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TMI Blog2014 (5) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... on 153A. On 31.5.2007, the petitioner approached the Settlement Commission to settle pending assessments for AY 2000-2001 to 2006-2007 and declared an additional income of Rs.18.75 crores. Initially, after hearing parties, the Commission admitted the application for hearing and disposal. On 17.8.2008, the Commission passed its order under Section 245D(4), finally determining the petitioner's liability, for 2004-05 to 2006-07. 3. The AO issued notice under Section 148, on 30.6.2010 proposing reopening of assessment for 2006-07. The petitioner objected to this on 30.7.2010; those objections were rejected by the AO on 30.10.2010. In this background, the AO passed the final reassessment order on 08.11.2011. This was challenged in WP(C) 7975/2011 filed by the petitioner. 4. In the meanwhile, consequent to search in the premises of one Mr. Surinder Modi in June, 2009, a satisfaction note was recorded by the AO (of Shri Modi) for initiating proceedings under Section 153C of the Act against the petitioner for 2004-05 to 2009-10. The Revenue, consequent to search (in the case of Mr. Modi), issued notices under Section 153C of the Act seeking to reassess the petitioner's income, inter alia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rities. 9. Learned counsel relies upon the decision of the Supreme Court in Commissioner of Income Tax v Express Newspapers Ltd. (1994) 206 ITR 443 and of this Court in Vatika Farms Pvt. Ltd. v Commissioner of Income Tax 302 ITR 98 to say that by virtue of Section 245D(4), the orders of the Commission are final and conclusive to the matters stated there and matters covered by it cannot be reopened in any proceedings under the Act. Reliance is also placed upon the Constitution Bench decision of the Supreme Court in Brij Lal v Commissioner of Income Tax 328 ITR 477 where it was held as follows : "........... Consequently, Section 234B, Section 245D(2C) and Section 245D(6A) in Chapter XIX-A operates in different fields. To this extent, we agree with the view expressed in Damani Brothers' case. Descriptively, it can be stated that assessment in law is different from assessment by way of settlement. If one reads Section 245D(6) with Section 245-I, it becomes clear that every order of settlement passed under Section 245D(4) shall be final and conclusive as to the matters contained therein and that the same shall not be reopened except in the case of fraud and misrepresentation. Under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner's premises were searched, and Section 153A notice was issued, it approached the Settlement Commission. The Commission made its final orders determining the petitioner's liability. The AO, subsequent to this event, issued a notice on 30.6.2010 under Section 148 proposing reassessment proceedings. On that occasion, this Court was approached. The reassessment notice was quashed in Omaxe (supra). The relevant discussion at that stage may be usefully reproduced as extracted below : "12. A conjoint reading of the aforesaid provisions indicates that the ITSC is a high powered body vested with powers to settle the case of an assessee. The order of settlement is conclusive as expressly stated in Section 245I but the argument of the Revenue is that it is conclusive only with regard to matters stated in the order of settlement and in respect of matters not stated therein, the Assessing Officer has the power to reopen the assessment. It is further submitted that the assessee did not approach the ITSC with regard to settlement of its claim for deduction under Section 80IB(10) of the Act and there was no adjudication of the said claim in the order of the ITSC. It is therefore submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ality of the order of settlement be disturbed, but it will also result in different orders relating to the same assessment year and relating to the same assessee being allowed to stand. We have grave doubts whether such a result, which is likely to create chaos and confusion in the tax administration could have been intended. The order of the ITSC can be reopened only in cases of fraud and misrepresentation and in no other case. ************* *********** 19. Thus if the observations made by the Court in the paragraph at page 484 of the report are read as a whole, it would be clear that the Court was dealing with a plea which attributed an active role as an income tax authority to the ITSC even during the pendency of the application till an order under Section 245D (1) was passed and thereafter once an order was passed allowing the application to be proceeded, a role combining the functions of both an assessing authority and an authority settling the case. The Court repelled the plea by clarifying certain observations made by the Supreme Court in CIT v. Express Newspapers Ltd., (1994) 206 ITR 443. What the learned standing counsel relied upon before us are observations of the Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to countenance a situation where it can be said that the assessee's claim for deduction under Section 80IB (10) was not the subject matter of the order passed by the ITSC under Section 245D (4). It is further necessary to keep in mind that Section245B (3) requires that the ITSC shall be manned by "persons of integrity and outstanding ability having special knowledge of, and, experience in, problems relating to direct taxes and business accounts". The provisions of Chapter XIX-A suggest that all matters in relation to the case of the assessee shall be dealt with by the ITSC just as an assessing authority would deal with them while completing an assessment under Section 143 (3) of the Act. If this is the position, it would be difficult to sustain the argument of the revenue that the matter relating to the deduction under Section 80IB (10) was not the subject matter of the final order of settlement. It follows that the Assessing Officer had no jurisdiction to reopen the assessment for the assessment year 2006-07 by issuing a notice under Section 148 of the Act on the ground that the deduction was wrongly allowed. 