TMI Blog2017 (5) TMI 829X X X X Extracts X X X X X X X X Extracts X X X X ..... ong as the threshold limit of tax as laid down in section 245C is exceeded there is no requirement that there should be additional tax liability for every year for which additional income is disclosed. We therefore hold that there is no requirement in the law that in each year where the additional income has been disclosed there should be additional tax payable, so long as the threshold limit of tax as provided in section 245C(1) is exceeded. We also hold, in view of the discussion above, that the amendments brought about in the proviso to section 245C(1) read with section 245A(b) by the Finance Acts 2007 and 2010 have not affected the legal position as far as the question posed before us is concerned and therefore the decision of the Special Bench rendered in the case of Airtech Private Ltd. [supra] prevails and is good law. - S. A. No. MH/MUCC-4/024, 025, 026 and 027/2016-17/IT - - - Dated:- 2-12-2016 - Archana Ranjan (Chairperson), F. M. Mohanty, Jayasankar Talava, D. K. Gupta (Vice-Chairmen), Dinesh Verma, H. C. Jain And Gunjan Misra (Members) For the Applicant : Vijay Mehta, Paras A. Sheth, Paresh Shapana, Chartered Accountants, Govind Javeri, Income-tax Practitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the application. Both these questions are sought to be answered through these proceedings. Additionally it is for our consideration whether there is any change in the position of law on the above issues subsequent to the decision of the Special Bench in the case of Airtech Private Ltd. 4. Apart from the Neptune group of cases which were represented by Shri Vijay Mehta, fellow of chartered accountant, four interveners also joined in the deliberations, pro bono. They were Shri S. R Wadhwa, advocate, Shri Chetan Karia, fellow of chartered accountant, Shri J. Prabhakar, fellow of chartered accountant and Shri B. Ramakrishnan, fellow of chartered accountant. The Department was represented by Shri K. S. Rajendra Kumar, Commissioner of Income-tax and Shri L. K. S. Dehiya, Commissioner of Income-tax (Appeals). 5. The arguments were opened by Shri Vijay Mehta, fellow of chartered accountant the authorised representative in the case of the Neptune group. It was his contention that the decision of the Special Bench in the case of Airtech Private Ltd. holds good even today and hence the same should not be overruled. The co-ordinate Bench at Mumbai in the case of BetuI Oil Ltd. group ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The authorised representative proceeded further and stated that sub-sections (1B) to (1D) are machinery provisions and they do not lay down the pre-conditions for admission of an application. It is his contention that the concept of the assessment year or that in every assessment year there should be disclosure of additional income is not expressly mentioned either in section 245C(1) which is the main section laying down the pre-conditions for admission of an application or in the machinery provisions. For the sake of arguments he stated that even if it is mentioned in the machinery provisions, it may be of no consequence in so far as such intention was not expressly mentioned in section 245C(1) which is the substantive provision. From the above, it is the contention of the authorised representative that there is no requirement for inferring from section 245C(1) or sub-sections (1B) to (1D) that for every year contained in the application there should be disclosure of additional income. 5.6 It is the contention of the authorised representative that when an assessee prefers an application he wants to have the case settled. The case is defined to include assessment year or yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 245C to state that in every year there should be disclosure of additional income. The emphasis is on the word income as such even in sub-section (1D) of section 245C wherein it starts off with the words where the income disclosed in the application relates to more than one previous year . Herein also the entire emphasis is on the income disclosed and it does not mean that for every year there should be disclosure of additional income. 5.10 According to the authorised representative what is to be examined is whether the income disclosed in the application relates to one year or more than one year. It nowhere states that it should be reckoned and examined with respect to each assessment year. 5.11 The authorised representative in his synopsis referred to the decisions of Supreme Court in the case of CIT v. Express Newspapers Ltd. [1994] 206 ITR 443 (SC), CIT v. Damani Bros. [2003] 259 ITR 475 (SC) and the Karnataka High Court in the case of CIT v. Vysya Bank Ltd. [2012] 344 ITR 658 (Karn) ; [2011] 240 CTR (Karn) 68. According to the authorised representative the view taken by the co-ordinate Bench in the case of Betul Oil Ltd. is an incorrect view. Herein the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust 7, 2007. However, there was no change in the language of section 245C(1). Even in the new form there is no specific requirement of having additional income/tax in all the years. Form 34B nowhere states that nil income cannot be entered for a given assessment year. In fact the authorised representative pointed out that the date of filing of return is also a column in Form 34B. Where no return is filed it is entered as nil . Hence it is his contention that nil can be entered with respect to the additional income against an assessment year in Form 34B also. 5.14 He pointed out that in the Form prescribed for wealth-tax application (pages 129-130 of the authorised representative's paper book), there is a requirement of the assessment year-wise declaration, even though there is no requirement of minimum amount of additional disclosure (although there is a requirement of some amount of additional disclosure of wealth). Under the Wealth-tax Act there is no threshold limit of tax fixed with regard to an application. The application is to be entertained even if there is no additional net wealth declared in one or some of the years involved in the application. 