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Rajiv Yashwant Bhale Versus The Principal Commissioner of Income Tax PMT

Order passed by the Settlement Commission - “conclusive" test theory - Held that:- Principal Commissioner dismissed the petitioner's appeal. We do not think that the view taken by the Principal Commissioner was either perverse or vitiated in law. It is a possible view of the matter. We equally agree with the Principal Commissioner when he faults the petitioner for having not disclosed the communication dated 30th January, 2017. The demand was computed on the basis of the petitioner's rectificati .....

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been brought on record that the Department's action is justified, according to this Principal Commissioner. We see much force in this stand of the Revenue. On facts, we find that this is not a case which requires our interference in writ jurisdiction. This court's jurisdiction under Article 226 of the Constitution of India is both, extraordinary and discretionary. It is equitable as well. It should not be exercised so as to allow a defaulter like the petitioner to derive benefit or take advanta .....

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It is the petitioner, who could not abide by the time limit and applied for extension. It is the petitioner, who proceeded on the footing that such an application for extension could have been filed and pressed. It is in these circumstances that the petitioner cannot now raise a technical plea. That too by relying upon the period prescribed by Rule 68B(1). That rule itself and as clarified above, does not end with the words “after the expiry of three years from the end of financial year”, but s .....

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tc. It is in that sense the word has been understood and must be, therefore, given that meaning. In these circumstances, we do not think that the view taken is in any way perverse or contrary to law. Writ petition dismissed. - WRIT PETITION NO. 3366 OF 2017 WITH CIVIL APPLICATION NO. 849 OF 2017 - Dated:- 5-6-2017 - S.C. DHARMADHIKARI & PRAKASH. D. NAIK, JJ. Mr. Porus Kaka-Senior Advocate with Mr. Manish Kanth and Ms. Chandana Salgaonkar for the petitioner. Mr. Charanjeet Chanderpal with Ms. .....

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bungalow, which was attached. The relief in that behalf, as set out in prayer clause (b), reads as under:- b) that this Hon'ble Court be pleased to issue a Writ of Certiorari, or any Writ order or direction in the nature of Certiorari, and after going into the legality, validity and propriety of the sale of the residential bungalow by attachment letters dated 18 February 2013 and 28 April 2016 issued by the Respondent No 2, as also the orders dated 16 January, 2017 and 28th February, 2017 p .....

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ness, in which he was engaged, was automobile dealership. However, on account of some erroneous commercial decisions, he suffered losses leading to the closure of his automobile dealership business. He had borrowed huge sums from banks and therefore, his properties were attached. In an attempt to restructure the financial liability, the petitioner started a business of developing properties. A group was formed, which comprised of several companies and joint venture agreements with third parties .....

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e history of acquisition of these rights, the petitioner states that he was involved in some litigation regarding this Wakad land. Ultimately, this land was developed by the petitioner as a developer, after taking huge loan and borrowing sums from financial institutions. He was unable to repay the same and some recoveries were effected by the banks and lenders. 4. As far as the Income Tax Act, 1961 (hereinafter referred to as the IT Act ) is concerned, the proceedings, according to the petitione .....

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the IT Act for the assessment years 2002-03 to 2008-09, in which, he disclosed additional income. The petitioner gave an explanation for his inability to repay the bank loans and other liabilities. The petitioner, during the search, had declared an additional income of ₹ 4 crores as income earned by the concerned company (Pratham Builders and Developers Private Limited) to overcome possible error/mistake in not declaring the income correctly for the past years. The petitioner relies upon t .....

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d to be given for special audit under section 142(2A) of the IT Act. The special auditor was appointed and the audit process was completed on 10th June, 2010. 5. Then, the petitioner refers to the application filed before the Settlement Commission by him and the company Pratham Builders and Developers Private Limited. There was a common order passed by the Settlement Commission on 1st December, 2011. The Settlement Commission assessed the taxable income at ₹ 20.82 crores for the petitioner .....

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the relief granted by the Settlement Commission in its order and submits that the Deputy Commissioner of Income Tax, Circle - 1(2), Pune passed an order under section 153-A read with section 245-D(6) of the IT Act giving effect to the order of the Settlement Commission. This order of the Deputy Commissioner is dated 16th January, 2012. Annexure 'D' is a copy of the same. After referring to the details of this order, the petitioner submits that there are assessment orders passed for the .....

