.8.2014 and communication dated 24.9.2014 has prayed for quashment of the same. 13. On 9.1.2015 this court issued show cause notice to the respondent No.1 and also passed an interim order staying the further proceeding pending before the respondent No.2 in respect of assessment year 2007 - 08 to 2014 - 15 until further orders from this court. 14. The application for vacating stay has been filed by the respondent No.1 - company on the ground that order dated 18.8.2014 is only an interim order and a final order will be passed by the Settlement Commission after examination of the records, considering the report of the Commissioner, and the material brought on record before the Settlement Commission. The Settlement Commission has a jurisdiction to provide for the terms of the Settlement includi....
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....jection was filed by the department nor they brought to the knowledge of the Hon'ble Suprme Court about the order dated 18.8.2014 and 24.9.2014. He has also drawn our attention to the report dated 18.9.2014 (Annexure P/8). Para 2.0, 2.1, 3,4,5 and 7 are relevant which reads as under :- "2.0 Validity of application for the relevant years: Search u/s. 132 of the I.T. Act 1961was conducted in the case of the above mentioned assessee group namely 'Bhatia Group' on 25.9.2007. Thereafter statutory notices were issued and served upon the assessee for previous years and also for the A.Ys.2007 - 08 and 2008 - 09. In the Block period of the case, Assessment Years 2007-08 and 2008 -09 are involved. A.Y. 2007 - 08 is covered under the provisions of Section 153A and A.Y. 2008 - 09 being the search year is covered u/s. 143(2)/142(1) of the Act. The assessee had filed its returns of income in response to the statutory notices issued under the provision of Income Tax Act. The assessment proceedings are pending in the case of assessee for A.Y. 2007 - 08 and 2008 - 09 because proceeding of scrutiny assessment have been stayed by the Hon'ble Supreme Court and also by the High....
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....ioner of Income Tax (TPO), Ahemedabad, which was referred to the TPO vide letter dated: 20.12.2012 after obtaining approval of the CIT-I, Indore The relevant letter is enclosed as per annexure-E. 2012-13 143(3) As above Notice u/s.143(2) for the A.Y. 2012-13 issued on 12.8.13. Matter has to be referred to the Addl. Commissioner of Income Tax (TPO), Ahemedabad. It will be sent shortly. 2013-14 143(3) As above Notice u/s.143(2) for the A.Y.2013-14 has been issued on 2.9.2014 Case for the A.Y. 2013-14 has been selected for scrutiny assessment in the month of September 2014 and statutory notice u/s. 143(2) has been issued which was duly served to the assessee. 2014-15 As above For A.Y. 2014-15, the proceedings are pending as defined in Explanation (iv) to 245A(b) of the Act. Assessee has filed the application with Settlement Commission on 5.8.2014 u/s.245C. 3.0 Correctness of additional tax interest paid by the applicant: The assessee has made disclosure of additional income of Rs. 18,93,19,340/- before the Hon'ble Settlement Commission. On this additional tax is Rs. 5,25,30,036/- and interest thereon is Rs.3,....
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....sp; of COAs Payment of freght Purchased and sale of coal Disallowance u/s. 14A Disallowance of deferred revenue exp. Indenting Commission Adho- Disclosure Total Amount () 2007-08 6,72,55,707 -- - 81,139 - 2,00,000 50,00,000 7,25,36,846 2008-09 - - - 1,00,442 - 3,00,000 50,00,000 54,00,442 2009-10 --- 31,40,889 -- 45,897 -- 7,50,000 50,00,000 89,36,786 2010-11 --- 1,80,74,108 3,78,95,937 - &nbs....