5.15 Besides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r admission of an application. Section 245C(1) speaks only of hitherto undisclosed income of a whole case. The authorised representative argued that the decision of Express Newspapers is on a totally different facts. During the assessment years 1985-86 to 1987-88 the position of law was that wherein concealment was established or likely to be established, the Department could raise objection against the admission of an application. According to the proviso, after giving opportunity the Settlement Commission can decide upon the same. There is no whisper in the judgment as to whether income should be disclosed for all the years involved in the application or not. Hence, the authorised representative relied on the case of CIT v. Sun Engineering Works [1992] 198 ITR 297 (SC) to state that the judgment should be carefully interpreted and applied after verification of the facts. 5.21 According to the authorised representative, even the Handbook on Effective Handling of Cases before the Income-tax Settlement Commission published by the Department cannot be relied upon since it is only for the purpose of internal use of the Department and not binding on the Settlement Commission. The fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndisclosed income was nil for a certain year, the entire block was taken as a case and admitted by the Settlement Commission. The authorised representative pointed out the above as an example in support of his arguments. 5.24 The authorised representative pointed out that when it comes to interpretation of section 245C(1) the Special Bench in the case of Airtech Private Ltd. has decided the issue. When the subsequent Benches are to deviate from the decision they should prove how the earlier decision is erroneous. According to the authorised representative there is no error in interpretation of section 245C(1) or sub-section (1B) or (1D) in the case of Airtech Private Ltd. More so the decision should have been followed because there has been no amendment or change in the relevant provisions to that effect. 5.25 The authorised representative referred to the case of Dolat Group decided by the Mumbai Bench in 2007 on which reliance was placed by the co-ordinate Bench while differing from the Special Bench and deciding the case of Betul Oil Ltd. He stated that the principles laid down in the latter case are not acceptable. An unnecessary distinction was made as to between the proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to absurdity should be avoided. The authorised representative also relied on the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 (SC) in support of his contentions. 5.30 It is also well settled that if the words used in the statute are interpreted in the manner that results into absurdity and imposes burden on the subject, such interpretation should be avoided and the interpretation which favours the citizen should be given effect to. In this respect, reliance is placed on the judgment of the Supreme Court in the case of Central India Spinning and Weaving and Manufacturing Company v. Municipal Committee, Wardha, AIR 1958 SC 341 (pages 222-234 of the authorised representative's paper book). 6. Shri Vijay Mehta, authorised representative concluded his arguments stating that there was no need to deviate from the decision of Airtech Private Ltd. The interveners continued the arguments. 6.1 Shri S. R. Wadhwa, advocate, adopted the arguments of the earlier authorised representative. Further, he elaborated that under section245D(3)/245D(4) even with respect to the assessment year where nil additional income is disclosed, there is scope to enquire and bring to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se the Form desired assessment year-wise details, it would mean that the Act also would ipso facto have that as requirement. Hence the view expressed therein is not tenable and further much emphasis was laid unnecessarily on the placement of the word only while giving the decision in the said case. According to the authorised representative this misquotation is in no way fatal. He also pointed out that Form 34B cannot curtail the right given to the applicant under the substantive provisions of law. 6.4 Shri B. Ramakrishnan, fellow of chartered accountant, represented by filing a paper book. He mentioned that the meaning of case as defined in section 245A(b) is to be considered. At any stage of a case the assessee can file an application. It is only necessary that proceedings are pending for the assessment year or the assessment years involved. Going further to the proviso to section 245C(1) he laid stress on the phrase additional amount of Income-tax payable on the income disclosed in the application . . . . According to him these words are embedded in clauses (i), (ia) and (ii) of the proviso to section 245C(1). He also pointed out that the threshold limit of tax was fixed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard to the admission of application, granting of immunity from penalty and prosecution. The applicant applies for settling his case as such and all conditions ought to be satisfied in a given case to get it settled. He specifically mentioned that the multiple conditions should be satisfied by the applicant assessment year-wise. According to the Departmental representative throughout Chapter XIX-A the word case is mentioned at various places. 