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and and details of the same are referred to in para 19 and a copy of the same is annexed as Annexure 'H'. A reply thereto, given by the petitioner is at Annexure 'I'. The residential bungalow of the petitioner was attached by order dated 28th February, 2013 Annexure 'J'. Thereafter, the second respondent wrote to the petitioner on 22nd July, 2013 referring to the attachment order dated 18th February, 2013 that the second respondent proposes to sell the residential bungalo .....

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half. The petitioner states that despite his cooperation and assistance, the Income Tax Department attached several properties, the total value of which far exceeds the demand raised on the petitioner. The valuation has increased due to change in the D. C. Regulations in Pune with effect from 5th January, 2017 granting greater FSI due to green belt. The details of the attached properties are provided in para 22 at pages 14 and 15 of the paper book. The further details are also provided in para 2 .....

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ge amounts paid by him. On 26th June, 2016, the Income Tax Department accepted the payments made by the petitioner and gave the petitioner a figure of ₹ 11,19,13,519/- that is required to be paid to clear the total outstanding dues against the Settlement Commission order. However, this figure was changed by the assessing officer on the basis of his working of the interest and interest on penalty. He computed the total outstanding of ₹ 16,51,55,214/-. Thus, the Department went on chan .....

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first attachment order, the third respondent issued another one dated 28th April, 2016 attaching the residential bungalow. The Department also illegally attached Plot Nos. G1 and G2, which does not form part of the residential bungalow and is part of one Surobhee Enclave. Thus, the attachment order, copy of which is at Annexure 'O' is faulted by the petitioner and he then produces the third respondent's letter dated 26th October, 2016 revising and rectifying the demand from ₹ 3 .....

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failure to pay the amount as per the Settlement Commission's order and called upon the petitioner to handover copy of the property tax receipt and electricity bill. The petitioner was called upon to handover possession of the residential bungalow. 9. Then, the petitioner, in para 31, states that the letter dated 1st November, 2016 Annexure 'Q' was issued more than three years from the end of the financial year in which the order giving rise for demand of any tax, interest etc. for th .....

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7 of the second respondent, calling upon him to vacate the residential bungalow. In that letter, reliance was placed on the impugned order dated 16th January, 2017. Annexure T is a copy of this letter dated 24th January, 2017. Against this communication, the petitioner filed an appeal to the Chief Commissioner of Income Tax on 3rd February, 2017. The contention of the petitioner was that the tax recovery officer ought to have appreciated that since the order of the Settlement Commission was not .....

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t in the writ petition. 11. We must note the development post filing of this writ petition. An affidavit in reply has been filed by Mr. Shiv Dayal Srivastava, Principal Commissioner of Income Tax-the first respondent and after setting out the full chronology of events, the said affidavit supports the entire action, including the orders impugned before us. 12. Essentially, the contention appears to be that the final and conclusive demand is intimated vide letter dated 30th January, 2017. This dem .....

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me limit by him. It is urged that these requests are made in writing. The Revenue submits that there are gross illegalities committed by the petitioner and which are summarised in this affidavit. Thus, it is urged that none of the steps, measures and orders can be said to be contrary to law. On the other hand, it is urged that the petition is filed by a defaulter. The defaulter has defaulted in payment of tax despite availing of all the opportunities to settle the dues. Thus, the settlement rout .....

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petitioner. Apart from reiterating the contents of the petition, additionally, it is submitted that the language of Rule 68B would enable the petitioner to raise a challenge to all the proceedings. Once they are not within the statutory time limit, then, the writ petition deserves to succeed. 14. There is a civil application being Civil Application No. 849 of 2017, which is filed by applicant-Deccan Homes Pvt. Ltd. The applicant says that it has vital interest in the writ petition for the simple .....

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licant placed its bid at ₹ 17,01,00,000/-. The third respondent declared, by a letter dated 22nd March, 2017 the applicant to be the highest bidder and directed it to pay 25% of the price immediately as per Rule 57 of the Second Schedule of the IT Act. Accordingly, a sum of ₹ 4,25,25,000/- being 25% of the bid price was deposited by a Demand Draft with the third respondent. The balance price had to be paid within 15 days from the date of auction, which the applicant is ready and will .....

