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2015 (12) TMI 629 - RAJASTHAN HIGH COURT

2015 (12) TMI 629 - RAJASTHAN HIGH COURT - TMI - 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 .....

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the case of Ajmera Housing Corporation (2010 (8) 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 Commissione .....

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BR> The issue before this Court regarding the power 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 b .....

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ance of the petitioners praying that an interim order 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 o .....

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nt Commission & Anr. [(2009) 315 ITR 328 (Mad)] 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 Ta .....

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sdiction to pass any order enhancing the income, 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 & .....

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dment of Section 245D of the Act of 1961 thus remains 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 asses .....

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;ble Division Bench without success, was challenged 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 asses .....

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h the consideration from the sale/s being appropriated 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 t .....

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edings under the Act. However, a wholesome rule will 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. Commission .....

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to the impugned order and prosecute the appellant, 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 othe .....

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udgment relied upon by the counsel for the petitioners 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 .....

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ss Newspapers Ltd. [(1994) 2 SCC 374]. Heard the 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 deposi .....

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