7.2 He laid stress on the contents of sub-section (1D) mainly the portion . . . the additional amount of Income-tax payable in respect of the income disclosed for each of the years shall first be calculated in accordance with the provisions of sub-sections (1B) and (1C) and the aggregate of the amount so arrived at in respect of each of the years. . . . According to the Departmental representative for each of the years there should be additional tax payable on the additional income disclosed and then only such aggregation could be done under section (1D). The Departmental representative pointed out that under sub-sections (1B) and (1C) the additional Income-tax payable for each of the years is to be ascertained first. Later the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the first instance quoted the case of Union of India v. Kamlakshi Finance Corporation [1992] AIR 1992 SC 711 ; [1991] 55 ELT 433 (SC), to emphasise that the orders of quasi judicial authorities are binding on their subordinate formation. 8.1 Shri Vijay Mehta, authorised representative in the rejoinder stated that so long as there is no explicit condition laid down in section 245C that for every year there should be a disclosure of additional income and additional tax effect, it may not be implied so. If it were the intention of the Legislature they would have mentioned so specifically. What is required is that income not disclosed before the Assessing Officer should be disclosed in the application but it does not mean that it should be disclosed for every assessment year involved therein. Sub-sections (1B) to (1D) of section 245C as agreed upon by the Department are only machinery provisions and they cannot be considered as laying down the pre-conditions of application. Under the provision of sub-section (1D) the word aggregate would include even nil additional tax that is payable. Merely because the word case is mentioned in various sections it does not mean that for ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision of law has held the field for a considerable period of time, the same should not be overruled as it would bring instability. 9. Findings 9.1 We have carefully considered all the arguments placed before us by both the sides along with the paper books filed. Case law cited have also been duly considered. Having considered all the material and the relevant provisions of law, it is our considered opinion that the decision of the Special Bench in the case of Airtech Private Ltd. holds good even today. All the points raised in the case of Betul Oil Ltd. stating that the decision in the case of Airtech Private Ltd. will no longer hold good are also dealt with in this order. We find that there is no specific condition laid down in law that there should be additional income disclosed in every assessment year or that there should be additional tax liability on such additional income disclosed in every year, covered by the application. The amendments made in the proviso to section 245C(1) read with section 245A(b) by the Finance Acts 2007 and 2010 have no direct bearing on the above conclusions drawn in the case of Airtech Private Ltd. so as to render the same as no longer good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such income and such other particulars as may be prescribed, to the Settlement Commission to have the case settled and any such application shall be disposed of in the manner hereinafter provided. (Proviso and Explanation are not quoted) Earlier at the time of the decision in the case of Airtech Private Ltd. it read as under (page 32 of 209 ITR (AT)) : Section 245C(1) and its proviso-'(1) An assessee may, at any stage of a case relating to him, make an application in such form and in such manner as may be prescribed, and containing a full and true disclosure of his income which has not been disclosed before the Income-tax Officer, the manner in which such income has been derived, the additional amount of Income-tax payable on such income and such other particulars as may be prescribed, to the Settlement Commission to have the case settled and any such application shall be disposed of in the manner hereinafter provided : Provided that no such application shall be made unless,- (a) the assessee has furnished the return of income which he is or was required to furnish under any of the provisions of this Act ; and (b) the additional amount of Income-tax pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 2010 the proviso was further amended including search cases where proceedings under section 153A/153C are pending and fixing the threshold limit of ₹ 50 lakhs for the same. This was in conformity with the amendment in the definition of case in section 245A(b) to include pending proceedings under section 153A/153C (clause (iiia) was introduced in section 245A(b)). 9.3.5 After 2010 i.e. with effect from June 1, 2011 the concept of specified person and related person, i.e. person connected to the main person searched, was introduced. The threshold limit of tax of ₹ 50 lakhs was applicable to the specified person whereas with regard to related person it was to exceed ₹ 10 lakhs. 9.3.6 The proviso and the Explanation to section 245C(1) are not being quoted specifically since there is no difference of opinion necessitating elaborate discussion of the same. 9.3.7 The wordings of this proviso clearly indicate that the additional amount of Income-tax payable on the income disclosed in the application (as a whole) was to be considered with respect to the threshold limits fixed. It cannot be said that the amendment introducing the higher thresh old limits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as different earlier. The Department fairly conceded that the change made in Form 34B cannot override the substantive provision of law. 9.4.3 On account of change in Form 34B there is no change in the position of law with regard to the interpretation of section 245C. The substantive provisions of section 245C(1) shows that since the time of decision in the case of Airtech Private Ltd. it has remained almost the same and hence there is no necessity to ignore this decision. 9.5 Now let us consider the provisions of sub-sections (1B) to (1D) of section 245C the machinery provisions which enable computation of additional tax effect. The arguments mainly relate to misquoting of the initial words of sub-clause (1B) of section 245C and erroneous interpretation of sub-section (1D) of section 245C as pointed out in the decision of Airtech Private Ltd. which is pointed out by the co-ordinate Bench in Betul Oil Ltd. Hence these two issues are discussed below. 