TMI Blog2014 (5) TMI 818X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court observed that the High Court ought not to gone into a factual issue while exercising writ jurisdiction and should not have substituted its opinion against the opinion of the Settlement Commission. The scope of review under Article 226 of the Constitution insofar as an order passed by the Settlement Commission u/s 245 D (4) of the Act is concerned, is a very limited one - This Court cannot substitute its view in place of the Settlement Commission particularly on point of interpretation of a particular document - Interference can only be made if there is a fault in the decision making process and not with the decision itself - The interpretation which has been placed by the Settlement Commission on the documents, first of all, results in a finding of fact which cannot be interfered with - the interpretation is not so outlandish to be categorized as arbitrary or perverse so as to call for interference - the interpretation sought to be placed by the Revenue may be a possible interpretation but, so, too, would be the interpretation placed by the Settlement Commission which has also been espoused by the learned counsel for respondent No.1. In such a situation no int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as income before the Settlement Commission. The stand taken by the Revenue that the said sum of Rs.6.00 crores is not the principal amount of loans received by respondent no.1 but only the interest received by respondent No.1 on much larger loans extended by respondent No.1 to five persons on 07.11.2008. As per the Revenue, the receipts disclosed the rate of interest @1.25%. Since the Revenue has taken the stand that the amounts received by respondent No.1 constituted interest payments, the total principal amount would amount to Rs.80.00 crores. The Revenue has contended that while the receipt of Rs.6.00 crores by way of interest has been disclosed to the Settlement Commission, the principal amount of Rs.80.00 crores by way of investment has not been disclosed and therefore the respondent No.1 has not made a full and true disclosure of his income even before the Settlement Commission which is a mandatory requirement under Section 245C of the Income Tax Act, 1961. Consequently, the impugned order was liable to be set aside on this ground alone. 3. One of the receipts dated 07.11.2008 which has been reproduced in the impugned order dated 21.05.2012 is also set out herein below:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t recorded in the month of June, 2009 he submitted that it was actually a loan received by him for a period of six months. It is important to note that the word loan has not been mentioned on the documents seized during the search. As such, the explanation given by the applicant is clearly an afterthought. Even during the statement under section 132(4) of the Act, the applicant had given the evasive reply. (iii) The applicant has not disowned the documents and the contents. The presumption u/s. 132(4A) of the Income Tax Act, 1961 has not been rebutted by him. The reference is placed on the decision of the Hon'ble Delhi High Court in the case of Smt. Urmila Gambhir. 5. On behalf of the respondent No.1, the submissions made before the Settlement Commission were as under:- 12. During the course of hearing the learned AR has submitted as under:- i) The receipts represent the money borrowed by the applicant, Mr. Sri Gopal Gupta from different persons through a common broker Shri Suresh Bansal. ii) The language of the receipts is cryptic and gives an impression that the receipts were on account of receipt of interest on some loan given. Whereas in actuality the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the five receipts of total amount of Rs. 6 crores are on account of loans taken by Shri Sri Gopal Gupta from the persons mentioned in the receipts or whether the amount of Rs. 6 crores are on account of interest received by Shri Sri Gopal Gupta on loans given by him to the said persons. 16. In our view, the words A/c Account of interest payable @1.25% for six months are very important and has to be interpreted considering the totality of circumstances. The words used are interest payable and not interest receivable . The words interest payable will be applicable to the person who has signed the receipt and not to the person for whom the receipt is signed. It is seen that the five receipts are the photocopies and not the original receipts. Logically the original receipts will be kept by the person who may need it to use it as a safety in case of any default. The photocopy will be kept by the person who wants to keep it as a matter of record and no original record needed. In case of default, the photocopy of the receipts will not have any legal force. In such situation only original receipts will have legal validity. It is a wide practice that even in cases of unacc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this