TaxTMI 
TaxTMI 
2003 (9) TMI 72
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....f section 25 of the Companies Act, 1956. The company carries on business in finance and also deals in shares and securities. It derives share income as a partner of a firm known as Viswa Udyog another concern of Express Newspapers Limited. The company availed of a loan of Rs. 62,30,000 from N. N. Investment Private Limited, a company carrying on the business of financing and which has two associate companies known as Nirmal and Navin Private Limited and Navin Cold Storage Private Limited. The loans were availed of by the company during the financial year 1985-86 ending March 31, 1986, for the purpose of advancing loan in turn to Express Newspapers Limited on short term basis with interest at the rate of 16 per cent. per annum, as against the rate of 15 per cent. per annum paid by the company to its creditor, thus earning an income by one per cent. margin in the payment and receipt of interest. Until the assessment year 1987-88 the company was following its accounting year with a period of 12 months beginning from May 1, of the year and ending with April 30 next year. Since the company decided to follow the regular financial year from May 1, 1986, the assessment of the company for t....
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....spondents Nos. 1 to 3 and Mr. T. N. Seetharam, learned counsel for respondents Nos. 6 to 8. The writ petition against respondents Nos. 4 and 5 was dismissed by the orders of this court dated February 22, 2002. I have also perused the counter affidavit filed on behalf of the second respondent, the Commissioner of Income-tax. Mr. V. G. Ramachandran, learned senior counsel appearing for the petitioners, would submit that the petitioners are not questioning the order of the Settlement Commission on the merits, but the order of the Settlement Commission is questioned on the ground of want of jurisdiction. In this context, learned senior counsel heavily relied upon the judgment of the apex court in CIT v. Express Newspapers Ltd. [1994] 206 ITR 443 and contended that an assessee who makes an application to the Commission without disclosing fully and truly income which has not been disclosed before the Assessing Officer cannot maintain the application and as a corollary, the application is not maintainable. He would also rely upon a Division Bench judgment of the Bombay High Court in CIT v. Income-tax Settlement Commission [2000] 246 ITR 63. It is the admitted stand of the Department th....
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....B. Shreeram Durga Prasad and Fatechand Nursing Das's case [1989] 176 ITR 169 and this proposition of law is also not disputed by learned senior counsel for the petitioners. Equally, the judicial review of this court to interfere in the order of the Settlement Commission is not barred when the order of the Settlement Commission is in contravention of any of the provisions of the Act. The law on this question is settled by the apex court in the judgment in Jyotendrasinhji's case [1993] 201 ITR 611. This proposition of law is also not disputed by learned senior counsel for the petitioners. Equally the power of this court to interfere in the order of the Settlement Commission unless there is patent illegality as held by this court in C. A. Abraham's case [2002] 255 ITR 540 is also not disputed. There is no dispute as to the power of judicial review of this court over the order of the Settlement Commission passed without jurisdiction. In fact the said question came up for consideration before the apex court in Express Newspapers Ltd.'s case [1994] 206 ITR 443. That was a case where the Express Newspapers Limited, a wholly owned subsidiary company of the company, namely, the first pet....
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....om penalty and prosecution. The law on the issue to sustain an application under section 245C(1) of the Income-tax Act is well settled that unless and until the assessee makes full and true disclosure of income which has not been disclosed before the Assessing Officer, it cannot maintain the application. The facts in this case are not disputed inasmuch as the order of the Settlement Commission also proceeds on the basis that the company had not made full and true disclosure of the facts regarding the real nature of the transactions with Express Newspapers Limited and N. N. Investment Private Limited. Sections 245C and 245H of the Act contemplate full and true disclosure of income by the applicant and the manner in which such income has been derived. It is the admitted position on the facts that the company did not make full and true disclosure of income. Having arrived at such finding the Settlement Commission ought to have dismissed the application. Hence the order of the Settlement Commission dated January 13, 1995, is liable to be set aside as bad, illegal and void as the application itself was not maintainable. However, it is the case of the Department that having filed a....
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.... the decision as declared by the apex court is applicable to the pending proceedings before the Settlement Commission. The decision of the apex court, being a declaration of the true and correct position of law becomes applicable to all transactions and proceedings which have not become final and concluded. As a necessary corollary, the true and correct position of law declared by the apex court applies not only to transactions and proceedings subsequent to the decision, but also to transactions and proceedings prior to the decision, but, of course, subject to the rule of finality of proceedings. Since there was no finality arrived at on the application filed by the petitioners, the Commission is bound by the law declared by the apex court in Express Newspapers Ltd.'s case [1994] 206 ITR 443. In this context, useful reference could be also made to the observation in Salmond on Jurisprudence (Twelfth edition) which reads thus: "As we have seen, the theory of case law is that a judge does not make law; he merely declares it ; and the overruling of a previous decision is a declaration that the supposed rule never was law. Hence, any intermediate transactions made on the strength of....