9.5.1 The initial words of the provisions of sub-section (1B) are held to be misquoted in the decision of Airtech Private Ltd. Hence the decision in the case of Airtech Private Ltd. is held to be erroneous as per the decision in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions to that effect. The disclosure when it covers more than one year, may be for all the years or for a few years. It is nowhere stated that it should be for all the years. In this regard, it is the contention of the authorised representatives that the machinery provisions cannot override the substantive provisions. Based on the machinery provisions or the rules, the main section cannot be interpreted. Case law were cited by the authorised representatives in this regard. 9.6.2 The provisions of sub-section (1D) of section 245C is quoted above. In the case of Airtech Private Ltd. this provision as it existed then is quoted in para A of page 36 volume 209 ITR. There is no change in this provision. Hence the decision in Airtech Private Ltd. interpreting the provisions of sub-section (1D) of section 245C holds good. 9.7 According to the authorised representative the reliance placed on the decisions in CIT v. Damani Brothers [2003] 259 ITR 475 (SC) and CIT v. Express Newspapers Ltd. [1994] 206 ITR 443 (SC) in the case of Betul Oil Ltd. is not well founded. In both these cases the issue whether in every year there should be disclosure of additional income and/or additional t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubordinate courts. In this case, the hon'ble court had held that in case of a disagreement, the Division Bench should refer the matter to a larger Bench, and not overrule the larger Bench. A five-judge Bench of the hon'ble Supreme Court in Central Board of Dawoodi Bohra v. State of Maharashtra has discussed the legal provisions relating to judicial discipline. 9.9.1 The hon'ble Supreme Court in Union of India v. Kamlakshi Finance Corporation [1991] 55 ELT 433 (SC) has held as under : Obviously, the Commissioner of Income-tax (Appeals) not only committed judicial impropriety but also erred in law in refusing to follow the order of the Appellate Tribunal. Even where he may have some reservations about the correctness of the decision of the Tribunal, he had to follow the order. He could and should have left it to the Department to take the matter in further appeal to the Tribunal and get the mistake, if any, rectified. 9.9.2 This would only ensure uniformity and certainty of law. It was pointed out that if a position of law has been accepted for many years it should not be overturned or disturbed. In this regard reference was made to the case of Radhasoami Sat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 245F mentions the powers and procedure of the Settlement Commission to the effect that the exclusive jurisdiction would vest in the Settlement Commission in relation to the case when the application is allowed to be proceeded with. 9.11.2 It is the total income consisting of disclosed income and undisclosed income that is determined and terms of settlement arrived at. This does not mean that for a given year in the final order there cannot be nil additional income. Thus there is nothing in law to presume that for every admitted year there should be additional income in the final order and terms of settlement should be offered year-wise for every year. The additional income disclosed in a year may be treated as nil and shifted to another year by the Commission. This would mean that for the initial year the additional income would be nil . The disclosed income in the return may be increased in the final order leading to additional income being brought to tax though it was disclosed as nil in the application. Yet once the application is accepted, as the conditions in section 245C(1) are fulfilled, there is no compulsion that in the final order there should be additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here has to be additional tax liability. It can be said for sure that the additional tax liability as per the application should exceed the threshold limit as mentioned in proviso to section 245C(1) such that the application could be admitted. The authorised representative argued that so long as the threshold limit of tax as laid down in section 245C is exceeded there is no requirement that there should be additional tax liability for every year for which additional income is disclosed. We are in agreement with the contention of the authorised representative. We therefore hold that there is no requirement in the law that in each year where the additional income has been disclosed there should be additional tax payable, so long as the threshold limit of tax as provided in section 245C(1) is exceeded. 9.12.2 We also hold, in view of the discussion above, that the amendments brought about in the proviso to section 245C(1) read with section 245A(b) by the Finance Acts 2007 and 2010 have not affected the legal position as far as the question posed before us is concerned and therefore the decision of the Special Bench rendered in the case of Airtech Private Ltd. [1994] 209 ITR (AT) 21 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson, Principal Bench, Delhi 2. Shri F. M. Mohanty, Vice-Chairman, AB-I, Mumbai 3. Shri T. Jayasankar, Vice-Chairman, AB, Chennai 4 Shri D. K. Gupta, Vice-Chairman, AB, Kolkata 5. Shri Dinesh Verma, Member, AB-II, Delhi 6. Shri H. C. Jain, Member, AB-Kolkata 7. Smt. Gunjan Misra, Member, AB-II, Delhi. 