TaxTMI 
TaxTMI 
2022 (6) TMI 845
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....d the response of the respondent herein was sought for. The Settlement Commissioner through order dated 22.05.2007 marked as Ext.P1 accepted the application and determined the terms for settlement of issues concerning tax payable by the assessee. In the proceedings before this Court the issue canvassed is in respect of advances taken by the appellants from others amounting to Rs.3,54,59,150/- and the claim of advance received from 3rd parties is legally and in accordance with the provisions of the Act has been decided u/s 245D of the Act. The respondent herein contested the details offered by the appellants for settlement under the head "advances from others". The Settlement Commissioner accepted the case of appellants herein and for appreciating the area of controversy before the learned Single Judge and the point urged before us, the brief portion of consideration by the Settlement Commissioner is excerpted hereunder: Advances from others: Advances from others shown at Rs.3,54,59,150/- in the original CFSs have been revised to Rs.4,13,52,150/-. The AR pointed out that the details of these loans were available in the seized records and that the relevant Promissor....
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....tations; which was refused to be entertained by the Commission finding that there is no power of reveiw conferred on the Commission. The Hon'ble Supreme Court found that the Commission had missed the true scope and ambit of Section 245D(6) and if the Commissioner was able to establish that the order of the Commission was obtained on misrepresentation of facts, then it was open to the Commission to decide the issue and the same would not lead to any review of the earlier orders. It was also categorically held so: "Further the conclusions of the Commission regarding the genuineness of the loan transactions were arrived at without indicating reasons. It only referred to the respective stands and the submissions of the assessee's counsel. That was not the proper way to deal with the matter." The manner in which the Settlement Commission dealt with the claim of advances is seen at page 5, paragraph 5 of Ext.P1: Advances from others: Advances from others shown at Rs.3,54,59,150/- in the original CFSs have been revised to Rs.4,13,52,150/-. The AR pointed out that the details of these loans were available in the seized records and that the releva....
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....ourse is unavailable in the circumstances of the case. He invites our attention to the very annexures stated to have been placed by the appellants before the Settlement Commissioner as materials to the brief filed for settlement. Therefore routine denial in Rule -9 report filed by the respondent is not a ground at all to interdict Ext.P1 order. He argues that the rejection of the addition by the Settlement Commissioner is upon being satisfied with the materials placed by the appellants before the Settlement Commissioner. On the scope of judicial review vis-à-vis the orders made under 245D, he places reliance on the judgments reported in Jyotendrasinhji v S.I.Tripathi and others (1993(201) ITR 611), Union of India and others v Ind-Swift Laboratories Ltd. (2011) 4 SCC 635, Commissioner of Income Tax v Om Prakash Mittal (2005(273) ITR 326) and N.Krishnan v Settlement Commission and others (1989 (180) 585) and finally contends that the remand for re-verification by the Settlement Commissioner of advances, is avoidable and prays for setting aside the judgment under appeal. 5. Learned Senior Counsel Mr.Jose Joseph supports the judgment under appeal by briefly arguing that the v....
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.... grounds canvassed by the appellants, we would like to rely on the very judgment relied on by the appellants. In Jyothindra Singhji case, the Supreme Court has held that the scope of the enquiry whether by the High Court under Article 226 or before the Supreme Court in the appeal under Article 136 remains the same viz. to consider whether the order of the Settlement Commissioner is contrary to the provisions of the Income Tax Act, and if so whether it has prejudiced the petitioner. This is, of course, apart from grounds of lies, fraud and malice which constitute a separate and independent category. A reading of the judgment under appeal discloses that the principle in Jyothindrasinghji is applied by the learned Single Judge in appreciating whether the settlement in Ext.P1 is in accordance with the provisions of the Act or not. Om Prakash Mithal case lays down the object and procedure followed by the Commission in applications arising under Section 245D of the Act. The Supreme Court has summarised the position as follows: A new Chapter XIX-A was introduced by the Taxation Laws (amendment) Act, 1975 (in short the 'Amendment Act') w.e.f. 1.4.1976. The Commission is co....
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....unt of income-tax payable on the income disclosed in the application exceeds one hundred thousand rupees. (1A) For the purposes of sub-section (1) of this section and subsections (2A) to (2D) of section 245D, the additional amount of income-tax payable in respect of the income disclosed in an application made under sub-section (1) of this section shall be the amount calculated in accordance with the provisions of subsections (1B) to (1D). (1B) Where the income disclosed in the application relates to only one previous year, - (i) if the applicant has not furnished a return in respect of the total income of that year (whether or not an assessment has been made in respect of the total income of that year), then, except in a case covered by clause (iii), tax shall be calculated on the income disclosed in the application as if such income were the total income; (ii) if the applicant has furnished a return in respect of the total income of that year (whether or not an assessment has been made in pursuance of such return), tax shall be calculated on the aggregate of the total income returned and the income disclosed in the application as if such aggrega....
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....nder section 245C, the Settlement Commission shall call for a report from the Commissioner and on the basis of the materials contained in such report and having regard to the nature and circumstances of the case or the complexity of the investigation involved therein, the Settlement Commission may, by order, allow the application to be proceeded with or reject the application : Provided that an application shall not be rejected under this subsection unless an opportunity has been given to the applicant of being heard: Provided further that the Commissioner shall furnish the report within a period of forty-five days of the receipt of communication from the Settlement Commission in case of all applications made under section 245C on or after the 1st day of July, 1995 and if the Commissioner fails to furnish the report within the said period, the Settlement Commission may make the order without such report. (2) x x x x x (2A) Subject to the provisions of sub-section (2B), the assessee shall within thirty-five days of the receipt of a copy of the order under sub-section (1) allowing the application to be proceeded with, pay the additional amount of income-tax payable ....
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.... x x x x x (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 by the Settlement Commission that it has been obtained by fraud or misrepresentation of facts." (underlined for emphasis) Sub-section (1) of Section 245C makes it clear that at any stage of a case relating to him an assessee may make an application to the Commission disclosing fully and truly his income which has not been disclosed before the Assessing Officer. To put it differently, an assessee cannot approach the Commission for settlement of his case in respect of an income which has already been disclosed before the Assessing Officer. The income disclosed as contemplated is in the nature of voluntary disclosure of concerned income. Section 245F dealing with powers and procedure of Settlement Commission provides that in addition to the powers conferred on the Settlement Commission under Chapter XIX-A, it has all the....
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....ssed under sub-section (4) specifying that settlement shall be void if it is subsequently found by the Commission that it has been obtained by fraud or misrepresentation of facts. The decision whether the order has been obtained by fraud or misrepresentation of facts is that of the Commission. But it is not a requirement that the Commission must suo motu initiate the action. If the revenue has material to show that the order was obtained by fraud or misrepresentation of facts it certainly can move the Commission for decision on that issue. Otherwise, even if in a given case there is material in abundance to establish that the order was obtained by fraud or misrepresentation of facts, yet the void order would continue to be operative because of the fortuitous circumstance that the Commission does not suo motu initiate the proceeding. Merely because Section 245I provides that the order of Settlement is conclusive it does not take away the power of the Commission to decide whether the settlement order had been obtained by fraud or misrepresentation of facts. Any other interpretation would render sub-section (6) otiose. The Commission had really missed the true scope and ambit of Secti....