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Mayura Prime Estates Ltd. & Ors. Versus Income Tax Settlement Commission & Ors.

2015 (12) TMI 629 - RAJASTHAN HIGH COURT

Prosecution under Section 276C(1) - willful attempt to evade tax by the petitioners by the Income Tax Department before the Special Court Economic Offence, Jaipur be stayed/suspended during the pendency of the present petition - Held that:- The order dated 28.06.2013 passed by the Settlement Commission is indeed under challenge before this Court. The petitioners appear to have made out a prima facie case with regard to lack of jurisdiction of the Settlement Commission for the reason that vide or .....

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TMI 35 - SUPREME COURT OF INDIA), the Settlement Commission had no jurisdiction to make a regular assessment qua an applicant who approached it for a settlement under Section 245C(1) of the Act of 1961. No clearly enunciated amendment altering this state of law has been brought to my notice. That no change of a substantive nature was made appears to be an admitted fact as reflected in the judgment of the Delhi High Court in the case of Commissioner of Income Tax Vs. Income Tax Settlement Commiss .....

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wer of the Settlement Commission, despite finding lack of true and full disclosure, to make a regular assessment qua the applicant before it, is in the circumstances a seriously contested one in respect of which no definitive opinion can be formed at the interim stage, as it would require an extended hearing.

Consequently, in the overall facts of the case, would direct that even though the prosecution against the petitioners initiated by the Income Tax Department may continue during t .....

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rder be passed whereby the prosecution under Section 276C(1) of the Income Tax Act, 1961 (hereinafter the Act of 1961 ) alleging willful attempt to evade tax by the petitioners by the Income Tax Department before the Special Court Economic Offence, Jaipur be stayed/suspended during the pendency of the present petition. Mr. Jhanwar, appearing for the petitioners has submitted that the Settlement Commission had no jurisdiction to pass the impugned order dated 28.06.2013 after having held that the .....

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)] equivalent citation [(2009) 184 Taxman 491 (Mad)] has held that the Settlement Commission, after having concluded that the applicant before it under Section 245C(1) of the Act of 1961 had not approached it with clean hands making a true and full disclosure of his income, ought to have dismissed the application before it without anything more and remitted the applicant for assessment of his income by the statutory authorities under the Income Tax Act, 1961. Part of para 10 of the aforesaid jud .....

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showing higher income in respect of the assessees. It has been submitted that albeit the judgment of the Madras High Court is prior to the amendment to Section 245D of the Tax of 1961 effective 1st June, 2007, yet the position fundamentally remains the same even thereafter, as evident from the fact that while the judgment of the Madras High Court was based on the judgment of the Hon'ble Supreme Court in the case of Ajmera Housing Corporation & Anr. ETC. ETC. Vs. Commissioner of Income Ta .....

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ains that the Settlement Commission has jurisdiction in respect of an application made before it under Section 245C(1) of the Act of 1961 only in the event of a true and full disclosure of the suppressed income. No sooner the Settlement Commission finds that the applicant before it has not come with true and full disclosure, it is obliged to reject the application. Thereafter the Commission cannot morph itself into an assessing authority and assess the applicant and raise a demand of tax alleged .....

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ed by a Special Leave Petition before the Hon'ble Supreme Court, which vide its order dated 17.10.2014 required the petitioners to deposit only ₹ 3 crores out of ₹ 30 crores of the amount purportedly assessed by the Settlement Commission. These facts, counsel submitted, fortify the case of the petitioners that the order of the Settlement Commission is prima facie without jurisdiction or lest the interim relief upto 90% of the assessment by the Settlement Commission would not have .....

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iated by the Income Tax Department upto ₹ 3 crores, for reasons beyond the control of the petitioners none of the properties attached are finding a buyer and the petitioners continue to remain in default upto that extent. Mr. Jhanwar then submitted that aside of liability on account of alleged tax assessed by the Settlement Commission, the petitioners in terms of liberty granted by the Settlement Commission as also under Section 276C(1) of the Act of 1961 are now sought to be prosecuted fo .....

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ill have to be adopted in matters of this nature where courts have taken the view that when the conclusions arrived at by the appellate authorities have a relevance and bearing upon the conclusions to be reached in the case necessarily one authority will have to await the outcome of the other authority. It was submitted that a similar view has been taken by the Division Bench of this High Court in the case of Malpani House of Stones Vs. Commissioner of Income Tax, D.B. Civil Misc. Stay Appl. No. .....

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t, then pending appeal, consequence of the order under challenge is implemented by prosecuting appellant thereby respondents are treating impugned order to be final though admitted for consideration by this Court Mr. Jhanwar submitted that the foundation of the prosecution against the petitioners is the order of Settlement Commission passed on 28.06.2013 which is under challenge before this Court for being without jurisdiction. One way or the other, there is no finality to the said order inasmuc .....

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oners i.e. Ajmera Housing Corporation (Supra) as also the judgment of the Madras High Court in the case of Canara Jewellers and Yogesh Palke (Supra) were judgments in the state of law prior to the amendment of Section 245D of the Act of 1961 effective 1st June, 2007. It was submitted that after the amendment to Section 245D of the Act of 1961 in the year 2007, the Settlement Commission has also the power to make a regular assessment of undisclosed income in the event of it finding that the appli .....

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counsel for the parties. The order dated 28.06.2013 passed by the Settlement Commission is indeed under challenge before this Court. The petitioners appear to have made out a prima facie case with regard to lack of jurisdiction of the Settlement Commission for the reason that vide order dated 17.10.2014 on proceedings commencing with an interim order in the present writ petition, the Hon'ble Supreme Court has required the petitioners to deposit only ₹ 3 crores of ₹ 30 crores of t .....

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