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TMI Blog2015 (2) TMI 1184X X X X Extracts X X X X X X X X Extracts X X X X ..... on the respondent No.1 company at the business premises as well as the residential premises of the Directors of Company. Thereafter, the assessment of the relevant Assessment year from 2002 - 03 to 2006 - 07 had been completed under Section 153A/153C and assessment proceedings for the Assessment Years 2007 - 08 and 2008 - 09 is pending due to stay granted by the Apex Court in Petition (S) for Special Leave to Appeal (C) No (s).18937/2012. 4. During the course of the assessment proceedings the Assessing Officer made a reference under Section 92 CA to the TPO after taking approval of Commissioner of Income Tax - I, Indore, for the assessment year 2007-08 & 2008-09. 5. The TPO has forwarded a copy of order under Section 92CA of the Act dated 29.10.2010 to the Assessing Officer as well as respondent No.1 company separately for the assessment year 2007 - 08 & 2008 - 09. 6. The respondent No.1 company filed writ petition bearing Nos.2229/2011 & 2230/2011 for both the Assessment years before this Court on 14.5.2012. This Court dismissed the writ petitions on account of alternative remedy. The assessing company did not accept the above order and filed SLP (c) 18936/2012 & SLP No.18937/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P Rule 1997 on or before 12.1.2015. It is also stated by the Settlement Commission in its letter that "please note that, in case no report is received in this case on or before 12.1.2015, the Commission shall proceed further without the report to initiate 245D(4) proceeding". The department being aggrieved by order dated 18.8.2014 and communication dated 24.9.2014 has prayed for quashment of the same. 13. On 9.1.2015 this court issued show cause notice to the respondent No.1 and also passed an interim order staying the further proceeding pending before the respondent No.2 in respect of assessment year 2007 - 08 to 2014 - 15 until further orders from this court. 14. The application for vacating stay has been filed by the respondent No.1 - company on the ground that order dated 18.8.2014 is only an interim order and a final order will be passed by the Settlement Commission after examination of the records, considering the report of the Commissioner, and the material brought on record before the Settlement Commission. The Settlement Commission has a jurisdiction to provide for the terms of the Settlement including demanding any tax, penalty or interest. The Commission has also the j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Suprme Court about the order dated 18.8.2014 and 24.9.2014. He has also drawn our attention to the report dated 18.9.2014 (Annexure P/8). Para 2.0, 2.1, 3,4,5 and 7 are relevant which reads as under :- "2.0 Validity of application for the relevant years: Search u/s. 132 of the I.T. Act 1961was conducted in the case of the above mentioned assessee group namely 'Bhatia Group' on 25.9.2007. Thereafter statutory notices were issued and served upon the assessee for previous years and also for the A.Ys.2007 - 08 and 2008 - 09. In the Block period of the case, Assessment Years 2007-08 and 2008 -09 are involved. A.Y. 2007 - 08 is covered under the provisions of Section 153A and A.Y. 2008 - 09 being the search year is covered u/s. 143(2)/142(1) of the Act. The assessee had filed its returns of income in response to the statutory notices issued under the provision of Income Tax Act. The assessment proceedings are pending in the case of assessee for A.Y. 2007 - 08 and 2008 - 09 because proceeding of scrutiny assessment have been stayed by the Hon'ble Supreme Court and also by the High Court in following assessment years. 2.1 The factual status of the case with re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant letter is enclosed as per annexure-E. 2012-13 143(3) As above Notice u/s.143(2) for the A.Y. 2012-13 issued on 12.8.13. Matter has to be referred to the Addl. Commissioner of Income Tax (TPO), Ahemedabad. It will be sent shortly. 2013-14 143(3) As above Notice u/s.143(2) for the A.Y.2013-14 has been issued on 2.9.2014 Case for the A.Y. 2013-14 has been selected for scrutiny assessment in the month of September 2014 and statutory notice u/s. 143(2) has been issued which was duly served to the assessee. 2014-15 As above For A.Y. 2014-15, the proceedings are pending as defined in Explanation (iv) to 245A(b) of the Act. Assessee has filed the application with Settlement Commission on 5.8.2014 u/s.245C. 3.0 Correctness of additional tax interest paid by the applicant: The assessee has made disclosure of additional income of Rs. 18,93,19,340/- before the Hon'ble Settlement Commission. On this additional tax is Rs. 5,25,30,036/- and interest thereon is Rs.3,49,85,023 is calculated, and paid, relevant tax payments is verified with the OLTAS and same is in order, enclosed as per Annexure F. 4.0 On the basis of evidence gathered and analysi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... () 2007-08 6,72,55,707 -- - 81,139 - 2,00,000 50,00,000 7,25,36,846 2008-09 - - - 1,00,442 - 3,00,000 50,00,000 54,00,442 2009-10 --- 31,40,889 -- 45,897 -- 7,50,000 50,00,000 89,36,786 2010-11 --- 1,80,74,108 3,78,95,937 - - 33,50,000 50,00,000 6,43,20,045 2011-12 --- - - -- - 41,50,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Range-3, Indore have also opined as per above. Reports of the JCIT/AO are enclosed herewith. 