12. The order constituting the Special Bench set out question of law for decision as under : Whether in an application for settlement under section 245C(1) covering more than one assessment year, the applicant must mandatorily disclose additional income not disclosed before the Assessing Officer, for each assessment year covered by the application and on such additional income there must be a liability to pay Income-tax for each such year especially in view of the amendments brought about in the proviso to section 245C(1), read with section 245A(b) by the Finance Acts 2007 and 2010 thereby rendering the decision of the Special Bench in Airtech Private Ltd. [1994] 209 ITR (AT) 21 (ITSC) [SB] no longer good law ? 13. The constitution of the Special Bench is prima facie at variance with the regulatory norm as laid down under rule 13(1) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal income for each of the assessment year referred in the application. 5. Various amendments carried out in 1994, 2007, 2010, etc. to section 245C of the Act show that these changes mainly dealt with increasing the ceiling of the threshold limit of additional tax liability, manner in which additional income need to be computed, stage at which application could be filed and eligibility of the persons who can file application before the settlement commission. 6. None of the aforesaid amendments had effect on the primary conditions mentioned in section 245C(1) of the Act to the effect that the assessee should mandatorily disclose additional income for each of the assessment year and consequentially must result into additional tax liability for each of the assessment year covered by the application filed before the Settlement Commission. 7. The view taken by the co-ordinate Bench in the case of Betul Oil Ltd. (pages 42 to 70 of the paper book) is incorrect view for the following reasons- The decision of the Supreme Court in the case of Express Newspaper Ltd. [1994] 206 ITR 443 (SC) (pages 71 to 86 of the paper book) is incorrectly interpreted. The judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15, there was no need to file return of income (section 245A(b) Explanation (iv)) still Form No. 34B (pages 112-113 of the paper book) requires of date of filing return, assessment year-wise. Therefore, merely because there is a requirement of giving particulars, assessment year-wise, does not mean that there is requirement of having that particular. Form cannot override the Act nor does it help in interpreting the provision of the Act : (a) CIT v. Chemplast Sanmar Ltd. [2009] 314 ITR 231 (Mad). (b) CIT v. Apar Industries Ltd. [2010] 323 ITR 411 (Bom). (c) CIT v. Tulsiyan NEC Ltd. [2011] 330 ITR 226 (SC). The decision of the Special Bench in Airtech Private Ltd. (pages 24 to 41 of the paper book) is wrongly distinguished. The argument regarding section 245E was not the main argument in the case of Airtech Private Ltd. (page 40 of the paper book)). In any case, section 245E has not been repealed. Only sunset clause has been inserted. The placing of the word only does not change any meaning. In any case, sub-section (ID) makes the interpretation amply clear. It failed to follow the judicial discipline by not following the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional tax liability. The aggregation of income does not necessarily mean positive income in all the years. This is evident from the reading of section 158BB of the Act (pages 131 to 133 of the paper book) and corresponding Form No. 2B (page 134 of the paper book). 11. The proviso (b) to section 245C(1) of the Act has not been removed and it is still there in the form of the proviso 1 to section 245C of the Act. 12. If the view taken into Betul Oil Ltd. and Dolat's case referred to above is accepted it would give absurd results not intended by the Legislature such as : If the requirement is of positive tax liability in all years, a person who has suffered commercially will be at further disadvantage as compared to a person who was fortunate to earn positive income. It would put total bar on vital issues which may not result in additional income for particular assessment year but still impact the determination of assessment of other related assessment years. Requirement of positive income without any threshold limit is meaningless as additional tax of Re. 1 would make the assessee eligible. No purpose would be achieved by such requirement. As aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sequently in a plethora of judgments but not referred to herein for the sake of brevity. 16. It is also well settled that if the words used in the statute are interpreted in the manner that results into absurdity and imposes a burden on the subject, such interpretation should be avoided and the interpretation which favours the citizen should be given effect to. In this respect, reliance is placed on the judgment of the Supreme Court in the case of Central India Spinning and Weaving and Manufacturing Comp. v. Municipal Committee, Wardha, AIR 1958 SC 341 ((pages 222-234 of the paper book). 17. In view of the above, it is submitted that the ratio laid down by the Special Bench in the case of Airtech Private Ltd. (pages 24 to 41 of the paper book) is correct and the same should be upheld in view of the legislative intent and the provisions of the Act. Without prejudice, in the present case of the applicant, additional income is disclosed in all the assessment years before the hon'ble Settlement Commission. 5.1 Shri S. R. Wadhwa, advocate adopted the contentions advanced by Shri Mehta. He further added that the provisions of section 245D(3) can be invoked in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty from penalty and prosecution cannot be envisaged in respect of the assessment years with nil additional income. He adverted to the provision of section 245C(1B) and 245C(1D). He highlighted the point that the provisions of section 245C(1D) talks of the aggregation of the amount of tax in respect of each of the years for which the application has been made under section 245C(1). Such clear language in the statute eliminates the possibility of assessment years with nil disclosure. Had the Legislature intended to include the assessment years with nil additional income then the language in sub-section (1D) would have read income disclosed for such years , not income disclosed for each of the years . He underlined the expression income disclosed for each of the years along with the aggregation of the tax payable for each of the years for which the application has been made under section 245C(1). He referred to section 245H and contended that the immunity enshrined in the provision is with respect to a case . It is inconceivable that such immunity was intended for the assessment years with nil additional income. He also emphasised that the earlier concept of block assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Settlement Commission be considered to be a binding precedent ? The mere thought is incomprehensible. 