2012 (4) TMI 227 - BOMBAY HIGH COURT

Challenge in these proceedings under Article 226 of the Constitution - application before the Settlement Commission seeking a settlement of a "case" including the grant of a waiver of penalty for Assessment Years 2008-2009 and 2009-2010 which was pending before the AO - The petitioner made a disclosure of income to the extent of ₹ 10 lacs each for the two Assessment Years in question - The Commission has come to the conclusion that a total amount of ₹ 6.18 Crores represents the additional income which is to be taxed in hands of the petitioner of which an amount of ₹ 4.26 crores relates to Assessment Year 2008-09 and ₹ 1.92 Crores for Assessment Year 2009-10 - assessee stated the Settlement Commission would have no jurisdiction to travel beyond the subject matter of the application - a penalty under Section 271(1)(c) is contrary to law since the Settlement Commission did not furnish a notice to show cause to the petitioner before the penalty was imposed – Held that:- The assessee had offered an amount of ₹ 10 lacs in each of the Assessment Years in question based on a story of having earned income for which no records were available - Settlement Commission complyied with the principles of natural justice and after furnishing to the assessee an opportunity of being heard specifically on the issue of penalty - Settlement Commission has imposed a penalty of ₹ 2.75 crores u/s Section 271(1)(c) where the assessee has mis-stated or concealed the particulars of his income - penalty shall not be less than the amount of tax sought to be evaded but shall not exceed three times the amount of tax sought to be evaded - total income tax demand in the present case, according to the petitioner, which has been arrived at on behalf of the Revenue works out to ₹ 1.96 crores for AY 2008-09 and ₹ 82.40 lacs for AY 2009-10. The total penalty of ₹ 2.75 crores has been clarified by a corrigendum issued by the Settlement Commission to be on a pro rata basis as an amount of ₹ 1.92 crores for AY 2008-09 and ₹ 82.50 lacs for AY 2009-10 - The penalty which has been imposed is thus commensurate with the provisions of Section 271(1)(c) – no merit in the challenge to the order on the aspect of penalty – against assessee.