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n was supported by an affidavit of the applicant dated 5th April, 2017 affirmed by its Director Dr. Avinash Mandke. 16. It is in the light of this application filed, supported by an affidavit that, we have allowed the applicant to intervene and oppose the writ petition along with other respondents. 17. Mr. Porus Kaka learned Senior Counsel appearing for the petitioner submits that the factual background would indicate as to how the petitioner has been treated by the respondents. Mr. Kaka raised .....

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oner and the Department. The petitioner has objected to the sale in writing. It is in these circumstances that Mr. Kaka would submit that the prayer for impleadment of the applicant as party respondent should be rejected. 18. Then, Mr. Kaka would submit that the order of the Settlement Commission dated 1st December, 2011 is final and conclusive. In that regard, Mr. Kaka relies upon the language of that order and section 245-I of the IT Act. He would submit that it clearly and unambiguously state .....

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here is no dispute between the petitioner and the respondents or even the Settlement Commission that the settlement order dated 1st December, 2011 has been obtained by any fraud or misrepresentation which otherwise could have resulted into the order itself being void. 19. Mr. Kaka submits that Respondent no.1 vide its impugned order dated 16 January 2017 has erred in holding that Petitioner is in continuing default due to its failure to pay the installments of tax dues. Such conclusion of Respon .....

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ttlement Commission passed u/s 245D(4) of the Act inconclusive in absence of any fraud or misrepresentation or without there being any challenge to such order. Non compliance of the order cannot make the order itself not a final or conclusive one. A continuing default per se is different from the finality and conclusiveness of the order itself and cannot affect the conclusiveness of an order of a judicial authority. 20. Mr. Kaka submits that In fact, the conduct of the respondents shows that eve .....

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interests have been levied u/s 220 and 245-D(6)(A) of the Act due to non payment of demand arising out of the conclusive order of settlement itself shows that such interests/penalty have been levied in consequence of the order of settlement u/s 245-D(4) of the Act which till date remains the only conclusive order for the block assessment years determining total income chargeable under the Act and the total demand consequent thereto. 22. Mr. Kaka submits that the respondents have also vehemently .....

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amendment to the order. In any event, even if the immunity is withdrawn and gives rise to any new demand in future, that will be a new order giving rise to a new demand, if any. The possibility of such new order in future cannot make the order passed by the Settlement Commission under section 245D(4) as inconclusive qua the consequent demands that have become final. The fact that the Respondents have attached the residential bungalow against the demand arising out of or in consequence of the Se .....

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le after the expiry of 3 years from the end of financial year in which the order giving rise to a demand of any tax, interest, fine, penalty for which the immovable property has been attached, has become conclusive. The demand comprising of tax, interest, penalty in this case arises out of the conclusive order of the Settlement Commission under section 245-D(4) of the Act, dated 1st December, 2011. Since the aforesaid order of the Settlement Commission dated 1st December, 2011 was conclusively p .....

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ent order dated 28th April, 2016 attaches the same residential bungalow with different survey numbers alongside plot G1 and G2 belonging to Surabhee Enclave. It must be noted and emphasized that the impugned letter for sale dated 1st November 2016 is for demands that have become final and conclusive vide the Settlement Commission s Order dated 1st December 2011 and not other years pending in appeal and disputed. Therefore, the various attachments and auction-sale thereupon of the residential bun .....

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ear 2011-12 during which the final and conclusive order of the Settlement Commission dated 01st December 2011 was passed. Therefore any attachment of the residential bungalow being the immovable property and its sale are beyond the powers of the tax recovery officer. 25. Mr. Kaka further submits that Rule 68B of the IT Act makes it obligatory on the part of the Revenue to complete the sale of the immovable property attached by it for recovery of any tax, interest, fine/penalty or any other sum w .....

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eration of Rule 68B(4) of the Second Schedule of the IT Act after the expiry of the period of limitation of three years from the date of the order of Settlement Commission in facts of this case. Mr. Kaka submits that the Hon'ble Supreme Court has also held in the case of India House vs. Kishan N. Lalwani. that there is no equity in applying the period of limitation. 26. Mr. Kaka submits that there was no order passed by the Settlement Commission on 1st August, 2016 for payment of ₹ 1.2 .....

