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TMI Blog2016 (2) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 7.12.2012. The respondent is said to have filed a return of income pursuant thereto. And further, during the pendency of the said proceedings, the assessee is said to have filed an application under Section 245C of the IT Act before the Settlement Commission, as on 6.2.2014, in Form no. 34B. The Settlement Commission is said to have issued notice to Respondent no.1 under Section 245D(1) of the IT Act. It had then passed an order under Section 245D(1) to proceed with the application vide proceedings dated 18.2.2014. The Settlement Commission had then called for a report from the petitioner as required under Section 245(D)(2B) of the IT Act. The petitioner is said to have submitted a report in compliance with the same. The petitioner had objected to the application filed by respondent no.1 on the ground that there was no true and full disclosure and that the requisite tax had also not been paid. It was emphasized that the unaccounted income detected during the course of search was not fully disclosed. And hence sought that the application be rejected. The Settlement Commission however chose to proceed with the further enquiry. It is the petitioner's contention that the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int out that Section 245D(2C) enjoins the Settlement Commission to declare an application as invalid on the basis of the report of the Commissioner. It does not contemplate "rejection" of the application on the basis of the objection by the Commissioner. It is asserted that Section 245 D(2C) does not require the Settlement Commission to adjudicate on the objection filed by the Commissioner. It is contended that the Settlement Commission has been empowered to declare whether the application under consideration is invalid on the basis of the report of the Commissioner and nothing more. There is no mandate contemplated under Section 245D(2C), for an adjudication on the objection filed. It is pointed out that the Commissioner having objected to the application on the ground that there was no full and true disclosure, has provided the amount of unaccounted income said to have been detected by the Investigation wing. The basis for arriving at the unaccounted income by the Investigation Wing, is not disclosed to this Court. There is no opportunity provided as yet, to the respondent - by the Commissioner to dispute the correctness of the unaccounted income detected. It is contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sure made in the Settlement Application is not full and true. So far as other conditions are concerned, they stand satisfied by the Applicant. We, therefore, allow the Settlement Application to be proceeded with under Section 245D(1) of the Act." From the above, it is evident that the Settlement Commission has satisfied itself that the application of the assessee has made, what is claimed as, a full and true disclosure of the income which has not been disclosed before the Assessing Officer; the manner in which such income has been derived and the additional income tax payable on such income. In so far as the procedure that is to be followed by the Settlement Commission under Section 245D of the Act, is discussed by the Apex Court, in the above decision, thus : "26. The procedure laid down in Section 245D of the Act, contemplates that on receipt of the application under Section 245C(1) of the Act, the Settlement Commission is required to forward a copy of the application filed in the prescribed form (No.34B), containing full details of issues for which application for settlement is made, the nature and circumstances of the case and complexities of the investigation involved, sav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommission decides to proceed with the application, it will not be denuded of its power to examine as to whether in his application under Section 245C(1) of the Act, the assessee has made a full and true disclosure of his undisclosed income. We feel that the report(s) of the CIT and other documents coming on record at different stages of the consideration of the case, before or after the Settlement Commission has decided to proceed with the application would be most germane to determination of the said question. It is plain from the language of sub-section (4) of section 245D of the Act that the jurisdiction of the Settlement Commission to pass such orders as it may think fit is confined to the matters covered by the application and it can extend only to such matters which are referred to in the report of the CIT under subsection (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 precondition for a valid application under section 245C(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." (e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o provide that the Commissioner shall furnish the report within a period of one hundred and twenty days of the receipt of communication from the Settlement Commission in case of all applications made under section 245C on or after the date on which the Finance Act received the assent of the President (i.e., 27th September, 1991) and if the Commissioner fails to furnish the report within the said period, the Settlement Commission may make the order on the application without such report. The provisions relating to filing of objection by the Commissioner against proceedings with the application made under section 245C contained in sub-section (1A) of section 245D, have also been omitted. 65.2 Similar amendment has been made to the corresponding provisions in section 22D of the Wealth-tax Act. 65.3 These amendments take effect from 27th September, 1991, i.e., the date on which the Act received the assent of the President" (emphasis added)." It would thus appear that the report submitted in the first instance by the CIT is 'primarily on the nature of the case and the complexities of the investigation, as the Annexure filed in support of the disclosure of undisclosed income .. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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