TaxTMI 
TaxTMI 
2021 (9) TMI 49
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....rector of the petitioner-company, has also filed separately the second writ petition. 3. Both the petitioners by way of these writ petitions have challenged the legality, validity and propriety of the order dated 19/12/2013 passed by the Income Tax Settlement Commission while exercising the powers under Section 245D(4) of the IT Act whereby the settlement application filed by the petitioners was disposed of. 4. In order to appreciate the controversy raised in the present writ petitions, it would be apposite to quote the relevant provisions relating to settlement of cases as provided under Chapter XIX of the IT Act which are as under:- "245C. [(1) 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 hereinafte....
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....ing a substantial interest in the business or profession of the specified person or any director, partner or member of such company, firm, association or family, or any relative of such director, partner or member; (v) a company, firm, association of persons or Hindu undivided family of which a director, partner or member, as the case may be, has a substantial interest in the business or profession of the specified person; or any director, partner or member of such company, firm, association or family or any relative of such director, partner or member; (vi) any person who carries on a business or profession,- (A) where the specified person being an individual, or any relative of such specified person, has a substantial interest in the business or profession of that person; or (B) where the specified person being a company, firm, association of persons or Hindu undivided family, or any director of such company, partner of such firm or member of the association or family, or any relative of such director, partner or member, has a substantial interest in the business or profession of that person; (b) a person shall be deemed to have a subs....
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....e the additional amount of income-tax payable in respect of the income disclosed in the application. (1E) * * * * * (2) Every application made under sub-section (1) shall be accompanied by such fees as may be prescribed. (3) An application made under sub-section (1) shall not be allowed to be withdrawn by the applicant. [(4) An assessee shall, on the date on which he makes an application under sub-section (1) to the Settlement Commission, also intimate the Assessing Officer in the prescribed manner of having made such application to the said Commission.] [(5) No application shall be made under this section on or after the 1st day of February, 2021] Procedure on receipt of an application under section 245C.- 245D. [(1) On receipt of an application under section 245C, the Settlement Commission shall, within seven days from the date of receipt of the application, issue a notice to the applicant requiring him to explain as to why the application made by him be allowed to be proceeded with, and on hearing the applicant, the Settlement Commission shall, within a period of fourteen days from the date of the application, by an ....
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.... invalid unless an opportunity has been given to the applicant of being heard: Provided further that where the [Principal Commissioner or Commissioner] has not furnished the report within the aforesaid period, the Settlement Commission shall proceed further in the matter without the report of the [Principal Commissioner or Commissioner]. [Provided alsothat where in respect of an application, an order, which was required to be passed under this sub-section on or before the 31st day of January, 2021, has not been passed on or before the 31st day of January, 2021, such application shall deemed to be valid] (2D) Where an application was made under subsection (1) of section 245C before the 1st day of June, 2007 and an order under the provisions of subsection (1) of this section, as they stood immediately before their amendment by the Finance Act, 2007, allowing the application to have been proceeded with, has been passed before the 1st day of June, 2007, but an order under the provisions of subsection (4), as they stood immediately before their amendment by the Finance Act, 2007, was not passed before the 1st day of June, 2007, such application shall not be al....
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.... (i) in respect of an application referred to in subsection (2A) or sub-section (2D), on or before the 31st day of March, 2008; (ii) in respect of an application made on or after the 1st day of June, 2007 [but before the 1st day of June, 2010], within twelve months from the end of the month in which the application was made;] [(iii) in respect of an application made on or after the 1st day of June, 2010, within eighteen months from the end of the month in which the application was made.] [(5) Subject to the provisions of section 245BA, the materials brought on record before the Settlement Commission shall be considered by the Members of the concerned Bench before passing any order under sub-section (4) and, in relation to the passing of such order, the provisions of section 245BD shall apply.] (6) Every order passed under sub-section (4) shall provide for the terms of settlement including any demand by way of [tax, penalty or interest], the manner in which any sum due under the settlement shall be paid and all other matters to make the settlement effective and shall also provide that the settlement shall be void if it is subsequently found ....