4. Wanchoo Committee purpose was to improve collection of revenue. 5. CIT v. Om Prakash Mittal [2005] 273 ITR 326 (SC) object of the constitution of the Income-tax Settlement Commission is speedy disposal and not reduction in statutory liabilities. 6. CIT v. Anjum M. H. Ghaswala [2001] 252 ITR 1 (SC). 7. Non-speaking order : The Department relies on S. N. Mukherjee v. Union of India [1990] 4 SCC 594. A Constitution Bench judgment which mandates that every order of a court or a Tribunal has to be speaking order because a non-speaking order frustrates the concept of judicial review. 8. The decision part in the Airtech Private Ltd. case comes abruptly without giving reasons as to why the decision has been taken. 9. Even if the decision was not challenged by the Revenue it does not mean that it has become final. 10. Section 245C mandates full and true disclosure of income which has not been disclosed before the Assessing Officer. If no income is disclosed by an applicant/or an applicant merely relies on the returned income, the wordings of section 245C are violated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e hon'ble Supreme Court had an occasion to look at the provisions of section 245C(1) in the case of CIT v. Damani Brothers [2003] 259 ITR 475 (SC). It is in place to extract the relevant portion : It has to be noted that the Commission exercises power in respect of income which was not disclosed before the authorities in any proceeding, but are disclosed in the petition under section 245C. It is not that any amount of undisclosed income can be brought to the notice of the Commission in the said petition. The Commission exercises jurisdiction if the additional amounts of tax on such undisclosed income is more than a particular figure (which at different points of time exceeded rupees fifty thousand or rupees one hundred thou sand, as the case may be). The assessee must have in addition furnished the return of income which he is or was required to furnish under any of the provisions of the Act. In essence the requirement is that there must be an income disclosed in a return furnished and undisclosed income disclosed to the Commission by a petition under section 245C. (Vide paragraphs E, F and G page 483) (underlining supplied for emphasis). 20. Nearly 9 years later in 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal tax on such undisclosed income. When the pivotal point is the income in the application not disclosed to the Assessing Officer can it embrace the assessment years with nil disclosure ? An affirmative answer would reduce the whole scheme of settlement to absurdity. 23. It is undisputed that the disclosure of undisclosed income is an essential pre-requisite for the validity of a settlement application. It is the case of the learned authorised representative that this requirement is only for the settlement application as a whole, not for every assessment year included in such application. In other words, the point of controversy is whether the disclosure of additional income should be for each assessment year stated in the application or there should be some assessment years in the settlement application with nil additional income and some other years with additional income subject to the statutorily prescribed threshold limit of additional tax payment i.e. ₹ 50 lakhs. 23.1 Let me begin with a presumption without granting it, that the statutory position is what the authorised representative says it is i.e. a settlement application can consist of some assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who file settlement applications as under : Assessee A Assessment year Undisclosed additional income (Rs.) Total additional tax (Rs.) 2013-14 30,00,000 2014-15 35,00,000 2015-16 32,00,000 Total 97,00,000 29,10,000 Assessee B Assessment year Undisclosed additional income (Rs.) Total additional tax (Rs.) 2010-11 Nil 2011-12 Nil 2012-13 2,00,00,000 2013-14 Nil 2014-15 Nil 2015-16 Nil Total 2,00,00,000 60,00,000 (*Accuracy of tax calculation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only totalling of tax and interest (vide Form 34B) not of income. Let me take an example : Undisclosed income (Rs.) Assessment year 2011-12 50 lakhs Assessment year 2012-13 1 crore Assessment year 2013-14 Nil Assessment year 2014-15 2.5 crores Total 4 crores Now can one apply the test of full and true disclosure to the total figure Rs. 4 crores ? In order to examine whether 4 crores is full and true. I have to break it up into assessment year-wise figures of disclosure and then examine each assessment year-wise figure of disclosure to see if the same is full and true. Unless I do this exercise, I cannot straightway make any evaluative comment as to full and true character of the total figure of undisclosed income i.e 4 crores . While the aggregation of the total income returned and the income disclosed in the application in respect of each assessment year in the application is stipulated (vide proviso (i), (ia), to section 245C an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of an assessment year with nil disclosure, will it stand the test of full and true disclosure as the original disclosure was nil ? Going by the Notes on Clauses relating to the Taxation Laws (Amendment) Bill, 1973, more specifically clause 58, it is seen that the Chapter XIX-A were intended to give a statutory basis for settlement of cases which are necessitated at times in the interests of the Revenue . Can an assessment year with nil disclosure be considered as in the interests of the Revenue ? 