backdrop, the question that arises is as to what degree, if at all, can this Court interfere when two possible interpretations are placed before it with regard to a document which is of vital importance and when one of the interpretations has been accepted by the Settlement Commission. In this context, Mr. Tripathi, the learned senior counsel appearing on behalf of respondent No.1 placed reliance on the following four decisions of the Supreme Court:- 1. R.B. Shreeram Durga Prasad v. Settlement Commission Another: (1989) 1 SCC 628; 2. Jyotendrasinhji v. S.I. Tripathi Ors.: 1993 Supp (3) SCC 38; 3. Shriyans Prasad Jain v. Income Tax Officer Ors.: 1993 Supp (4) SCC 727; and 4. Union of India Others v. Ind-Swift Laboratories: (2011) 4 SCC 635. 10. In R.B. Shreeram Durga Prasad (supra) the Supreme Court observed that in the exercise of power of judicial review of a decision of the Settlement Commission, the Court is concerned with the legality of procedure followed and not with the validity of the order. The Supreme Court also placed reliance on the English decision in the case of Chief Constable of the North Wales Police v. Evans: (1982) 1 WLR 1155. The Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee should not be permitted to accept what is favourable to him and reject what is not. According to learned counsel, the Commission is not even required or obligated to pass a reasoned order. Be that as it may, the fact remains that it is open to the Commission to accept an amount of tax by way of settlement and to prescribe the manner in which the said amount shall be paid. It may condone the defaults and lapses on the part of the assessee and may waive interest, penalties or prosecution, where it thinks appropriate. Indeed, it would be difficult to predicate the reasons and considerations which induce the Commission to make a particular order, unless of course the Commission itself chooses to give reasons for its order. Even if it gives reasons in a given case, the scope of enquiry in the appeal remains the same as indicated above viz., whether it is contrary to any of the provisions of the Act. In this context, it is relevant to note that the principle of natural justice (audi alteram partem) has been incorporated in Section 245-D itself. The sole overall limitation upon the Commission thus appears to be that it should act in accordance with the provisions of the Act. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and it is enough if we confine ourselves to the question whether the order of the Commission is contrary to the provisions of the Act, we propose to, for the sake of completeness, examine also whether the order of the Commission is vitiated by any such wrong interpretation? (underlining added) 12. The next decision which was relied upon by Mr. Tripathi was that of Shriyans Prasad Jain (supra) wherein the Supreme Court again placed reliance on R.B. Shreeram Durga Prasad (supra) and Jyotendrasinhji (supra) and observed as under:- 19. Mr Poti, learned counsel for the Revenue, is right in submitting that in this appeal this Court would not go into questions of the fact or review the findings of fact recorded by the Commission. As pointed out by this Court in Jyotendrasinhji v. S.I. Tripathi [1993 Supp (3) SCC 389: (1993) 201 ITR 611] this Court can interfere with the Commission's order only if it is found to be contrary to any of the provisions of the Act . To the same effect is the earlier decision of this Court in R.B. Shreeram Durga Prasad and Fatehchand Nursing Das v. Settlement Commission [(1989) 1 SCC 628 : 1989 SCC (Tax) 124 : (1989) 176 ITR 169] . (underli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a particular document. Interference can only be made if there is a fault in the decision making process and not with the decision itself. Even if this Court feels that it would have arrived at a different decision, it cannot interfere with the conclusion arrived at by the Settlement Commission because this Court does not sit in appeal over the decision of the Settlement Commission. 16. In this context, it is to be seen that the only point urged by the learned counsel for the Revenue is that the interpretation placed on the receipts was erroneous. The interpretation which has been placed by the Settlement Commission on the documents in question, first of all, results in a finding of fact which, as we have seen, cannot be interfered with. And, secondly, the interpretation is not so outlandish to be categorized as arbitrary or perverse so as to call for interference. We make it clear that the interpretation sought to be placed by the Revenue may be a possible interpretation but, so, too, would be the interpretation placed by the Settlement Commission which has also been espoused by the learned counsel for respondent No.1. In such a situation no interference with the Settlement Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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