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.... of doubts, it is hereby declared that nothing contained in section 153 shall apply to any order passed under sub-section (4) or to any order of assessment, reassessment or recomputation required to be made by the [Assessing Officer] in pursuance of any directions contained in such order passed by the Settlement Commission [and nothing contained in the proviso to sub-section (1) of section 186 shall apply to the cancellation of the registration of a firm required to be made in pursuance of any such directions as aforesaid.]" 6. Brief facts of the case as noticed are that on 09/09/2010, the petitioner and its director Rajendra Gupta (petitioner in CWP No.8699/2014) were subjected to search and seizure under Section 132 of the IT Act and were served with consequential notices issued under Section 153A of the IT Act for initiating assessment proceedings in case of search. The petitioner approached the Settlement Commission and filed application under Section 245C(1) of the IT Act in the prescribed form seeking settlement of their cases on 29/06/2012 for the period AY 2007-08 to 2012-13 making true and full disclosure of income not disclosed before the Assessing Officer alongwith th....
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....ution and the scope and process of both are fundamentally different, passed the impugned order dated 19/12/2013 under Section 245D(4) of the Act in a manner that the Settlement Applications were disposed of by the Settlement Commission by assuming role as of an Assessing/Adjudicating Officer instead of statutory role as a Settlement Commission. 9. It was further stated that from the findings of the Settlement Commission, it is prima facie evident that the Commission disbelieved the true and full disclosure and assumed the role of Assessing Officer and made an addition which is 155 times of the disclosed. It is further stated that the petitioner submitted an application for rectification under Section 164 and by way of an order dated 18/06/2014 the Settlement Commission partly accepted the application under Section 245D(6B) of the IT Act. 10. It was further contended that the impugned order dated 19/12/2013 passed by the learned Settlement Commission under Section 245D(4) of the IT Act is without jurisdiction and suffers from vice of non-application of mind, arbitrariness and the Commission exceeded its jurisdiction by proceeding as Assessing Officer. The Commission completely....
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....ion much wider. 13. Learned counsel for the Revenue relies on the law laid down by the Supreme Court in Brij Lal & ors. Vs. Commissioner of Income Tax, Jalandhar: (2011)1 SCC 1 in support of his contentions. 14. Learned counsel for the Revenue has also filed written submissions wherein it has been stated that the writ petitions should be dismissed also on account of suffering from delay, latches and acquiescence. It is stated that the writ petition has been filed on 11/07/2014 against the final order which was passed on 19/12/2013. It is further stated that the petitioner has acted upon and deposited the installments as per the directions issued by the learned Settlement Commission in the order impugned. The amount was directed to be deposited by the learned Settlement Commission in 6 installments and the petitioners moved application praying to deposit the amount in 24 installments instead. The learned Settlement Commission granted benefit and increased the installments to 15 which was accepted by the petitioner-assessee and he acted upon accordingly. Thus, it is a case of acquiescence to the order passed by the learned Settlement Commission and therefore, the petitioner is ....
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....der Section 245D(4) of the Act". In Brij Lal & ors. Vs. Commissioner of Income Tax, Jalandhar (supra), the questions re-framed by the Constitutional Bench were "Whether Section 234B of the Act applies to the proceedings of Settlement Commission under Chapter XIX-A of the Act?" and second if yes, "What is the terminal point for levy of such interest- whether such interest should be computed up to the date of the order under Section 245D(1) or up to the date of the order of the Commission under Section 245-D(4)?" and third "Whether the Settlement Commission could reopen its concluded proceedings by invoking Section 154 of the said Act so as to levy interest under Section 234-B, though it was not so done in the original proceedings?" Thus, the judgments were essentially in relation to the interest for defaults in payments of advance tax and at what terminal point the levy of such interest can be imposed and what are the powers in granting the relief under the CBDT Circulars. The moot question, which has been essentially raised in the present writ petitions is "Whether the Settlement Commission can proceed and pass final orders on an application moved by an assessee after finding that ....
