TaxTMI 
TaxTMI 
1992 (7) TMI 60
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....s their partners one or some of the following persons or their near relatives Percentage of profit 1. Kanubhai P. Patel 29 2. Manibhai P. Patel 29 3. Satishchandra R. Desai 27 4. Shantilal N. Patel 11 5. Jaykant A. Patel 4 The constitution of the said firms was arrived at in such a manner that the family of each of the aforesaid five persons would be a sharer in the profits of the said firms substantially as set out above. The names of the said partnership firms were as follows 1. Pioneer Builders. 2. Rolan Construction Company. 3. Parul Corporation. 4. Paras Packaging Industries. 5. Swadeshi Industries. 6. Pioneer Brick Works. 7. Patel Desai and Company. 8. Premier Paper Industries. 9. Pioneer Transport Company. 10. Premier Plastic Industries. 11. Pioneer Industries. It is the case of the petitioners that the business of the said eleven firms was supervised and controlled by the aforesaid five persons. In substance, 30 per cent. share belonged to the Desai group and 70 per cent. share belonged to the Patel group. Search and seizure proceedings under section 132 of the said Act were initiated by the Income-tax Department o....
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....ber 31, 1990, and the last application for settlement was moved before the Commission by Kanubhai P. Patel, individual, on February 15, 1990. Thus, before the Settlement Commission, there were on the anvil, in all, eight applications moved under section 245C, six by the firms, the seventh by the association of persons and the eighth by Kanubhai P. Patel in his individual capacity. So far as the remaining five firms were concerned, they did not file such applications because the additional amount of income-tax payable on the income disclosable by them in such applications presumably might not have exceeded Rs. 50,000 for each of these firms and hence they were not before the Commission. So far as the aforesaid eight applications were concerned, the Settlement Commission which is common respondent No. 1 in this group of petitions, after having received objections from the Commissioner, set down the applications for hearing for deciding whether these applications were required to be admitted or not and that exercise was undertaken by the Commission under section 245D(1) of the Act. The Settlement Commission heard the parties on November 14, 1991, and, by the impugned order dated Decem....
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.... Commission can be made the subject-matter of an appeal by special leave under article 136 of the Constitution and, according to the learned advocate of the respondents, that would be the only remedy available to the petitioners if at all they are aggrieved by the order of the Settlement Commission and they cannot move a writ petition under article 227 of the Constitution before this court. Mr. Kaji for the petitioners has vehemently opposed this preliminary objection. In our view, there is no substance in this preliminary objection based on the aforesaid two grounds. So far as the first ground of the preliminary objection is concerned, it has to be stated only to be rejected. Section 245-I reads as under : " Every order of settlement passed under sub-section (4) of section 245D shall be conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwise provided in this Chapter, be reopened in any proceeding under this Act or under any other law for the time being in force." A mere look at the said provision shows that what is made conclusive is the order of settlement passed under sub-section (4) of section 245D. The present order pas....
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....e 227 is not available to a party to challenge the order of the Settlement Commission and its only remedy is to go under article 136. Such type of decision is not rendered by the Supreme Court in any of the aforesaid cases on which strong reliance was placed by Mr. Shelat in support of the second ground of preliminary objection. He also invited our attention to the decision of the Delhi High Court in the case of Deen Dayal Didwania v. Union of India [1986] 160 ITR 12, wherein the Delhi High Court took the view that the High Court cannot direct the Settlement Commission to decide pending settlement applications expeditiously as it is for the Settlement Commission to proceed in accordance with law under the Act. Even this judgment cannot be of any assistance to Mr. Shelat as it is not an authority for the proposition about the exclusion of jurisdiction of the High Court under article 227 which is being canvassed by Mr. Shelat in the present proceedings. Consequently, even the second ground of preliminary objection is found to be without any merit and, consequently, the preliminary objection against the maintainability of these petitions has to be overruled. That takes us to the me....
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....atus of the partnership firms was not in dispute. This argument was repelled by the Commission by holding as under : " Implicit in the stand of the applicants and the arguments of Shri Thakkar is the fact that the association of persons is an afterthought. In the scheme of settlement, the applicant is expected to make a clean breast of his affairs and come out with a true and full disclosure. Persons taking contradictory alternative pleas forfeit the right to have their cases settled by the Settlement Commission. It is difficult to appreciate this line of reasoning. It reflects a patent error on the part of the Commission on the question of jurisdiction which it has to settle cases placed before it. Even if the association of persons might have put forward a claim which was a fictitious claim, the same could not have any adverse impact on the claims for settlement put forward by the six firms which were given due registration by the Department and whose status was never challenged by the Department. May be, their claims for settlement on adjudication may not be found to be valid, wholly or partially. That is a matter of merits. But the Commission could not have made short wor....