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2020 (11) TMI 41 - HC - Income TaxSettlement Application u/s 245C - Maintainability of awards of the ITSC - ITSC rejected the said application under Section 245D(1) of the Act for non-payment of taxes on the additional income disclosed in the Settlement Application and did not allow the same to be proceeded with - whether the awards of the ITSC or the decision making process culminating to the award, are in violation of the provisions of the Act or not? - HELD THAT:- A perusal of the award of the ITSC in the present cases reveal that the procedures under Section 245C & 245D of the Act have been duly followed and the terms of the Settlement have been arrived at on mutual acceptance, after perusing the offers made by the Department and the Assessee. Hence, it cannot be said that the award of the ITSC is in violation of the statutory provisions or the decision making process. If that be so, the ground raised by the Department in the present Writ Petition are merely factual in nature and since there are no procedural lapses on the part of the ITSC in adjudicating and arriving at the terms of the settlement. While Section 245C(1) refers to ‘disclosure of income’ before the ITSC, Section 245HA(3) refers to the use of ‘information produced’ before the ITSC. The term ‘disclosed income’ is conspicuously absent in Section 245HA(3). When a taxing law, does not provide or empower the Assessing Officer to rely on or take into consideration the income disclosed by the Assessee in the earlier application that had abated in view of Section 245HA(1)(i) of the Act, the attempt of the Department to make a comparison between the income disclosed in the abated proceedings and the second settlement application to establish that the assessee has not fully and truly disclosed their income, is not based on intelligible differentia. When the Income Tax law does not empower the Assessing Officer to rely on the income disclosed in the earlier proceedings that had abated before the ITSC, the Department is not justified in making a comparison with such an income and thereby find fault with the ITSC’s decision making process in the impugned proceedings. Whether additional amount of income tax payable on the disclosed income in the second Settlement Application has not exceeded, at least by ₹ 50 lakhs as contemplated under proviso (i) of Section 245C(1) of the Act, the second application ought not to have been entertained by the ITSC? - A perusal of the impugned awards also reveal that the assesses have declared a sum of ₹ 1.65 and ₹ 1.67 crores respectively as income in their respective settlement applications before the ITSC and the additional amount of income tax payable on such income exceeds ₹ 50 lakhs. Thus, the ground raised by the Department in this regard, cannot be sustained. Amounts towards capitation fees have been disclosed and offered as voluntary contribution in the hands of the assessee - Apparently, the ground raised is purely a factual finding rendered by the ITSC and such factual findings is not permissible to be reviewed by this Court under Article 226 of the Constitution of India, as held in the aforesaid cited decisions. As there was no defect on the part of ITSC in the decision making process leading to the impugned Awards, the preliminary objection raised to the Department by this Court, with the regard to the maintainability of the Writ Petition, challenging the award of a Settlement Commission, gains significance. In the present case, it is not the stand of the department that there was fraud and misrepresentation of facts, owing to which, the disclosure requires to be treated as not true or fair. Rather, the disclosure was voluntary and the manner in which a major portion of the additional income has been derived was also explained. As a matter of fact, the department had not raised any objections during the stage of the case under Section 245D(1) or 245D(2C) of the Act. As such, the aforesaid decision is clearly distinguishable on the facts of the case, as well as the consequential ratio and hence may not be applicable. Both the impugned awards of the ITSC are neither in violation of any statutory provisions of the Income Tax Act nor is there any defect in the decision making process. As such the Writ Petitions, challenging the awards of the ITSC cannot be maintained.
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