23.6 The third test to be applied is : How does an applicant fill up the prescribed Form 34B in respect of the assessment years with nil additional income ? The prescribed Form 34B requires an applicant to fill up the following columns : Column No. 2 requires an applicant to state particulars of the issues to be settled, nature and circumstances of the case (assessment year-wise). What can one fill up in respect of an assessment year with nil additional income ? What particulars of issues to be settled ? What nature and circumstances of the case ? Other columns i.e. Nos. 3, 4 and 5 stipulate as under : 3. Full and true disclosure of income which has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year or years to which the application relates in accordance with the provisions of the Act, copies of manufacturing account, trading account, profit and loss account, income expenditure account, balance-sheet. In other words, the annexures require details as per the Income-tax return. There is no specified requirement to state additional income assessment-year-wise or to state additional tax assessment year-wise or to state the manner of deriving additional income assessment year-wise. These amendments were brought about by way of the Income-tax (Ninth Amendment) Rules, 2007, with effect from August 7, 2007. The stand of the learned authorised representative that there is no difference between the old Form and the new Form would render nugatory the Income-tax (Ninth Amendment Rules). In his effort to superimpose his own interpretation on the provision of section 245C(1) the learned authorised representative has created phantom issues such as the following : (i) Form cannot override the Act nor does it help in interpreting the provisions of the Act. For this proposition he has relied on three case law. (a) CIT v. Chemplast Sanmar Ltd. [2009] 314 ITR 231 (Mad) (b) CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... representative begs the question in a similar vein as raised by the authorised representative i.e. whether there is explicit requirement in the provision to section 245C(1) that an assessment year with nil undisclosed income can be included ? Needless to say that there is no explicit requirement either. His whole problem of understanding starts with his basic premise that the expression income which has not been disclosed before the Assessing Officer as occurring in the provision of section 245C(1) should mean income in the settlement application as a whole, not income assessment year-wise. The key expression not been disclosed before the Assessing Officer would certainly mean assessment year-wise income as any disclosure before the Assessing Officer has to be only assessment year-wise. The settlement application is not filed before the Assessing Officer. Taxation matters before the Assessing Officer are always assessment year-wise. Further, in respect of an assessment year with nil disclosure there would be no income which has not been disclosed to the Assessing Officer. That requirement being indispensable to the validity of an application, the interpretation adopted by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication has been made under sub-section (1) does not allow even the smallest chink to let in assessment years with nil disclosure or nil additional tax. The authorised representative would have us read and understand the word aggregate to include zero or nil tax. But that scenario gets clearly eliminated by the phrase occurring in the substantive provisions income not disclosed to the Assessing Officer which I have pointed out in the foregoing that it can have meaning only in relation to individual assessment year. 25. The contention of the authorised representative is that the provision of section 245C(1B) talks of income in the application relating to one year, not of application relating to one year, that the word application has not been used in section 245C(1B) that since the words actually used are : income in the application relates to only one previous year it would imply that an application for settlement would be for a number of years with additional income being offered only for one of them, that aggregation under section 245C(1D) is limited to those years for which there would be additional tax, that the provisions contained in section 245C(1B) to (1D) are mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dditional tax payable on such income. One can only ignore the procedural provision and Form 34B to the detriment of the legislative intent. It is in place to quote a principle of interpretation as stated in Maxwell on the Interpretation of statutes. This principle has been quoted with approval by the hon'ble apex court in the case of Union of India v. Paras Laminates Pvt. Ltd. [1990] 186 ITR 722 (SC). This principle is where an Act confers a jurisdiction, it impliedly also grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution . 26. As regards the interpretation of statutory provisions the hon'ble Supreme Court has time and again laid down the salutary principles as under : Two principles of construction-one relating to casus omissus and the other in regard to reading the statute as a whole-appear to be well settled. Under the first principle a casus omissus cannot be supplied by the court except in the case of clear necessity and when reason for it is found in the four corners of the statute itself but at the same time a casus omissus should not be readily inferred and for that purpose all the parts of a sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyed in a statute is the determinative factor of legislative intent. The first and primary rule of construction is that the intention of the legislation must be found in the words used by the Legislature itself. The question is not what may be supposed and has been intended but what has been said. 