TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 1410
X X X X Extracts X X X X
X X X X Extracts X X X X
....fter the present appeals were filed by the assessee, the scope of challenge by the Department to the decision of the Settlement Commission came up for consideration before a Division Bench of the Bombay High Court, of which one of us (Chief Justice) was a party. The Division Bench in the case of Commissioner of Income Tax, Central II vs. Income Tax Settlement Commission [2024] 161 taxmann.com 495 (Bombay) (M/s. Kanakia Spaces Pvt. Ltd.), and in WP No.432 of 2020 (Principal Commissioner of Income Tax (Central-3) vs. Income Tax Settlement Commission (ITSC) and others, dated 25.04.2024 (unreported) as also in Principal Commissioner of Income Tax (Central-3) vs. Income Tax Settlement Commission (ITSC) and others, (Wadhwa Group Holding Pvt. Ltd), order dated 18.04.2024 in WP No.1830 of 2019 dealt with similar issues. 4. Paragraph Nos.7 to 15 of Wadhwa Group Holding Pvt Ltd. (supra), read as under: "7. The Apex Court in Jyotendrasinhji Vs. S. I. Tripathi has discussed the scope of challenge to orders passed by the ITSC. The Apex Court has held that after examining such further evidence as it may be placed before it, the ITSC may, in accordance with the provisions of this Act, pass suc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in the 1922 Act. The proceedings under this chapter commence by an application made by the assessee as contemplated by Section 245C. Section 245D prescribes the procedure to be followed by the commission on receipt of an application under Section 245C. Sub-section (4) says: 'after examination of the records and the report of the commissioner received under sub-section (1), and the report, if any, of the commissioner received under subsection (3), and after giving an opportunity to the applicant and to the commissioner to be heard, either in person or through a representative duly authorised in this behalf, and after examining such further evidence as may be placed before it or obtained by it, the settlement commission may, in accordance with the provisions of this Act, pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the commissioner under sub-section (1) or sub-section (3)." Section 245E empowers the Commission to reopen the completed proceedings in appropriate cases, while Section 245F confers all the powers of an Income Tax authority upon the C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and to prescribe the manner in which the said amount shall be paid. It may condone the defaults and lapses on the part of the assessee and may waive interest, penalties or prosecution, where it thinks appropriate. Indeed, it would be difficult to predicate the reasons and considerations which induce the commission to make a particular order, unless of course the commission itself chooses to, give reasons for its order. Even if it gives reasons in a given case, the scope of enquiry in the appeal remains the same as indicated above viz., whether it is, contrary to any of the provisions of the Act. In this context, it is relevant to note that the principle of natural justice (and alteram partem) has been incorporated in Section 245D itself. The sole overall limitation upon the Commission, thus, appears, to be that it should act in accordance with the provisions of the Act. The scope of enquiry, whether by High Court under Article 226 or by this Court under Article 136 is also the same whether the order of the Commission is contrary to any of the provisions of the Act and if so, has it prejudiced the petitioner/appellant apart from ground of bias, fraud & malice which, of course, const....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... for challenging the legality of assessment order or orders passed in any other proceedings. The Karnataka High Court held that the power conferred on the settlement commission is so wide that it can take any view on any questions of law, which it considers appropriate having regard to the facts and circumstances of a case including giving immunity against prosecution or imposition of penalty. The Karnataka High Court further held that it is in the nature of statutory arbitration to which a person may submit himself voluntarily and the scope of interference is much more restricted than the power of the court to interfere with an arbitration award. 9. A similar matter came to be considered by this court in the Commissioner of Income Tax,Central-II Vs. Kanakia Spaces Pvt Ltd. This court after considering all the judgments cited, noted that in R. B. Shreeram Durga Prasad & Fatechand Nursing Das (Supra) the court held that any challenge to the orders of the Settlement Commission, the High Court should be concerned with the legality of the procedure followed and not with the validity of the order. The judicial review should be concerned not with the decision but with the decision maki....