7.0 Looking to the sensitivity of the case; the case record is being sent personally by an Income Tax Inspector deputed by the Department. Submitted for kind perusal. 17. The procedure prescribed is that on receipt of application by the Settlement Commission, he has to issue notice to the applicant within 7 days and on hearing the applicant an order has to be passed under Section 245 D(1) rejecting or allowing the application to be proceeded with. At this stage, no hearing is required to be given to the commission of Income Tax and only the applicant has to be heard. 18. In the present case, the Settlement Commission called for a report vide letter dated 18.8.2014 from the Commissioner of Income Tax. The Commissioner of Income Tax furnished its report on 18.9.2014 and in this report the Commissioner of Income Tax has accepted the pendency of the assessment proceedings and has not made any prayer for rejecting / declaring the application made by the respondent as invalid. The only averment that has been made by the Commissioner before the Settlement Commission is to keep the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led to examine that question at the final hearing of the matter. 21. The Division Bench of Delhi High Court in the case of Commissioner of Income -tax v/s. Income Tax Settlement Commission, 2013 (35) Taxmann.com 56 (Delhi) has held the following in para 22, 24, 25 and 34 which reads as under :- 22. From the above, it is clear that in True Woods Pvt. Ltd. (supra), a specific argument had been raised on behalf of the Revenue that it was incumbent upon the Settlement Commission to record a specific finding to the effect that the 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 disclosu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... longer be good law. 25. In Ajmera Housing (supra), an order had been passed by the Income Tax Settlement Commission under Section 245D(1) on 17.11.1994, allowing the settlement application filed on behalf of the assessee to be proceeded with. That order was not challenged by the Revenue. The Settlement Commission proceeded with the said settlement application and passed a final order under Section 245D(4) of the said Act on 29.01.1999. That settlement order was challenged by the Revenue before the Bombay High Court which 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 Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the additional tax and therefore the subsequent applications of the said respondents 3 and 4 filed on 23.11.2012 ought not to have been entertained. In our opinion, the learned counsel for the respondents 2 to 5 has given a complete answer to this argument. He has referred to Section 245K(2) of the said Act which stipulates that where a person has made an application under Section 245C on or after the first day of June, 2007, and if such application has been allowed to be proceeded with 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 respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 245D(3), directly proceeded under sub-section (4) and a letter was received from the Directorate of Investigation of the Settlement Commission on 4 October 2013 requiring the inspection of the factory premises of the Second Respondent. The contention of the Revenue is that in the present case it was necessary for the Settlement Commission to cause the Commissioner to make or cause to be made a further enquiry or investigation and to furnish a report on the matters 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 a ..... 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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 opp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to in the application, that matter must be of a nature such that it is referred to in the report of the Commissioner. At this stage, it would also be necessary to advert to the provisions of subsection (2) of Section 245F under which the Settlement Commission has exclusive jurisdiction to exercise the powers and to perform the functions of the Income Tax authority under the Act, where an application made under Section 245C has been 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 sub-section (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter, we are unable to concur with the contention of the learned counsel for the petitioner that the order is vitiated on account of violation of principles of natural justice. Inasmuch as we are satisfied that it was within the discretion of the Settlement Commission at the stage of Section 245D(1) of the Act to admit a case for consideration based on the prima facie view, the aspect of admission of a case by the 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stand taken by the department. Statutory report which is at page 53 and para 3.0 and 5.0 of the report. His contention is that no notice to either side is required at the time of considering the application. The rule of the department will start one the application is accepted and notice is issued to them. At the time of admission no objection of any kind was raised as is evident from the report which has been reproduced in the preceding paragraph and submits that interest of the department is well protected. The department just to linger on the proceeding 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 ent ..... 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