TMI Blog2016 (9) TMI 817X X X X Extracts X X X X X X X X Extracts X X X X ..... t, a complete mechanism has been provided for dealing with Settlement applications and the said mechanism is a complete code in itself and merely because of the fact that an interim admission order has been passed under Section 245(D)(2C), it does not mean that any irreparable loss has been caused to the Income Tax Department. In the considered opinion of this Court, as the matter is pending before the Settlement Commission and no final order has been passed and as the Commission is now seized with the matter, all the grounds raised by the petitioner shall be looked into and shall be considered by the Settlement Commission while passing a final Order. Resultantly, no case for interference is made out in the matter. However, by way of abundant caution, it is observed that any observation made by this Court will not affect in any way the subject matter pending for consideration before the Settlement commission. The Settlement Commission shall decide the matter strictly in accordance keeping in view the statutory provisions as contained under the Income Tax Act. - W.P.No.1491/2016, W.P.No.1492/2016, W.P.No.1493/2016, W.P.No.1494/2016 - - - Dated:- 30-8-2016 - S. C. Sharma An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2015 passed under Section 245D(2C) of the Act declared the four applications of the Group as 'Not Invalid'. Meaning thereby, the Settlement Commission is proceeding ahead in the matter to decide the issue. 8. The contention of the learned Counsel appearing on behalf of the Income Tax Department is that based upon the materials seized from the residential premises and other premises of the group, there was huge tax evasion done by Shri Gopal Goyal and Shri Sanjay Dasot and the assessee's total estimated income comes to ₹ 289.16 crores and the settlement commission is proceeding ahead in the matter by taking into account a meager amount of ₹ 19.08 crores. The other grounds have also been raised by the petitioner. However, Shri Sumit Nema appearing on behalf of respondent No.1 has vehemently argued before this Court that the order dated 18/05/2015 passed by the Settlement Commission under Section 245D(2C) of the Income Tax Act is only a primafacie order which deals only with the aspect of either accepting the application or rejecting the application. No final order has been passed by the Settlement Commission and the Settlement Commission has to proceed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case the department has not adduced any evidence which could conclusively prove that the information submitted by the applicants was incorrect, false or applicants had withheld certain information to the detrimental interest of the revenue. On the other hand the applicants stated that they have made the declaration true and full before the Commission. We are conscious that at the 245D(2C) stage it is not expected by the applicants or the department to establish beyond doubt by adducing of all the evidences at this juncture to prove their versions or stands. What is expected at the level of 245D(2C) is to examine in a macroscopic manner whether there is any information available with the department or with the Commission which would warrant to hold that the information or the income declared by the applicants is not true and full. Here we find that we do not have any such information either at our level or any such information has been provided by the department. Hence as of now we hold that the information and department. Hence as of now we hold that the information and the facts given by the applicants are true and full on the basis of which the income offered by them was to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have heard learned counsel for the parties at length and perused the records. 7- We find that merely because the application filed under section 245-D(1) has been admitted and the Report of the Department under section 245-D(2) has not been considered, no case is made out for interference. The matter is still pending before the Settlement Commissioner, the petitioner can raise all the grounds before the Settlement Commissioner, including the objection as are raised in the writ petition, and it is for the Settlement Commissioner to look into this aspect of the matter and proceed in accordance with law. This is the principle which we find from the order passed by the Supreme Court in the case of K. Jayaprakash Narayanan (supra) and the law laid down by a Coordinate Bench of this Court, in the case of Asian Natural Resources India Limited (supra). 8- The judgments cited by the Revenue based on the decision rendered by the Bombay High Court and the Delhi High Court, in the cases of Commissioner of Income Tax (Central) [supra) and Marc Bathing Luxuries Limited (supra) need not be considered at this stage, when a Coordinate Bench of this Court under similar circumstances in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant had made a full and true disclosure before it admitted the application or took any further steps on the basis thereof. This argument was rejected by the Division Bench. The Division Bench was of the view that while the foundation for settlement was an application from the assessee in which the assessee is required to make a full and true disclosure, it was equally true that such requirement need not be examined and authoritatively determined at the threshold of any proceeding initiated before the Commission. Importantly, the Division Bench observed that there may be cases where it is possible for the Commission to record a finding that the disclosure made in the application is full and true. At the same time, there could also be situations in which the Commission may not be able to, at the stage of admission of the application, record a finding with any amount of certainty. It is in such a situation that it would be permissible for the Commission to keep the question open to be examined at a later stage or at the stage of disposal of the application. As in the case of True Woods Pvt. Ltd. (supra), this is exactly what has happened in the present case. The Settlement Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich set aside the same on, inter alia, the ground that no finding had been returned by the Settlement Commission as to whether there was a full and true disclosure of income on the part of the assessee/applicant. The Bombay High Court also held that the order dated 17.11.1994 passed under Section 245D(1) of the said Act was void and remitted the case to the Settlement Commission for a decision afresh and kept all the questions open. The applicant/assessee, being aggrieved by the said decision of the Bombay High Court, went up in appeal before the Supreme Court which, by an order dated 11.07.2006, set aside the Bombay High Court order and remitted the matter to the High Court for a fresh decision. In the second round, the Bombay High Court again set aside the Income Tax Settlement Commission's order dated 29.01.1999 and remanded the case to the Settlement Commission for fresh adjudication. While doing so, the Bombay High Court observed as under:- In view of the facts and the legal position noted above, even though we find that the respondents had not made full and true disclosure of their income while making applications under Section 245C, it