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COMMISSIONER OF INCOME-TAX (CENTRAL) , KOCHI Versus THE SETTLEMENT COMMISSION (IT & WT) , CHENNAI AND OTHERS

2017 (1) TMI 775 - KERALA HIGH COURT

Unexplained creditors - Refusal of the Settlement Commission to make any additions on the basis of the entries in the Cash Flow Statement [CFS] of the alleged advances taken by the assessee - Held that:- The manner in which additions have been refused to be made, is without any reasoning especially when the Commissioner of Income Tax had specifically, in his report, stated that the details of the creditors were not furnished and there was no manner in which the credit-worthiness of the said pers .....

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particular aspect which this Court has interfered with. - W.P.(C) No.34690 of 2007-D - Dated:- 10-1-2017 - K. Vinod Chandran, J FOR THE PETITIONER : STANDING COUNSEL FOR GOVT. OF INDIA TAXES SRI.JOSE JOSEPH. FOR THE RESPONDENT : CENTRAL GOVERNMENT COUNSEL SRI.M.A.VINOD., ADVS.SRI.E.K.NANDAKUMAR, SRI.P.BENNY THOMAS, SRI.P.GOPINATH, SRI.K.JOHN MATHAI, SRI.RAMESH CHERIAN JOHN JUDGMENT The Commissioner of Income-tax (Central) impugn Exhibit P1 order passed by the Additional Bench of Income Tax Sett .....

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; 65,00,000/-. 2. The assessee-respondent raises a preliminary objection that the Commissioner of Income Tax is not entitled to file a writ petition challenging the order of the Settlement Commission going by the scheme of Chapter XIX A of the Income Tax Act, 1961 [for brevity the Act ], being a statutory authority under the Act. The specific contention raised is based on the judgment of the Hon ble Supreme Court reported in Mohtesham Mohd. Ismail v. Spl. Director, Enforcement Directorate and An .....

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passed by the Settlement Commission as has been specified by Section 245-I, for which reliance is placed on Dhampur Sugar (Kashipur) Ltd. v. State of Uttaranchal and Others [2007 (8) SCC 418]. 3. The learned Standing Counsel appearing for the Department, however, would draw a distinction as to the facts and the respective material provisions of law, in this case and Mohtesham Mohd. Ismail. It is also contended that Dhampur Sugar has not in any manner restricted the jurisdiction of the High Court .....

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eign remittances made. The appellant was successful in the first appeal, which order was challenged before the High Court under Article 226, by the adjudicating authority itself. The Hon'ble Supreme Court found that the writ petition was filed by the adjudicating authority who was specifically conferred with powers to adjudicate cases of contravention of any of the provisions of the statute. Section 54 of FERA, which provided for an appeal to the High Court, specifically by Explanation (ii) .....

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cation pointed out as to any empowerment or authorisation with respect to filing of an appeal on behalf of the Central Government. The material provisions so noticed are distinctively different from that in the present case. 5. The writ petition is not filed from an order passed by the petitioner herein, who per-chance happens to be also an adjudicatory authority under the Act. Chapter XIXA provides for a totally different scheme of assessment, which all the same has to be made under the provisi .....

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rij Lal v. CIT [(2011) 1 SCC 1] held that assessment in law is different from assessment by way of settlemnent (sic. - para 23). All the same, it was held that from a reading of the provisions of Section 245C and Section 245D it is clear that the various provisions of the Act and the concepts of self-assessment, assessment, regular assessment and computation of total income have been engrafted in Chapter XIX-A. Hence, the assessment by settlement as contemplated under Chapter XIX-A though differ .....

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when the Settlement Commission decides to proceed on the application filed by the assessee. The said sub-section also confers power on the Settlement Commission to 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. The Commissioner, on such direction, is also obliged to furnish a report within a period of ninety days of the receipt of the communication .....

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fording an opportunity of hearing to the applicant and to the Commissioner. 8. Chapter XIXA is a code by itself and the Settlement Commission is the authority empowered to pass the order of assessment. The Commissioner does not have any adjudicatory power under Chapter XIXA and the role is more adversarial. The Commissioner is entitled to make a report on the matters specified in the application and even those not specified therein, on which the Settlement Commission is also empowered to pass or .....

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clusiveness obviously cannot oust the jurisdiction of the High Court under Article 226 or Article 227 of the Constitution. Dhampur Sugar specifically held that statutory finality does not oust the jurisdiction of a High Court under Articles 226/227 of the Constitution . More in point is Jyotendrasinhji, wherein the finality of orders passed by the Settlement Commission under Chapter XIXA itself came up for consideration. The finality was found to be not a bar to writ jurisdiction of the High Cou .....

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hown at ₹ 3,54,59,150/- in the CFSs were revised to ₹ 4,13,52,150/-. It is pertinent that the report of the Commissioner had merely been referred to and the contention with respect to the advances said to have been obtained from others was accepted by the Settlement Commission without any discussion. As is evident from the report no details of the creditors; who are said to have advanced the loans, as per the CFS, was revealed by the petitioner. In this context, the decision of the H .....

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mission finding that there is no power of review conferred on the Commission. The Hon'ble Supreme Court found that the Commission had missed the true scope and ambit of Section 245D(6) and if the Commissioner was able to establish that the order of the Commission was obtained on misrepresentation of facts, then it was open to the Commission to decide the issue and the same would not lead to any review of the earlier orders. It was also categorically held so: Further the conclusions of the Co .....

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₹ 4,13,52,150/-. The AR pointed out that the details of these loans were available in the seized records and that the relevant Promissory Notes were also seized during the course of search. Rate of interest on these loans is also mentioned in the seized records. Further, the confirmation letters from the creditors have also been filed before the Addl. DIT. The applicant pointed out that the relevant details are available at pages 39, 70, 80, 308, 392 and 402 of APB. 5.1. The CIT in Rule-9 .....

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