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.... 6.0. It is further requested that the Hon'ble Supreme Court and Hon'ble High Court of M.P. through their aforesaid orders have stayed the assessment proceedings in the case. As such, the matter is sub judice. Hence, it is requested that the proceedings before the Settlement Commission may kindly be kept in abeyance till the matter is decided by the Hon'ble Courts. 6.1 The Assessing Officer, i.e. ACIT-3(1), Indore and JCIT, Range-3, Indore have also opined as per above. Reports of the JCIT/AO are enclosed herewith. 7.0 Looking to the sensitivity of the case; the case record is being sent personally by an Income Tax Inspector deputed by the Department. Submitted for kind perusal. 17. The procedure prescribed is that on receipt of application by the Settlement Commission, he has to issue notice to the applicant within 7 days and on hearing the applicant an order has to be passed under Section 245 D(1) rejecting or allowing the application to be proceeded with. At this stage, no hearing is required to be given to the commission of Income Tax and only the applicant has to be heard. 18. In the present case, the Settlement Commission called for a report ....
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.... second declaration cannot be the ground for admitting the application under s. 245D. Since this SLP is filed only against the order of the Settlement Commission admitting the application of the assessee under s. 245D, we do not wish to interfere at this stage. However, we make it clear that on the point of maintainability of the application, it would be open to the Department to raise the contention before the Settlement Commission who would be entitled to examine that question at the final hearing of the matter. 21. The Division Bench of Delhi High Court in the case of Commissioner of Income -tax v/s. Income Tax Settlement Commission, 2013 (35) Taxmann.com 56 (Delhi) has held the following in para 22, 24, 25 and 34 which reads as under :- 22. From the above, it is clear that in True Woods Pvt. Ltd. (supra), a specific argument had been raised on behalf of the Revenue that it was incumbent upon the Settlement Commission to record a specific finding to the effect that the applicant had made a full and true disclosure before it admitted the application or took any further steps on the basis thereof. This argument was rejected by the Division Bench. The Division Bench was of th....
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....ith the impugned orders. However, we need to examine the decision of the Supreme Court in the case of Ajmera Housing (supra) which has been strongly relied upon by the learned counsel for the petitioner. In fact, the learned counsel for the petitioner went to the extent of submitting that in view of the decision of the Supreme Court in Ajmera Housing (supra), the orders/decisions in K. Jayaprakash Narayanan (supra) and True Woods Pvt. Ltd. (supra) would no longer be good law. 25. In Ajmera Housing (supra), an order had been passed by the Income Tax Settlement Commission under Section 245D(1) on 17.11.1994, allowing the settlement application filed on behalf of the assessee to be proceeded with. That order was not challenged by the Revenue. The Settlement Commission proceeded with the said settlement application and passed a final order under Section 245D(4) of the said Act on 29.01.1999. That settlement order was challenged by the Revenue before the Bombay High Court which set aside the same on, inter alia, the ground that no finding had been returned by the Settlement Commission as to whether there was a full and true disclosure of income on the part of the assessee/applicant. ....
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....mmission for hearing parties afresh and to pass orders as per law. Facts and circumstances noted in respect of writ petition No. 2191 of 1999 are also relevant for the remaining writ petitions and, therefore, it will be necessary that the final orders passed in all these proceedings should be set aside." 34. The learned counsel for the petitioner had also taken a point that the settlement applications of respondents 3 and 4 had been rejected for failure to pay the additional tax and therefore the subsequent applications of the said respondents 3 and 4 filed on 23.11.2012 ought not to have been entertained. In our opinion, the learned counsel for the respondents 2 to 5 has given a complete answer to this argument. He has referred to Section 245K(2) of the said Act which stipulates that where a person has made an application under Section 245C on or after the first day of June, 2007, and if such application has been allowed to be proceeded with under Section 245D(1), such person shall not subsequently be entitled to make an application under Section 245C. It was contended by the learned counsel for the respondents 2 to 5 that this bar from making another application under Section ....
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....rse. 2. The Commission has accordingly held that the application filed by the Second Respondent is not an invalid application and should be allowed to be proceeded with further. Following the order which was passed by the Settlement Commission on 29 August 2013, further hearings took place before the Commission on 19 September 2013 and 7 October 2013. The grievance of the Petitioner is that the Commission has without ordering an enquiry by the Commissioner under Section 245D(3), directly proceeded under sub-section (4) and a letter was received from the Directorate of Investigation of the Settlement Commission on 4 October 2013 requiring the inspection of the factory premises of the Second Respondent. The contention of the Revenue is that in the present case it was necessary for the Settlement Commission to cause the Commissioner to make or cause to be made a further enquiry or investigation and to furnish a report on the matters covered by the application to the Settlement Commission. 3Section 245D(3) provides as follows : "(3) The Settlement Commission, in respect of - (i) an application which has not been declared invalid under sub-section (2C); or (ii) an appl....