would not be proper to set a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith under Section 245D(1), such person shall not subsequently be entitled to make an application under Section 245C. It was contended by the learned counsel for the respondents 2 to 5 that this bar from making another application under Section 245C would only apply if the earlier application had been allowed to be proceeded with under Section 245D(1). But, in the present case, the earlier applications filed by respondents 3 and 4 had not been allowed to be proceeded with under Section 245D(1) and had been rejected at the threshold for want of payment of the full amount of the additional tax and interest due. Prima facie, we are in agreement with the submission made by the learned counsel for the respondents. However, since we are not inclined to interfere with the impugned orders, we feel that this issue can also be left open to be decided by the Settlement Commission at the time of further proceedings till the order under Section 245D(4) is passed. For all these reasons, we agree with the learned counsel for the respondents 2 to 5 that this is not the stage at which this Court ought to interfere with the impugned orders and the proceedings pending before the Settlement Commission. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs covered by the application to the Settlement Commission. 3Section 245D(3) provides as follows : (3) The Settlement Commission, in respect of- (i) an application which has not been declared invalid under sub-section (2C); or (ii) an application referred to in sub-section (2D) which has been allowed to be further proceeded with under that sub-section, may call for the records from the Commissioner and after examination of such records, if the Settlement Commission is of the opinion that any further enquiry or investigation in the matter is necessary, it may direct the Commissioner to make or cause to be made such further enquiry or investigation and furnish a report on the matters covered by the application and any other matter relating to the case, and the Commissioner shall furnish the report within a period of ninety days of the receipt of communication from the Settlement Commission; Provided that where the Commissioner does not furnish the report within the aforesaid period, the Settlement Commission may proceed to pass an order under subsection (4) without such report. 4. The provisions of sub-section (3) of Section 245D would make it clear tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s may be placed before it or obtained by it, the Settlement Commission may, in accordance with the provisions of this Act, pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the Commissioner. 7. Under sub-section (4) of Section 245D the Settlement Commission has to : (i) examine the records; (ii) examine the report of the Commissioner, if any, received under sub-section (2B) or sub-section (3), as the case may be, (or under sub-section (1) as it stood before the Finance Act 2007); (iii) examine such further evidence as may be placed before it or obtained by it. The Settlement Commission is also required to furnish an opportunity to the applicant and to the Commissioner to be heard before it passes an order under sub-section (4). A reading together of the provisions of sub-section (3) and sub-section (4) would indicate that the Settlement Commission is not as a mandate of law required to order a further enquiry or investigation by the Commissioner under Section 245D(3) in every case. Whether the facts of the case are of such a nature or complexit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en allowed to be proceeded with under Section 245D, until an order is passed under sub- section (4) of Section 245D. This is, however, made subject to the provisions of subsection (3). Consequently, where the Commission in the course of its jurisdiction under Section 245D(3) has ordered an enquiry or investigation by the Commissioner, the exclusive nature of its jurisdiction is subject to Section 245D(3). 8. On the record of the case, it is common ground between counsel appearing on behalf of the Revenue and learned senior counsel appearing on behalf of the Second Respondent that the Settlement Commission is yet to apply its mind to whether an enquiry under Section 245D(3) should be ordered. In view of the statement which has been made on behalf of the Second Respondent which is consistent with the scheme of the statutory provisions, we are not inclined to entertain the proceedings at this stage, save and except to clarify that the Settlement Commission shall during the course of its proceedings specifically bring to bear its consideration on whether an enquiry under Section 245D(3) should be ordered particularly having regard to the circumstances which have been set ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Settlement Commission except in exceptional circumstances cannot be the subject matter of a judicial review. This becomes clear from the law laid down in catena of judgments with reference to the restricted scope of interference by the Courts even with the final orders of the Settlement Commission. In that view of the matter, we do not see any reasons to order the amendment petition. Accordingly, the W.P.M.P.No.28188 of 2002 is dismissed. 24. In the case of Commissioner of Income-tax vs. Income Tax Settlement Commission, 2013 (33) taxmann.com 313 (Gujarat) para 6 is relevant which reads as under :- 6. We are of the opinion that by such order, the Settlement Commission did not finally decide the merit or demerit of the rival contentions. It only allowed the application to be proceeded with. All contentions of both the sides would necessarily be gone into the Commission before passing any final order. The order of Settlement Commission was only in the nature of permitting further enquiry into application of the assessee for settlement. In that view of the matter, no interference is called for. Petition is dismissed. Rule is discharged. 25. In reply, Shri R.L. Jai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been reproduced in the preceding paragraph and submits that interest of the department is well protected. The department just to linger on the proceedings before the Settlement Commission has filed this writ petition whereas they can raise all these objections before the Settlement Commission and in view of the law laid down by the Apex court in the case of Commissioner of Income Tax v/s. K. Jayaprakash Narayanan (supra). The Hon'ble Apex Court has granted liberty to the department to raise the contention before the settlement Commission who would be entitled to examine that question on the final hearing of the matter. 28. Since the matter is pending before Settlement Commission and it has to decide as to whether full disclosure was made or not, it is not for the court to enter into it and petitioner is at liberty to raise all objection regarding the maintainability of the application before the commission. With the aforesaid observations, we vacate the ad-interim order dated 9.1.2015 by allowing I.A.No.378/2015 filed by the respondent No.1. 29. It may be mentioned that we have not decided any issue on merits of the case and any observation made in the order wil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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