TMI Blog2015 (7) TMI 921X X X X Extracts X X X X X X X X Extracts X X X X ..... erest of an equivalent amount of ₹ 8.85crores. These facts when brought to notice of the Commission at the hearing should have led the Commission to make some enquiry into it and not accept the Commissioner's report as unimpeachable. This is particularly so as a rejection at a stage when the petitioner has made full and true disclosure in the spirit of settlement, without proper examination does cause prejudice to the petitioner. A rejection of the application on dubious/suspicious ground made out in the report should not be allowed by the Commission without some enquiry to satisfy itself about the stand of the Commissioner. The circumstances surrounding the Commissioner report viz. of equal amount of interest demand to refund granted by the Intimation, not annexing the Intimation to the report and the Intimation itself being served upon the petitioner after over one year of its purported issue and after the Commissioner's report also raise questions about its authenticity. Thus an unjustified rejection without proper enquiry into the stand of the Revenue would cause prejudice to the assessee as all the information made available during the settlement proceedings would be cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s pending proceedings for Assessment Years 2007-08 to 20014-15. This on the ground that application for settlement as filed is not valid for failure to pay taxes on the additional declared income as contended by the Commissioner of Income Tax(Central) (Commissioner). This resulted in the pending proceeding of the Petitioner for Assessment Years 2007-08 to 20014-15 being restored to the Assessing officer. 4. On 23rd March, 2015, the Petitioner filed an application before the Commission under Section 245C(1) of the Act, seeking to settle its pending assessments for the Assessment Years 2007-08 to 2014-15. In its application, the Petitioner disclosed an additional income, aggregating to ₹ 13.64Crores for the Assessment Years 2007-08 to 2014-15 which was not disclosed before the Assessing Officer. The additional income tax payable along with interest thereon on the additional declared income was ₹ 2.77Crores. The Petitioner in its application for settlement had explained that it had fulfilled the requirement of paying the tax on the declared additional income by having paid an amount of ₹ 77lakhs into the treasury and adjusting an amount of ₹ 2.37Crores out o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear 2012-13, it was entitled to a refund and the Intimation under Section 143(1) of the Act contained error apparent from the record inasmuch as, after holding that the Petitioner is entitled to a refund of ₹ 8.85Crores, sets off the same against the interest demanded under Section 234B of the Act. 9. The Commission without awaiting the fate of the rectification application dated 9May 2015 or itself deciding on the correctness of the Commissioner's report or the rectification application, by an order dated 12th May, 2015, dismissed the Petitioner's application for settlement. This on the basis of the report of the Commissioner that no refund was due to the Petitioner for the Assessment Years 2010-11, 2011-12 and 2012-13. Consequently, the Petitioner would not be entitled to claim adjustment of the refund due against additional tax payable on the further disclosure of income tax. In the result, the Petitioner's application for settlement was dismissed as invalid. 10. Consequent to the above, on 22nd June, 2015, the Petitioner received a communication from the Assessing Officer, disposing off the Petitioner's application for rectification dated 18th June, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extent it adjusts the refund of ₹ 8.85crores due to the petitioner against the demand of interest is admittedly a mistake as is evident from the communication 22 June 2015 of the Assessing officer, holding that, prima facie, the Petitioner's claim for refund for Assessment Year 2012-13 is correct. Thus the entire exercise of the Commission in not applying its mind to the report of the Commissioner makes the decision making process vulnerable. In the above circumstances it is submitted that the order of the Commission dated 12 May 2015 be set aside and the application be restored to the Commission for fresh disposal. 13. As against the above, Mr. Tejveer Singh, learned Counsel appearing for the Respondent support the impugned order on the following ground: (a) The condition precedent for an application for settlement application being entertained by the Commission in terms of Section 245C of the Act is that the Petitioner must pay the tax and interest on the additional amount of income tax disclosed in the application. According to him, there is no provision for adjustment of refund payable to the Petitioner against demand of tax and interest to be paid by the Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll such time the Commission is seized of the proceedings, the Assessing officer shall cease to have jurisdiction over the assessee for the assessment years under consideration of the Commission. 15. Keeping in view the above Scheme of Settlement as provided in the Act and also being conscious of the fact that in writ jurisdiction we are more concerned with examining the decision making process, we shall examine the challenge in the present petition. The issue for examination is whether the dismissal of the Petitioner's application for settlement at the stage of Section 245(2D) of the Act merely on the ground of the Commissioner's report dated 5 may 2015 was justified particularly when on the face of it the assertion of the Commissioner required some investigation. 16. The Petitioner made an application for settlement on 23 March 2015 for the Assessment year 2007-08 to 2014-15. The petitioner appears to have prima facie satisfied the condition precedent for a valid application for Settlement. This is evident from the order of the Commission dated 31st March, 2015 under Section 245D(1) of the Act wherein it is recorded that the Petitioner had disclosed its additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Petitioner that it is entitled to refund of ₹ 8.85crores has adjusted the entire refund to satisfy a demand on account of interest of an equivalent amount of ₹ 8.85crores. These facts when brought to notice of the Commission at the hearing should have led the Commission to make some enquiry into it and not accept the Commissioner's report as unimpeachable. This is particularly so as a rejection at a stage when the petitioner has made full and true disclosure in the spirit of settlement, without proper examination does cause prejudice to the petitioner. A rejection of the application on dubious/suspicious ground made out in the report should not be allowed by the Commission without some enquiry to satisfy itself about the stand of the Commissioner. The circumstances surrounding the Commissioner report viz. of equal amount of interest demand to refund granted by the Intimation, not annexing the Intimation to the report and the Intimation itself being served upon the petitioner after over one year of its purported issue and after the Commissioner's report also raise questions about its authenticity. Thus an unjustified rejection without proper enquiry into the st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner before the Commission. Both of them have proceeded on the basis that as the Petitioner is not entitled to any refund, consequently occasion for setting off the tax payable for settlement does not arise. This being a new ground and not the basis of the impugned order, we see no reason to examine it at this stage. 23. The next objection raised by Mr. Tejveer Singh is that restoring the application to the file of the Commission would contravene Section 245k of the Act. This section prohibits a subsequent application by a person whose application for settlement has been allowed to be proceeded with earlier under Section 245D(1) of the Act. It has no bearing on the present dispute in any manner. The setting aside of the impugned order dated 12th May, 2015 and restoring the Petitioner's application to the file of the Commission would not amount to filing of a fresh application for settlement but only the earlier application for settlement would stand revived. Accordingly, the second objection taken by the Revenue is also not sustainable. 24. We take note of the fact that the Commissioner in its report dated 5th May, 2015 before the Commission, had categorically ..... X X X X Extracts X X X X X X X X Extracts X X X X
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