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Principal Commissioner of Income Tax (Central) Versus Settlement Commission

2016 (1) TMI 137 - GUJARAT HIGH COURT

Validity of application for settlement to Settlement Commission - Held that:- We record the contention of the Counsel for the assessee that despite the orders being passed by the Settlement Commission under sub-section (1) of Section 245D and Section 245D(2C) of the Act, the question of fulfillment of all material requirements of a valid application for settlement would be still open for the Commission to examine before further inquiry under sub-section (3) of Section 245D and passing final orde .....

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tive and it will be open for the Settlement Commission to examine these aspects before passing final order under sub-section (4) of Section 245D of the Act. Under the circumstances, we are not inclined to scrutinize the decisions of the Settlement Commission. - Special Civil Application No 12209 of 2015 - Dated:- 8-12-2015 - Akil Kureshi And Mohinder Pal, JJ. For the Appellant : Mr Manish R Bhatt, Sr Adv, with Mrs Mauna M Bhatt, Adv For the Respondent : Mr B S Soparkar, Adv ORDER ( Per : Honoura .....

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ted 23.03.2015 under Section 245D(2C) of the Act and allowed the said application to proceed further from that stage. These orders the Income Tax Department has challenged on various grounds. 2. The case of the Department is that both the orders of the Settlement Commission suffer from material irregularities. Application for settlement was irregular and that therefore, ought not to have been proceeded further beyond the stage of Section 245D(1) of the Act. In any case, assessee had not made tru .....

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and none of the observations made by the Settlement Commission in the impugned orders would act as res judicata. Learned Counsel Shri Bandish Soparkar for the assessee drew our attention to judgment of Division Bench of this Court in case of Vishnubhai Mafatlal Patel Vs. Assistant Commissioner of Income Tax, reported in [2013] 31 taxmann.com 99 (Gujarat), in which it was observed that order allowing settlement application to proceed beyond the stage of sub-section (1) of Section 245D of the Act .....

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e Settlement Commission under Section 245D(2C) of the Act, it was observed that such order is not final and is subject to the final orders that may be passed by the Settlement Commission under Section 245D(4) of the Act. 4. Insofar as the order of the Settlement Commission under Section 245D(1) of the Act on 28.01.2015 is concerned, the same poses no serious consideration. Under sub-section (1) of Section 245C of the Act, an assessee is allowed to make an application for settlement in prescribed .....

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ded with and on hearing the applicant, the Settlement Commission shall pass, within fourteen days from the date of the application, an order in writing rejecting the application or allowing the application to be proceeded with. Proviso to sub-section (1) of Section 245D would make it clear that where no such order has been passed within the aforesaid period by the Settlement Commission, the application shall be deemed to have been allowed to be proceeded with. 5. Thus, at the stage of sub-sectio .....

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section 245C(1) of the Act, of containing full and true disclosure of income which has not been disclosed before the Assessing Officer and the manner in which such income has been derived, are thus of considerable importance and would be open for the Settlement Commission to examine the fulfillment thereof at several stages of the settlement proceedings. If therefore, while at the threshold, considering the question whether such application should be allowed to be proceeded with or be rejected, .....

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e may refer to the decision of the Supreme Court in case of Ajmera Housing Corporation and another(supra). It was a case in which the assessee had made certain disclosures in the initial application under section 245C(1) of the Act. Such disclosures were however, revised and additional income was disclosed in the revised annexures. The Apex Court held that the assessee had no right to revise an application under section 245C(1) of the Act and further that such revised annexure making further dis .....

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i Mafatlal Patel (supra) makes no reference. However, we have, as pointed out by the Counsel for the assessee, judgment of the Delhi High Court in case of Commissioner of Income Tax Vs. Income Tax Settlement Commission (supra), in which, in the context of the stages envisaged under sub-section (1) of Section 245D of the Act, the Court held and observed as under:- 13. From the above provisions, it is apparent that the settlement application passes through several stages before the final order pro .....

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full and true disclosure on the part of the applicants and the manner in which the undisclosed income was derived is still open for discussion and debate and the Settlement Commission would have to give its final decision on these aspects before an order of settlement is passed under Section 245D(4) of the said Act. Therefore, on a plain reading of the provisions, it is apparent that the submission made by the learned counsel for the respondents 2 to 5 merits acceptance insofar as it was conten .....

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ction 245D(1) and has not been held to be invalid under Section 245D(2C), the validity of the same in terms of the requisite conditions stipulated in Section 245C(1) cannot be gone into at the subsequent stages up to the passing of the order under Section 245D(4) of the said Act. 7. In the said judgment, as reproduced in para-13, the Counsel for the assessee had not contended that once the application has been proceeded with under Section 245D(1) and has not been held to be invalid under Section .....

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