20. The issue can also be viewed from another angle. Barring the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the Settlement Commission in case of all applications made under section 245C on or after the 1st day of July, 1995 and if the Commissioner fails to furnish the report within the said period, the Settlement Commission may make the order without such report.] (1A) 72[Omitted by the Finance (No. 2) Act, 1991, w.e.f. 27-9-1991.] (2) A copy of every order under sub-section (1) shall be sent to the applicant and to the Commissioner. 73[(2A) Subject to the provisions of sub-section (2B), the assessee shall, within thirty-five days of the receipt of a copy of the order under sub-section (1) 74[allowing the application to be proceeded with], pay the additional amount of income-tax payable on the income disclosed in the application and shall furnish proof of such payment to the Settlement Commission.] 74[(2B) If the Settlement Commission is satisfied, on an application made in this behalf by the assessee, that he is unable for good and sufficient reasons to pay the additional amount of income-tax referred to in sub-section (2A) within the time specified in that sub-section, it may extend the time for payment of the amount which remains unpaid or allow payment thereof by installments i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner under sub-section (1) or subsection (3). 77[(4A) In every application allowed to be proceeded with under sub-section (1), the Settlement Commission shall, where it is possible, pass an order under sub-section (4) within a period of four years from the end of the financial year in which such application was allowed to be proceeded with.] 78[(5) Subject to the provisions of section 245BA, the materials brought on record before the Settlement Commission shall be considered by the Members of the concerned Bench before passing any order under subsection (4) and, in relation to the passing of such order, the provisions of section 245BD shall apply.] (6) Every order passed under sub-section (4) shall provide for the terms of settlement79 including any demand by way of 80[tax, penalty or interest], the manner in which any sum due under the settlement79 shall be paid and all other matters to make the settlement effective and shall also provide that the settlement shall be void if it is subsequently found by the Settlement Commission that it has been obtained by fraud or misrepresentation of facts. 81[(6A) Where any tax payable in pursuance of an order under sub-section (4) is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect appears to be, the ruling in Omaxe (supra) precludes exercise of authority by the Revenue. Whilst from the Revenue's perspective, every non-disclosure or a fresh discovery of facts which might have a bearing on the assessee's returns, prima facie, stands excluded from what is referred to a Settlement Commission, the fallacy in that argument is the Commission has a full weight and the jurisdiction of all the authorities under the Income Tax Act when it is seized of a matter. Concededly in this case, the subject matter before the Commission was the submission of the assessee to its jurisdiction with respect to AY 2006-07. Of course, the Revenue contends that the recovery of material in a third party's premises were not a subject matter of the settlement proceedings, which got concluded on 17.3.2008. However, equally its case can proceed only on the assumption that the assessee was guilty of non-disclosure or suppression of material facts which ought to have been primarily revealed to the Settlement Commission when the application was moved under Section 245D in the first place. The fallacy in the Revenue's argument is that it overlooks the remedy available for the Revenue, i.e t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of AY 2006-07. Whilst exercising its authority over the application, the Commission concededly exercised the vast plenitude of its power or jurisdiction. The petitioner had made a disclosure in its application - as it was duty bound to. What is in controversy today is that the subsequent event of search and seizure operation conducted in the premises of Shri Modi - in the contention of the Revenue - have thrown light on material that had been suppressed from the Commission. If such is the case, it would be only logical that the Commission itself should be approached for a declaration that its order of 17.3.2008 is a nullity. Allowing any other authority, even by way of a notice under Section 153C, would be to permit multiple jurisdictions which can result in chaos. After all non-disclosure or suppression of information in respect of what is required to be revealed to the concerned authorities is akin to fraud and if it has a material bearing on the outcome of the assessment, it would most certainly be misrepresentation. During the course of hearing, the learned counsel for the Revenue had voiced apprehensions that the Commission might well be of the opinion that "misrepresentation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f imagination to be review of the earlier judgment or the subsequent Bench sitting in appeal over the earlier Bench's decision. Further the conclusions of the Commission regarding the genuineness of the loan transactions were arrived at without indicating reasons. It only referred to the respective stands and the submissions of the assessee's counsel. That was not the proper way to deal with the matter. The foundation for settlement is an application which assessee can file at any stage of a case relating to him in such form and in such manner as is prescribed. The statutory mandate is that the application shall contain "full and true disclosure" of the income which has not been disclosed before the assessing officer, the manner in which such income has been derived. The fundamental requirement of the application under Section 245C is that full and true disclosure of the income has to be made, along with the manner in which such income was derived. On receipt of the application, the Commission calls for report from the Commissioner and on the basis of the material contained in the report and having regard to the nature and circumstances of the case or complexity of the in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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