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2013 (4) TMI 225 - KARNATAKA HIGH COURTOrder of settlement commission - Writ Petition - This Intra Court Appeal under Section 4 of the Karnataka High Court Act. - Single Judge has quashed the order passed by the Income Tax Settlement Commission (Additional Bench), Chennai dated 04.02.2008 in so far as it relates to granting immunity from penalty and prosecution and remanding the matter to the Settlement Commission for limited purpose of reconsidering the question of penalty, Settlement Commission took up the application of the assessee for hearing and after considering the arguments passed order under section 245D(1) and 245D(4) of the Act determined the additional income and the tax payable thereon. Maintainability of the application filed by the assessee was also upheld. Being aggrieved by the order revenue preferred writ petition before the court where, learned Single Judge has quashed the order passed by the Settlement Commission for which intra Court appeal is filed by the assesse. Held that - In a given case if such immunity is not granted the Department would proceed to prosecute the assessee in a jurisdictional court. Once prosecution is lodged the presumption is that there was mens rea on the part of the assessee to conceal the income by a smoke screen or evade tax. Thus the Settlement Commission will have to examine the application by lifting the corporate veil to see as to whether there has been an intention to evade tax and then arrive at a conclusion. In the absence of such exercise being undertaken by the Settlement Commission the intention underlined behind section 245H(1) would become otiose or redundant. As per the provision of section 245D, the Settlement Commission on receipt of an application filed under section 245C had to call for a report from the Commissioner and on the basis of that report, the Settlement Commission was empowered to reject or allow the application to be proceeded with, within the prescribed period and it is in this background the granting of immunity from prosecution ought to have been scrutinized by the Settlement Commission which the learned Single Judge has found not to be so and as such remanded the matter for de novo adjudication which does not suffer from any material irregularity or illegality so as to invite the attention of this court for exercising the Appellate jurisdiction which is limited in scope. In that view of the matter also the point herein above deserves to be answered in the negative i.e., against the assessee/appellant. - Decided against the assessee.
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