'Statutes should be construed not as theorems of Euclid'. Judge learned Hand said, 'but words must be construed with some imagination of the purposes which lie behind them' (see Lehigh Valley Coal Co. v. Yensavage (218 F. 547, 553 (2d Cir. 1914)). The view was reiterated in Union of India v. Filip Tiago de Gama of Vedem Vasco de Gama, AIR 1990 SC 981. In D. R. Venkatachalam v. Deputy Transport Commissioner, AIR 1977 SC 842, it was observed that courts must avoid the danger of a priori determination of the meaning of a provision based on their own pre-conceived notions of ideological structure or scheme into which the provision to be interpreted is somewhat fitted. They are not entitled to usurp legislative function under the disguise of interpretation. While interpreting a provision the court only interprets the law and cannot legislate it. If a provision of law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be'. The expression 'as if' is also seen as giving rise to a deeming fiction (vide paragraph 23) Under the circumstances, the contention of the counsel for the petitioner that the term 'total income' should be construed as defined under section 5 for the purpose of calculating additional tax of an applicant for settlement of a case cannot be accepted. This is for multiple reasons. Firstly, clause (ii) of sub-section (1B) of section 245C gives rise to deeming fiction where total income has to be considered as if the aggregate of the total income returned and the income disclosed would be the total income. Such deeming fiction must be allowed its full effect. Secondly, the very same clause uses the term 'total income' returned in a different context and the aggregate of the total income returned and the income disclosed which would partake the character of a total income for this limited purpose. Thirdly, such deeming fiction cannot be discarded by bringing into consideration such term used elsewhere by the Legislature. It is well known that the Legislature provides for definition of various terms frequently used in the statutes. The definition sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not as defined in sub-section (1B) but as otherwise understood and referred to in section 5. Likewise, the computation of the tax on such total income and the resultant liability of the assessee for paying additional tax also would become a complex exercise. In Income-tax proceedings multiple claims of deductions and exemptions give rise to often time complex considerations. Often the liability itself is fluctuating due to court pronouncements. Sometimes, a legal question or interpretation of a provision may be in the virgin field not covered by any court judgment. The Legislature never intended that at the stage of ascertaining whether the assessee has deposited the additional tax on an application made for settlement of the case, such complex exercise should be undertaken by the Settlement Commission. Further, in our opinion, accepting any such interpretation would defeat the very purpose of introducing the simplicity of computation of 'total income' of an assessee for the purpose of the said provision and his liability to pay additional tax with interest thereon. (vide paragraph 27) 27.1 The decision of the Gujarat High Court as extracted above had arisen from a ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases (vide pages 63 to 69 of the paper book submitted by the authorised representative). 30. A close look at the decision of the Special Bench rendered in 1994 June shows that the inferences drawn by the Special Bench do not logically follow from the premises accepted by them or from the statutory provisions of section 245C(1B) to (1D) analysed by them. The inferences drawn by the Special Bench are found to have been superimposed on the language used in the statutory provision which is contrary to all accepted canons of interpretation. A quasi-judicial authority is confronted with the problem of conscience when he is fettered by the evidently erroneous precedent. To follow such palpably erroneous decisions mechanically would certainly make a mockery of the exercises of quasi-judicial authority. In the Dolat group of cases the Additional Bench-I, Mumbai had consciously disregarded the erroneous decision of the Airtech Private Ltd. The applicant had not carried out the matter in appeal or writ. Recently the Additional Bench-I, Mumbai had followed the decision taken in the Dolat group of cases on well reasoned appreciation and consideration of the relevant statutory provisions. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the Committee on Disputes (COD) ? (2) Whether the first respondent (sic petitioner) has no authority to file the writ petition ? (3) Whether the Settlement Commission has no jurisdiction to admit and entertain the application of first respondent under section245C of the Income-tax Act after detection and discovery of the concealed income ? (4) Whether the impugned order passed by the Settlement Commission is in accordance with law ? It can be seen from the above extract that the single judge of the hon'ble Karnataka High Court, in the said case, had taken up four points for his consideration, that there was no point/issue framed by the said single judge as regards the disclosure of negative income in some assessment years. On the fourth point/issue, which mainly related to the merit of immunity from penalty and prosecution as granted by the Settlement Commission, the single judge had recorded as under (page 667) : On point No. IV The contention of the petitioner that the first respondent had only disclosed negative income for certain assessment years is unacceptable to me. The Settlement Commission in the impugned order directed the first resp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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