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n based on which the Commission proceeded to pass its orders are beyond the scope of judicial review. As held by the Apex Court in Brij Lal And Others vs. Commissioner of Income Tax7 the High Court should not scrutinize an order or proceeding of the ITSC as an appellate court. 11 Therefore, in our view, ITSC was entitled to exercise discretion while passing the impugned order and has exercised its discretion. In our view, there is neither violation of any mandatory procedure prescribed under any of the sections of Chapter XIX-A of the Act nor any violation of any of the Rules of natural justice. Further, it cannot be said that the reasons assigned by the ITSC for granting relief sought for by assessee have no nexus to the decision taken. 12 As held by the Apex Court in Kotak Mahindra Bank Ltd. (supra), unsettling reasoned orders of the ITSC, and in the present case order runs into almost 170 pages, may erode the confidence of bonafide assessee thereby leading to multiple litigation where settlement is possible and this larger picture has to be borne in mind. Moreover, the members of the ITSC have been appointed by Central Government in accordance with Section 245B(3) of the Act....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vision of the Act or there was miscarriage of justice or order has been passed without jurisdiction. More so when bias or fraud or malice is not alleged in the petition against the members of the ITSC. In the case at hand we are not satisfied that the order of the ITSC is contrary to the provisions of the Act. It is rather unfortunate that the Commissioner who has filed the Writ Petition is sitting in appeal over findings of the members of the ITSC. Chapter XIX-A was inserted to enable an assessee, at any stage of a case relating to him, to make an application containing a full and true disclosure of his income which has not been disclosed before the A.O., the manner in which such income has been derived, the additional tax payable on such income and such other particulars as may be prescribed, to the ITSC to have the case settled. When such an application is made and the ITSC is satisfied that there has been a full and true disclosure, the department cannot raise any grievance. Unless a case of bias or fraud or malice is alleged, not being a bald allegation, but with details, no petition by Revenue impugning an order by the ITSC should be entertained. We say this because the Centr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....perience in problems relating to direct taxes and business accounts. Therefore, these members have been authorised to settle the disputes on behalf of the Government and it does not lie in the mouth of the Government to challenge the decision taken by their own representatives without making allegations of bias or fraud or malice." 5. Therefore, as is evident from Section 245 of the Act, the Central Government has appointed the members of Income Tax Settlement Commission (ITSC) as their representatives to settle the disputes with assessee, and it reflects the confidence they had in the members because the persons appointed are of integrity and known for their outstanding ability and expertise and for the special knowledge and experience in problems relating to taxes and business accounts. These members, therefore, have been authorised to settle the disputes on behalf of the Government and it would not lie in the mouth of the Government to challenge the decision taken by their own representatives without making allegations of bias or fraud or malice. 6. As noted in Kanakia Spaces Pvt. Ltd (supra), original petitioner, viz., respondent No.1 herein, is in effect sitting in appeal ov....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r or find the correct law. The law has always been the same and if a subsequent decision alters the earlier one, the later decision does not make a new law. It only discovers the correct principle of law which has to be applied retrospectively. The Hon'ble Apex Court held that even an earlier decision of the court operated for quite sometime, the decision rendered later on would have retrospective effect, clarifying the legal position which was earlier not correctly understood. Paragraph no. 40 to 44 of the said judgment read as under : 40. The core issue, therefore, is whether non-consideration of a decision of Jurisdictional Court (in this case a decision of the High Court of Gujarat) or of the Supreme Court can be said to be a "mistake apparent from the record"? In our opinion, both - the Tribunal and the High Court - were right in holding that such a mistake can be said to be a "mistake apparent from the record" which could be rectified under Section 254(2). 41. A similar question came up for consideration before the High Court of Gujarat in Suhrid Geigy Ltd.'s case (supra). It was held by the Division Bench of the High Court that if the point is covered by a decision of th....