TaxTMI 
TaxTMI 
2021 (4) TMI 1038
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....ed as the facts in detail were adjudicated by the Settlement Commission by providing an opportunity to the petitioner/Department. The question of fact adjudicated by the Settlement Commission cannot be re-adjudicated in a writ proceedings under Article 226 of the Constitution of India. The nature of proceedings under Section 245C of the Income Tax Act is for settlement of disputes. Once the settlement of disputes are finalized, then there is no scope for entertaining the writ petition under Article 226 of the Constitution of India. The learned counsel for the second respondent cited the judgments in support of his arguments that no writ can be entertained against the order of the Settlement Commission, if the facts in detail were adjudicated by the Settlement Commission with reference to the documents and evidences produced by the parties along with the application filed under Section 245C of the Income Tax Act. In this regard, the learned counsel for the second respondent cited the judgment in the case of JYOTENDRASINHJI vs. S.I.TRIPATHI reported in [1993] 68 Taxman 59(SC). The Apex Court formulated a principle stating that "whether only ground upon which either High Court under A....
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.... as the present writ petition is concerned, the writ petitioner/Department could able to establish that there was seizure conducted and during seizure, large quantity of account books and incriminating evidences were recovered. Those evidences are to be considered for the purpose of assessment under Section 153A of the Act and the Settlement Commission, without considering the fundamental powers of the Assessing Officer, formed an opinion and settled the matter, which is impermissible, in view of Section 245(C) of the Income Tax Act. Thus, the very contention of the second respondent that the writ petition is not maintainable deserves no merit consideration. 5. This Court is of the considered opinion that the maintainability of the writ petition is to be considered at the first instance as the same has been raised by the second respondent. All the writ petitions are entertainable under Article 226 of the Constitution of India. No writ petition can be dismissed as not-maintainable. The powers of the High Court under Article 226 of the Constitution of India are wider enough to provide complete justice to the litigants, who are all approaching the High Court. Thus, the concept of n....
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.... the purpose of procedure of settlement of application under Section 245C and not for reasssessment of tax of a particular year which is vested with the Assessing Authority". 8. Relying on the above judgments, the learned Senior Standing Counsel contended that the writ petition is maintainable and therefore, the issues are to be adjudicated regarding the manner in which the decision was taken by the Settlement Commission and the decision making process adopted with reference to Section 245C of the Income Tax Act. 9. This Court is of the considered opinion that Section 245(C) of the Income Tax Act enumerates that "An assessee may, at any stage of a case relating to him, make an application in such form and in such manner as may be prescribed, and containing a full and true disclosure of his income which has not been disclosed before the Assessing] Officer, the manner in which 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". 10. A reading of the sectio....
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.... various other factors. Thus, the scope of Section 245C of the Income Tax Act cannot be compared with the regular assessments to be made in accordance with the procedures contemplated under the Act nor Section 245(C) can be tagged along with the regular provisions for the purpose of settling the disputes between the assessee and the Department. 12. In a common parlance, the settlement of disputes are possible, only if there is a consensus between the parties to the disputes. The dictionary meaning of "settlement" would show that the settlement can be made, if the difference between the parties are narrowed down. Undoubtedly, the Settlement Commission has got certain powers to settle the issues. However, such power of settlement is absolutely guided by the provision itself. That is the reason why the proviso clauses are provided under Section 245(C). The proviso clause stipulates that no application shall be made unless certain terms and conditions are fulfilled. But Section 245(C)(1) provides that it is a pre-condition to entertain an application that the assessee must disclose full and true facts and the evidence. Thus, Sub-clause (1) to Section 245(C) is the preliminary req....
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....ncome is required to be further disclosed in respect of some issues because there seemed to be a possibility that perhaps there could be a component of income arising out of the transactions concerned. It was only to cover such a possibility that we have directed further disclosure to be made. In respect of most of the issues, there was no evidence to conclusively establish that there had been any under disclosure of income. The Applicant also agreed to abide by our directions for further disclsure not because she accepted any understatement of income but basically with a view to bring quietus to the matter and in the spirit of settlement. In these circumstances, we find that it cannot be said that the disclosure of income by the Applicant was not full and true. Thus the Applicant has satisfied the requisite conditions prescribed u/s.245H of the Act. Accordingly we allow the prayer of the Applicant for immunity from penalty and prosecution under the Income Tax Act only so far as the same relate to issues dealt with in this order of settlement." 16. A perusal of the above findings regarding full and true disclosure reveals that the Settlement Commission itself is doubtfu....