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....may specify. 8. Commissioner's further report.--Where an order is passed by the Commission under Sub-section (1) of section 245D allowing the settlement application to be proceeded with, copy of the Annexure to the said application, together with a copy of each of the statements and other documents accompanying such annexure, shall be forwarded to the Commissioner along with a copy of the said order with the direction that the Commissioner shall furnish a further report within ninety days of the receipt of the said Annexure (including the statements and other documents accompanying it or within such further period as the Commission may specify. 30. It will also be useful to extract the relevant portions of Form (No. 34B), prescribed for making an application under Section 245C(1) of the Act: [Form No. 34B] [See rules 44C and 44CA] Form of application for settlement of cases under section 245C(1) of the Income-tax Act, 1961 10. Particulars of the issues to be settled, nature and circumstances of the case and complexities of the investigation involved [See Note 7] 11. Full and true disclosure of income which has not been di....
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.... Act which prohibits the withdrawal of an application once made under Sub-section (1) of the said Section is instructive in as much as it manifests that an assessee cannot be permitted to resile from his stand at any stage during the proceedings. Therefore, by revising the application, the applicant would be achieving something indirectly what he cannot otherwise achieve directly and in the process rendering the provision of Sub-section (3) of Section245C of the Act otiose and meaningless. In our opinion, the scheme of said Chapter is clear and admits no ambiguity. 36. It is trite law that a taxing statute is to be construed strictly. In a taxing Act one has to look merely at what is said in the relevant provision. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. There is no room for any intendment. There is no equity about a tax. (See:Cape Brandy Syndicate v. Inland Revenue Commissioners (1921) 1 KB 64 and Federation of A.P. Chambers of Commerce and Industry and Ors. v. State of A.P. and Ors.: (2000) 6 SCC 550. In interpreting a taxing statute, the Court must look squarely at the words of the statute and interpret them. Consideratio....
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....s of the present case. In that case, while the assessee in his application moved under Section 245C of the Act disclosed the income which was made a basis for the decision of the Settlement Commission, in the present case, the assessee had disclosed the income which was not found to be full and true disclosure of income by the Settlement Commission and the Settlement Commission on the basis of the report submitted by the Commissioner of Income Tax, proceeded to make assessment and passed orders. Thus, the disclosure made by the petitioners was not accepted by the Settlement Commission. The petitioners, therefore being aggrieved, submitted that if the Settlement Commission had not accepted the disclosure as full and true disclosure of income, it could not have proceeded further and it is their submission that the order passed by the Settlement Commission is ab-initio, void. 22. In the facts of the present case, it would be apposite to notice the observations made by the Apex Court in Brij Lal & ors. Vs. Commissioner of Income Tax, Jalandhar (supra) which read as under:- "20. Under Section 245D(2A) the applicant is required to pay the additional amount of income tax payab....
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.... powers which are vested in the income tax authority under the Act. In this connection, however, we need to keep in mind the difference between "procedure for assessment" under Chapter XIV and "procedure for settlement" under Chapter XIX-A (see Section 245D). Under Section 245F(4), it is clarified that nothing in Chapter XIX-A shall affect the operation of any other provision of the Act requiring the applicant to pay tax on the basis of self-assessment in relation to matters before the Settlement Commission. 25. Our detailed analysis shows that though Chapter XIX- A is a self-contained Code, the procedure to be followed by the Settlement Commission under Sections 245C and 245D in the matter of computation of undisclosed income; in the matter of computation of additional income tax payable on such income with interest thereon; the filing of settlement application indicating the amount of income returned in the return of income and the additional income tax payable on the undisclosed income to be aggregated as total income shows that Chapter XIX-A indicates aggregation of incomes so as to constitute total income which indicates that the special procedure under Chapter XIX-A ....
