TMI Blog2013 (4) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... essee 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 attent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commission after considering the contentions of both the parties and allowed the application filed by the appellant under section 245C by order dated 11.12.2000 and thereby rejecting the contention of the revenue. Aggrieved by this order revenue preferred writ petition No. 13111/2001 before this court and after hearing the learned advocates appearing for parties disposed of the writ petition by order dated 18.08.2005 by concluding as under: "12. Accordingly, this writ petition is disposed of observing that not withstanding the impugned order dated 11.12.2000, it is open to the parties to urge all their contentions before the Commission at the stage of disposal of the application itself and the commission may independent of the findings which it has given under the impugned order, examine all the contentions and proceed to pass orders on merits in accordance with the provisions of the Act". 4. Accordingly Settlement Commission took up the application of the assessee for hearing and after considering the arguments advanced by respective learned advocates by order dated 04.03.2008 passed under section 245D(1) and 245D(4) of the Act determined the additional income and the tax paya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition was maintainable. He would further contend that obtaining of approval by the committee of disputes a body constituted pursuant to directions given by Hon'ble Apex Court was not obtained was a ground for not entertaining the writ petition and the law laid down by this court in this regard was not considered by the learned Single Judge. He contends that the learned Single Judge failed to consider the fact that orders of the Settlement Commission are final and conclusive subject to constitutional remedies and such remedies could be availed only when the orders passed by the Settlement Commission are contrary to the provisions of the Act. He would contend that issue regarding jurisdiction of the Settlement Commission to entertain an application filed by the assessee having been upheld by the learned Single Judge it erred in concluding that Settlement Commission was not justified in granting immunity to the assessee from levy of penalty and initiation of prosecution as vague, unsound. He further contends that section 245C contemplates full and true disclosure of income to be made before the Settlement Commission and the same was made by the assessee and as such the learned Sing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting lease -where the lessor treats the transaction as lease per se - accounts for the entire lease rentals as income and the lessor claims depreciation on the leased assets as owner and contends that assessee accounted for interest component alone as income in line with finance lease but claimed depreciation on the leased assets as an operating lease and as such the assessee apparently sought benefits under both forms of the lease which was impermissible in law resulting in evasion of income and tax. This fact was noticed by assessing officer after completion of the assessment for the assessment years up to 1997-98 and brought to tax the concealed lease rentals as income and initiated penalty proceedings and also reopened the completed assessments for the earlier years. He contends that it is thereafter application was filed by the assessed under section 245C(1) before the Settlement Commission. He submits that there is a marked difference between "discovered" or "disclosed" in as much as what was "discovered" by the assessing officer during the course of assessment proceedings could not form part of what was "disclosed" by the assessee in the application filed before the Settleme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Court sub-ordinate to the High Court, in the course of a suit or other proceeding not finally disposed of, which is attracted by Section 115 Code of Civil Procedure and is governed under Section 8 of the Karnataka High Court Act. .........." In the said judgment the issue under consideration was as to whether against an interim order passed by a sub-ordinate court if challenged in writ petition under Article 226 or 227 of the Constitution of India to get over restrictions imposed in section 115 C.P.C., in view of amendment brought to the said section by Act 46 of 1999 and not as to whether order passed in exercise of the power under Articles 226 227 of the Constitution of India is amenable to intra court appeal or not. In the instant case it is no doubt held by the Learned Single Judge that Annexure-G can be questioned under Articles 227 of the Constitution of India. That by itself would not wipe the prayer sought for in the writ petition which is both under Articles 226 227 of the Constitution of India. Hence the contention of learned counsel appearing for respondent that intra court appeal is not maintainable cannot be accepted and it stands rejected. Re: Point No. 2: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be relevant to note the provision governing the filing of an application by the assessee seeking settlement namely section 245C which reads as under: 245C. (1) An assessee may, at any stage of a case relating to him, make an application in such form and in such manner as may be prescribed, and containing a full and true disclosure of his income which has not been disclosed before the (Assessing) Officer, the manner in which such income has been derived, the additional amount of income-tax payable on such income and such other particulars as may be prescribed, to the Settlement Commission to have the case settled and any such application shall be disposed of in the manner hereinafter provided: [Provided that no such application shall be made unless,- (i) in a case where proceedings for assessment or reassessment for any of the assessment years referred to in section (b) of sub-section (1) of section 153A or clause (b) of sub-section (1) of section 153B in case of a person referred to in section 153A or section 153C have been initiated, the additional amount of income-tax payable on the income disclosed in the application exceeds fifty lakh rupees, (ii) in any other case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st day of June, 2007] [(1A) An immunity granted to a person under sub-section (1) shall stand withdrawn if such person fails to pay any sum specified in the order of settlement passed under sub-section (4) of section 245D within the time specified in such order or within such further time as may be allowed by the Settlement Commission, or fails to comply with any other condition subject to which the immunity was granted and thereupon the provisions of this Act shall apply as if such immunity had not been granted.] (2) An immunity granted to a person under sub-section (1) may, at any time, be withdrawn by the Settlement Commission, if it is satisfied that such person had, in the course of the settlement proceedings, concealed any particulars material to the settlement or had given false evidence, and thereupon such person may be tried for the offence with respect to which the immunity was granted or for any other offence of which he appears to have been guilty in connection with the settlement and shall also become liable to the imposition of any penalty under this Act to which such person would have been liable, had not such immunity been granted. A reading of the above provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment Commission in a given case is not satisfying the criteria then grant of immunity would not arise at all and as such while granting immunity from prosecution and imposition of penalty it is incumbent upon the Settlement Commission to examine the claim in this background namely as to the criteria prescribed under section 245C is wholly and in full complied or not. 17. 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. 18. Now, we would like to turn our attention to the Judgments relied upon by the assessee whereunder it has been held that it is not open to the High Court to say that the order passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h case and no straight-jacket formula for any universal application can be laid down. In the instant case, the Commission has been satisfied that grant of immunity is called for. Since the decision has not been questioned by the income tax authorities it has attained finality." In the above said case prosecution was launched against assessee for alleged concealment of income and thereby wilfully attempting to evade tax and for making false statement in the verification in terms of Section 276C of the Act. After sanction granted by the Commissioner. Cognizance was taken by the jurisdictional Court and being aggrieved by this the assessees filed petitions under section 482 seeking quashing of the proceedings by taking a specific stand that proceedings should not continue since the application of the assessee was pending before Settlement Commission which was not accepted by the High Court on the ground that no order of immunity had been passed by the Commission. The Hon'ble Apex Court after noticing the Judgment of B.N. Bhattachargee's case (supra) held grant of immunity is called for in a given case is to be decided by the Commission on the facts of each case and no straight-jacke ..... X X X X Extracts X X X X X X X X Extracts X X X X
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