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....f the Income Tax Department. In other words, what is not contemplated under Section 245C and 245D cannot be conferred on the Settlement Commission by the Courts nor the Settlement Commission is competent to usurp the powers. Undoubtedly, the Settlement Commission has to consider the mixed question of law and facts. But, while considering the same, the Commission is not competent to exercise the powers and the procedures contemplated beyond the scope of the provisions of the Act. Thus, the powers of the Settlement Commission to deal with facts, circumstances in consonance with the provisions of the Act are permitted. However, the Settlement Commission cannot make an assessment or exercise the powers conferred on the other Authorities under the provisions of the Act. 19. As far as the original power of the Assessing Officer under Section 153(A) of the Act is concerned, the Division Bench of this Court in the case of CANARA JEWELLERS vs. SETTLEMENT COMMISSION reported in [2009] 184 Taxman 491 (Madras) held that "the Settlement Commission is empowered to have all the powers which are vested in an income-tax Authority under the Act, in addition to the power conferred under Chap....
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....t. 23. In the present case, the petitioner could able to establish that they have made all the particulars before the Settlement Commission regarding the seizures made and the books of accounts and incriminating evidences collected from the premises of the second respondent. The detailed working of each year were submitted by the Department on 25.07.2013 before the Settlement Commission. Accordingly, the petitioner/Department found that there is a difference of more than 11 crores in disclosing the true and full income of the second respondent. When such a dispute is raised, then the Settlement Commission ought to have allowed the Assessment officer to make a fresh assessment with reference to the newly recovered materials under Section 153A of the Act. It is improper to settle the issues despite the fact that there are controversies regarding the true and full disclosure of income. This being the mixed question of law and fact, the High Court is well within its powers to entertain the writ petition under Article 226 of the Constitution of India, in view of the fact that the point of jurisdiction as well as the powers of the Settlement Commission is raised as a ground for filing....
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.... is an enabling provision to settle the dispute between the parties. Therefore, law expects that the parties, who are approaching the Settlement Commission by way of application, must disclose full and true income in the event of any difference or confrontation in this regard such an application for settlement cannot be entertained. Contrarily, the Assessing Officer must be permitted to make regular assessment of income under Section 153A of the Act. It is further contended that the differential amount of income is crossing Rs. 25 Crores and all these facts were placed before the Settlement Commission by the Department. In this regard, it is contended that the Settlement Commission has committed an error in adopting the decision making process, as the process adopted is totally in contravention to the facts and circumstances established by the Department and further, such facts and circumstances are not correlating with the application filed by the assessee under Section 245C of the Act. When there are discrepancies and doubt arises with regard to the true and full disclosure of income, then the natural course of action would be that the Assessing Officer must be permitted to ma....
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....tlement Commission more specifically, the findings from paragraphs 6.3 to 6.6, which are all extracted hereunder:- "6.3. Cash amounting to Rs. 96,44,870/- was found during the search though the cash book showed a balance of only Rs. 3,26,710/-. It has been claimed that certain sales had been effected prior to the date of the search which had remained to be entered in the books of account. Such unrecorded sales proceeds amounting to Rs. 62,71,694/- received by way of cash are claimed to represent a part of the cash found during the search. It was argued that credit should be given for the same. The learned AR pointed out that the physical stock in the shop at the time of the search was less than the stock recorded in the other set of books. This indicates that there must have been some sales, in respect of which bills had remained to be issued. While this explanation may perhaps be true but the fact remains that no evidence was found during the search which establishes the fact that any sales had remained to be entered in the books. Hence we are of the view that there is no clinching evidence to support the explanation for excess cash amounting to Rs. 62,71,694/-. Further d....
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.... agree that no evidence was found during the search to establish that any 'on money' was paid in respect of these properties. We also agree that the Applicant's son did not have the relevant documents which is statement was being recorded during the search. At the same time, it has also to be kept in mind that a statement to this effect had been made during the search which has not been retracted. We, therefore, are of the view that the value of the properties over and above the documented value (as admitted at the time of the search) is required to be further disclosed as unaccounted income. The learned AR stated that, even though no evidence was unearthed during the search in respect of such 'on money' payment, the Applicant wishes to bring a quietus to the matter and hence is willing to offer the following amounts:- Property at Value stated in 132(4) statement Value in Document Difference A.Y. Further disclosure Bangalore 60,00,000 43,00,000 17,00,000 2011-12 2012-13 10,00,000 7,00,000 K.K.Pudur, Stampt Duty & Others 60,00,000 19,55,000 40,45,000 19,75040,64,750 2011-12 40,64,750 Ganapathy Stamp Duty & ....