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....ssion, and during the course of the proceedings, the Settlement Commission would apply its mind to that aspect. As we have noted earlier, by a letter dated 3 October 2013 to the Settlement Commission, the Commissioner of Income Tax (Central) Pune has drawn the attention of the Commission to the specific issues on which a further enquiry or investigation under Section 245D(3) would be necessary. 6. Sub-section (4) of Section 245D provides as follows : "(4) After examination of the records and the report of the Commissioner, if any, received under - (I) sub-section (2B) or sub-section (3), or (ii) the provisions of sub-section (1) as they stood immediately before their amendment by the Finance Act, 2007, and after giving an opportunity to the applicant and to the Commissioner to be heard, either in person or through a representative duly authorised in this behalf, and after examining such further evidence as may be placed before it or obtained by it, the "Settlement Commission may, in accordance with the provisions of this Act, pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case no....
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....ement Commission are wide. Finally, it may be necessary to note that under sub-section (4) the Settlement Commission has to pass an order in accordance with the Act as it thinks fit on matters covered by the application. The Settlement Commission may also pass an order on any other matter relating to the case not covered by the application, but which has been referred to in the report of the Commissioner. Hence, if the Settlement Commission intends to pass an order in respect of any other matter which has not been referred to in the application, that matter must be of a nature such that it is referred to in the report of the Commissioner. At this stage, it would also be necessary to advert to the provisions of subsection (2) of Section 245F under which the Settlement Commission has exclusive jurisdiction to exercise the powers and to perform the functions of the Income Tax authority under the Act, where an application made under Section 245C has been allowed to be proceeded with under Section 245D, until an order is passed under sub- section (4) of Section 245D. This is, however, made subject to the provisions of sub-section (3). Consequently, where the Commission in the course ....
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....ous circulars whereby restraining the department officials to file appeals and further appeals in all and sundry cases recognising futility of such exercise may be noticed. A close perusal of the order passed by the Settlement Commission, both at the stage of admission and also at the stage of passing of the final order, we find, as a matter of fact, ample opportunity was given to the Department to file their objections and also the representatives of the department were heard before passing the orders and in that view of the matter, we are unable to concur with the contention of the learned counsel for the petitioner that the order is vitiated on account of violation of principles of natural justice. Inasmuch as we are satisfied that it was within the discretion of the Settlement Commission at the stage of Section 245D(1) of the Act to admit a case for consideration based on the prima facie view, the aspect of admission of a case by the Settlement Commission except in exceptional circumstances cannot be the subject matter of a judicial review. This becomes clear from the law laid down in catena of judgments with reference to the restricted scope of interference by the Courts even ....
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.... v/s. Income Tax Settlement Commission (ITSC), 2013 (40) taxmann.com 201 (Bombay), Commissioner of Income-tax v/s. Godwin Steels P. Ltd, 2013 (353) ITR 353 (Delhi), Hassan Ali Khan v/s. Settlement Commission, 2008 (168) Taxman 78 (Bom), Commissioner of Income-tax v/s. Income-tax Settlement Commission & Anr., 2009 (310) ITR 10 (Mad) and Commissioner of Incometax v/s. Om Prakash Mittal, 2005 (273) ITR pg 326 (SC). 27. To counter the aforesaid allegations learned counsel for the respondent No.1 has drawn our attention to Annexure P/1, the stand taken by the department. Statutory report which is at page 53 and para 3.0 and 5.0 of the report. His contention is that no notice to either side is required at the time of considering the application. The rule of the department will start one the application is accepted and notice is issued to them. At the time of admission no objection of any kind was raised as is evident from the report which has been reproduced in the preceding paragraph and submits that interest of the department is well protected. The department just to linger on the proceeding before the Settlement Commission has filed this writ petition whereas they can raise all the....