TMI Blog2014 (12) TMI 685X X X X Extracts X X X X X X X X Extracts X X X X ..... of the documents available - the enquiry by this Court can only be with regard to whether or not the Settlement Commission exercised a jurisdiction that it did not have or, alternatively, if it did have the jurisdiction, whether it erred in the exercise of that jurisdiction. One cannot discount the possibility of the Settlement Commission finding the disclosure of income made by an assessee as being full and true and yet requiring minor adjustments to include even those amounts, which though disputed by the assessee, would nevertheless be offered by the assessee in the interests of putting an end to litigation and in the spirit of settlement - These could be amounts, in respect of which, neither the department nor the assessee have sufficient material to substantiate their contentions, but the assessee is nevertheless willing to give up his claim in the interests of finality to litigation - The consent by an assessee to forgo such amounts, at the suggestion of the Settlement Commission, cannot have the effect of rendering his original disclosure dubious for the purposes of settlement under the Act - it is only in those cases where an assessee resiles from his original declaratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t additional amounts that were offered by the assessee at the instance of the Settlement Commission and added this amount to the total amount that had to be paid by the assessee for the purposes of settlement. The Settlement Commission also took into account the cooperation by the assessee during the proceedings before the Settlement Commission and granted immunity from penalty and prosecution in terms of Section 245H of the IT Act. It is this order of the Settlement Commission that is impugned by the Department in the instant writ petition. 3. A counter affidavit has been filed by the respondent wherein it is pointed out that the additional amount, over and in addition to the amounts of undisclosed income declared by the assessee along with the settlement application filed before the Commission, were all amounts that were offered pursuant to the suggestion of the Settlement Commission and with a view to put a finality to the litigation. It is explained that the said amounts were amounts in respect of which the Department did not have any material to proceed against the assessee and these were offered by way of effecting minor adjustments to the declaration already made before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome and the cooperation by the assessee during the proceedings before the Settlement Commission, for the purposes of grant of immunity from penalty and prosecution. 6. Per contra, the learned senior counsel appearing for the respondent would point out that order of the Settlement Commission had been conferred with a statutory finality under the IT Act and this Court would not normally interfere with the final orders passed by the Settlement Commission in exercise of its powers under Article 226 of the Constitution of India. As regards the contention of the learned Senior counsel for the petitioner, with reference to the Ajmera Housing Corporation's case [supra], it is pointed out that the said decision of the Supreme Court applied on the peculiar facts of that case and it would not apply across the board to all cases where there were additional offers of undisclosed income effected by the applicant before the Settlement Commission. It is his specific case that the assessee has cooperated through out the proceedings before the Settlement commission and hence the decision of the Settlement Commission to grant immunity from penalty and prosecution could not be found fault with. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. In this context, it is relevant to note that the principle of natural justice (audi alteram partem) has been incorporated in section 245D itself. The sole overall limitation upon the Commission, thus, appears to be that it should act in accordance with the provisions of the Act. The scope of enquiry, whether by the High Court under article 226 or by this Court under article 136, is also the same - whether the order of the Commission is contrary to any of the provisions of the Act and if so, apart from ground of bias, fraud and malice which, of course, constitute a separate and independent category, has it prejudiced the petitioner/appellant..... The Karnataka High Court in N.Krishnan (Decd. By legal representative, K.Badrinarayan, and others) v. Settlement Commission and Others - [1989 (180) ITR 585] observed as follows at page 597: The provision for settlement would show that it is in the nature of statutory arbitration to which a person may submit himself voluntarily. Hence, many of the grounds on which an arbitration award could be set aside would not be available in view of the nature and jurisdiction of the Settlement Commission. A decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontention of the learned senior counsel for the petitioner is that the very fact, that additional amounts were offered by the respondent assessee before the Settlement Commission, would indicate that the original declaration made by the respondent assessee, along with the application filed before the Settlement Commission, did not contain a full and true disclosure of the undisclosed income or the manner in which such income was derived. While considering a similar contention, raised in the other batch of cases that I had decided namely, in W.P.(C).No.2637/2014 and connected cases, I had examined the scheme of the Chapter XIX-A of the IT Act and found as follows: It is apparent from a perusal of the scheme of Chapter XIX-A of the IT Act that the jurisdictional fact that confers the settlement commission with the jurisdiction to proceed with an application is the filing by an applicant, of an application that that contains 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 and the additional amount of income tax payable on such income. If, at any stage of the proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tend only to such matters which are referred to in the report of the Commissioner under sub- section (1) or sub-section (3) of the said section. A full and true disclosure of income, which had not been previously disclosed by the assessee, being a pre-condition for a valid application under section 245(1) of the Act, the scheme of Chapter XIX -A does not contemplate revision of the income so disclosed in the application against item no.11 of the Form. Moreover, if an assessee is permitted to revise his disclosure, in essence, he would be making a fresh application in relation to the same case by withdrawing the earlier application. In this regard, section 245(3) of the Act which prohibits the withdrawal of an application once made under sub-section (1) of the said section is instructive inasmuch as it manifests that an assessee cannot be permitted to resile from his stand at any stage during the proceedings. Therefore, by revising the application, the applicant would be achieving something indirectly what he cannot otherwise achieve directly and in the process rendering the provision of sub-section (3) of section 245C of the Act otiose and meaningless. In our opinion, the scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erests of putting an end to litigation and in the spirit of settlement. These could be amounts, in respect of which, neither the department nor the assessee have sufficient material to substantiate their contentions, but the assessee is nevertheless willing to give up his claim in the interests of finality to litigation. The consent by an assessee to forgo such amounts, at the suggestion of the Settlement Commission, cannot have the effect of rendering his original disclosure dubious for the purposes of settlement under the Act. In my opinion, it is only in those cases where an assessee resiles from his original declaration of undisclosed income, by suo motu effecting revisions thereto, that he renders his application invalid for the purposes of settlement. In cases where additional amounts are offered by an assessee, pursuant to a relinquishment of his claims with regard to the non-taxability of such income, it would not be a case where the assessee is resiling from his original stand as regards undisclosed income. In the latter type of cases, the Settlement Commission would be well within its jurisdiction to include such amounts in the final amount for which the case before it is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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