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....tion 144 and issuing of notice of demand under Section 156 on the basis of the assessment order. The making of the order of assessment is an integral part of the process of assessment. No such steps are required to be followed in the case of proceedings under Chapter XIX-A. The said Chapter contemplates the taxability determined with respect to undisclosed income only by the process of settlement/ arbitration. Thus, the nature of the orders under Sections 143(1), 143(3) and 144 is different from the orders of the Settlement Commission under Section 245D(4). 40. Even in Commissioner of Income Tax v. Anjum M.H. Ghaswala and Ors. MANU/SC/0662/2001 : 252 ITR 1 there is no finding by this Court that the order of Settlement Commission under Section 245D(4) is an order of assessment under Section 143(3) or under Section 144. In Ghaswala's case the only question decided by this Court is that the interest under Section 234B is mandatory in nature and that Settlement Commission, therefore, had no authority to waive it. 41. Further, as stated above, the jurisdiction of the A.O. is not fettered merely because the applicant has filed the Settlement Application. The Act doe....
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....to the computation of total income in the manner indicated under Chapter XIX-A vide Sections 245C(1B) and 245C(1C) read with the provisos to Section 245C(1) on the additional income tax payable on the undisclosed income. 45. Further, if one examines the provisions of Sections 245C(1B) and 245C(1C), one finds that various situations are taken into account while computing the additional amount of tax payable, viz., if the applicant has not filed his returns, if he has filed but orders of assessment are not passed or if the proceedings are pending for re-assessment under Section 147 (again in Chapter XIV) or by way of appeal or revision in connection with such reassessment and the applicant has not furnished his return of total income in which case tax has to be calculated on the aggregate of total income as assessed in the earlier proceedings for assessment under Section 143 or under Section 144 or under Section 147 [see Section 245C(1B)]. The point to be noted is that in computation of additional income tax payable by the assessee, there is no mention of Section 154. On the contrary, under Section 245I the order of the Settlement Commission is made final and conclusive on m....
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....f the Commissioner in pursuance of a direction under subsection 2B of Section 245D, the Commission is empowered to reject an application as invalid after giving an opportunity of being heard to the applicant. Where an application has not been declared to be invalid under sub-section 2C, sub-Section 3 of Section 245D empowers the Commission to call for the records from the Commissioner. After examination of the records, if the Commission is of the opinion that any further inquiry or investigation in the matter is necessary, it may direct the Commissioner to make or cause to be made a further inquiry or investigation and to furnish a report on the matters covered by the application and any other matter relating to the case. Such a report has to be furnished by the Commissioner within ninety days of the receipt of a communication from the Commission. Next, sub-sections 4 and 6 of Section 245D are of relevance and they provide 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 th....
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....sion ought not have accepted the report of the Commissioner of Income Tax and proceed further. The second submission of the petitioner is that once the Settlement Commission had sent the documents for verification to the FSL, it should have waited for result of the FSL and proceed thereafter. 25. As regards the first contention, this Court finds that the petitioner himself submitted an application stating therein true and full disclosure of his income which was found to be incorrect. A person, who himself has not come out with clean hands, cannot take the benefit of the law for his own purposes. It is noticed that the Settlement Commission, after having taken note of the report of the Commissioner of Income Tax, proceeded to assess the total income of the petitioner and has thereafter settled the income. On an application moved by the petitioner, installments were also increased from 6 to 15. The payments have already been made accordingly. 26. Brij Lal & ors. Vs. Commissioner of Income Tax, Jalandhar (supra), the Settlement Commission passes the order which is a complete code in itself. It is a quasi-judicial authority and there is no provision for the Settlement Commission ....
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....ayments in 15 installments. There is no estoppel against the law. The Settlement Commission, which is a quasi-judicial body, is required to adhere to the principles of law in stricto sensu. 30. The contention of learned counsel for the Revenue that the petition deserves to be dismissed on the ground of acquiescence is noticed for rejection. In cases relating to Revenue, the law of acquiescence would have no application because the orders are of mandatory nature where a person is bound to comply with the orders of the AO/Settlement Commission. If the assessee has deposited the revenue as assessed, he cannot be said to have acquiesced to the findings arrived at for computing the amount. A person would always be entitled for seeking a judicial review to such assessment. Neither the Revenue Department nor the assessee can be estopped from challenging the orders of assessment which may be passed by the AO/Commissioner or the Settlement Commission. 31. Thus at the stage when the Settlement Commission did not accept the true and correct disclosure made by the petitioner, it ought to have given an opportunity to the petitioner and further, it ought to have also waited for the FSL rep....