TMI Blog2010 (5) TMI 659X X X X Extracts X X X X X X X X Extracts X X X X ..... to granting immunity from penalty and prosecution is liable to be quashed. - 12239 of 2008 - - - Dated:- 20-5-2010 - NAGAMOHAN DAS H. N., J. JUDGMENT H. N. Nagamohan Das J.- 1. In this writ petition, the petitioners have prayed for a writ in the nature of certiorari to quash the order dated March 4, 2008, passed by the second respondent-Settlement Commission as per annexure G. 2. The first respondent is a scheduled bank and has been an income-tax assessee for a number of years. The returns filed by the first petitioner came to be processed and the Assessing Officer completed the assessment, vide order dated March 30, 2000, for the assessment year 1997-98 as per annexure A. In the order of assessment at annexure A, the Assessing Officer brought to tax the concealed income, disallowed depreciation claimed on non-existing assets and corrected certain anomalies in the accounting procedure of the first respondent. Further, the Assessing Officer, being satisfied that the first respondent had concealed its income, levied penalty under section 271(1)(c) of the Income-tax Act (for short "the Income-tax Act"), vide order dated June 14, 2000, as per annexure B. Consequentl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impleading application permitting the Union of India to come on record as the second petitioner. Accordingly, the writ petition is amended. 5. Dr. R. B. Krishna, learned counsel for the first petitioner, contends that the Settlement Commission has no jurisdiction to entertain an application under section 245C(1) of the Act after detection/discovery of concealed income of the assessee by the Department. It is contended that the Settlement Commission committed an illegality in passing the impugned order when the first respondent had disclosed a negative income for certain assessment years which is invalid in the eye of law. It is contended that the Settlement Commission committed an illegality in not following the law laid down by this court and the apex court in the decisions placed before it. The Settlement Commission committed an error in deleting the penalty and granting immunity from prosecution. Reliance is placed on the following decisions : (a) CIT v. Express Newspapers Ltd. [1994] 206 ITR 443 (SC) ; (b) CIT v. B. N. Bhattachargee [1979] 118 ITR 461 (SC) ; (c) Chief Conservator of Forests, Government of A. P. v. Collector [2003] 3 SCC 472 ; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not applicable to the facts of this case. He supports the impugned order. Reliance is placed on the following decisions : (a) CIT v. Anjum M. H. Ghaswala [2001] 252 ITR 1 (SC) ; and (b) CIT v. Nainital Bank Ltd. [2009] 309 ITR 335 (Uttaranchal). 8. Heard arguments on both the sides and perused the entire writ papers. On the basis of pleadings and arguments the following points will arise for my consideration : (1) Whether the writ petition is not maintainable for want of clearance from the Committee On Disputes (COD) ? (2) Whether the first respondent has no authority to file the writ petition ? (3) Whether the Settlement Commission has no jurisdiction to admit and entertain the application of the first respondent under section 245C of the Income-tax Act after detection and discovery of the concealed income ? (4) Whether the impugned order passed by the Settlement Commission is in accordance with law ? On point No. I 9. The first petitioner and the first respondent are the parties before the second respondent, Settlement Commission. The impugned order at annexure G is passed by the second respondent. The prayer of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evaders. Even in the absence of specific provision enabling the Commissioner to file the writ petition before this court there is implied power authorising him to file the writ petition. In addition to the first petitioner, the Union of India is impleaded as the second petitioner calling in question the impugned order at annexure G. Therefore, the writ petition filed by the first petitioner is within his powers. Accordingly, point No. 2 is answered in the negative holding that the Commissioner of Income-tax is having the implied powers to file this writ petition questioning the impugned order at annexure G. On point No. III 12. Under Chapter XIX-A of the Income-tax Act, the provisions relating to the Settlement Commission was introduced with effect from April 1, 1976, on the basis of the recommendations made by the Wanchoo Committee for establishing a Settlement Commission. The relevant portion of the recommendations reveals the legislative background and also the salient aspects of the provisions providing for establishment of the Settlement Commission and they read as under : "This, however, does not mean that the door for compromise with an errant taxpayer should, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 ITR 443 (SC) held that "if the Assessing Officer has already discovered a concealment and has gathered the material to establish the particulars of such income or fraud fully or is at a stage of investigation/ enquiries, where the material gathered by him is likely to establish the particulars of such income or fraud, the assessee cannot be allowed to defeat or forestall, as the case may be, the entire exercise of the income-tax authorities just by approaching the Settlement Commission. In such a case, it cannot be said that he is acting voluntarily or in good faith. The assessee should not be allowed to take advantage of the comparatively easy course of settlement. The assessee must face the normal channels of assessment/ appeal, etc. Section 245C is meant for those assessees who seek to disclose income not disclosed before the officer including the manner in which such income has been derived. If the Department already knows and has gathered particulars of such income and the manner in which it has been derived, then there is no disclosure by the assessee". 15. The Supreme Court in Express Newspapers Ltd.'s case [1994] 206 ITR 443 (SC) specifically observed that it is not co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and section 245D(1) of the Income-tax Act manifestly makes it clear that the Commissioner of Income-tax's power to object to the application made by the assessee is narrowed down. The words "at any stage" in section 245C(1) of the Income-tax Act specifies that even at the stage of the appeal pending before the first appellate authority, the assessee can go before the Settlement Commission and disclose the true and correct income. Therefore, the assessee can go before the Settlement Commission at any stage even after detection/investigation by the assessing authority. 18. In the event of the assessing authority detecting the concealed income, then he is entitled to pass assessment orders bringing the concealed income to tax liability, impose penalty and initiate prosecution proceedings. This power is also available with the Settlement Commission. If the Settlement Commission holds that there is deliberate concealment of income by the assessee then it has got the power to bring the concealed income, to impose interest, penalty and to order for prosecution. Therefore, it cannot be contended that in the event of detection by the Assessing Officer an application under section 245C( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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