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) already passed by the Settlement Commission which has statutorily attained finality under section 245-I of the IT Act. Even if any order is passed by the Settlement Commission finally in those separate proceedings against Department's application for withdrawal of immunity, that, by no stretch of imagination, can alter the conclusiveness of the Settlement Commission's order dated 1st December, 2011 passed under section 245-D(4) of the IT Act and therefore, the period of limitation unde .....

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filed/issued after the expiry of three years from the end of financial year during which the order of Settlement Commission was passed and therefore would not be relevant for computing such period of limitation. 28. Mr. Kaka submits that the interpretation canvassed by the respondents on the basis of intimation of demand dated 30th January, 2017, wherein the demand has been updated after adding interest and penalty, is totally fallacious and incorrect. As per Rule 68B, the period of limitation s .....

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lusive as to the matters stated therein. The levy of interest under under section 220 and 245-D(6A) of the IT Act is an automatic process. By levy of statutory interest, a conclusive order does not become inconclusive till payment of demand arising out of the conclusive order. The addition of automatic statutory interest under section 220 and 245-D(6A) and/or even penalty under section 221 of the Act due to delay in payment is also based on and arises from the same final and conclusive order of .....

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the sale only for the penalty levied under section 221 (without prejudice to its being consequential) would be contrary to law, being wholly disproportionate to the demand as per Rule 34 of the Income Tax Rules. In fact, sub-section (2) of section 221 of the Act itself says that the penalty shall be cancelled and refunded where as a result of any final order the amount of tax, with respect to the default in the payment of which penalty was levied, has been reduced, thereby statutorily providing .....

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aka complains that after the conclusion of the hearing, the Income Tax Department/respondents have filed an affidavit in reply. This is most unjust and unfair. The whole attempt is to take the petitioner by surprise and by introduction of new materials so as to prejudice his case. 31. Mr. Kaka, therefore, would submit that the affidavit in reply be ignored for it runs into more than 250 pages. Without prejudice to this submission, the petitioner submits that he does not admit and rather denies e .....

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ner of Income Tax, [(2010) 328 ITR 447 (SC)] 33. On the other hand, Mr. Chanderpal appearing for the respondents would rely upon the statements made in the affidavit in reply. He would submit that these would demonstrate as to how the petitioner has grossly abused the process of this court. He has tried to mislead this court by suppression of true and correct facts. Mr. Chanderpal would submit that there is no merit in the contentions of Mr. Kaka. He would submit that ample opportunities were gi .....

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ad together and harmoniously would indicate as to how in the facts and circumstances of the present case, the Settlement Commission was desirous of obtaining the report about compliance with its order. Thus, so long as the petitioner did not comply with the directions of the Settlement Commission, he would not enjoy the immunity from prosecution. Therefore, for compliance with the order and directions of the Settlement Commission, the matter had to be placed before it. In these circumstances, go .....

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istance for construction of the legal provisions, would support Mr. Chanderpal. Additionally, he would submit that the applicant is the successful bidder and now the purchaser of the property at a public auction. The applicant was declared as the highest bidder in the public auction concluded on 22nd March, 2017. It has since paid full consideration of the auction of ₹ 17.01 crores by 4th April, 2017 well within the time limit of 15 days stipulated by Rule 57 of the Second Schedule to the .....

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sion granted eight quarterly installments, which is two years period to the petitioner to pay the arrears as per its order dated 1st December, 2011. The penalty otherwise imposable was much more, but the penalty actually imposed on the petitioner by the Settlement Commission is on an income of ₹ 1,71,54,123/-. Precisely, a immunity was granted by the Settlement Commission to the petitioner qua balance penalty imposable under section 271(1)(c) in its order dated 1st December, 2011. Inviting .....

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ent Commission are not fulfilled. Even otherwise, by operation of law, namely, section 245-H(1)(A), the immunity was to stand withdrawn on non-compliance with the conditions imposed by the Settlement Commission. Hence, the order dated 1st December, 2011 cannot be conclusive. This would be demonstrated by the fact that the petitioner applied on or about 4th December, 2013 for grant of further time. The Revenue applied to the Settlement Commission for withdrawal of immunity and both these eventual .....

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ars of the assessee. 36. Mr. Sridharan would then submit that the decision of the Division Bench in Joshi's case (supra) is clearly distinguishable for the default in this case is a continuing one. Mr. Sridharan elaborated his submissions orally as also in writing thus:- 8.1. Once an order of the Settlement Commission passed under section 245D(4) of the IT Act, inter alia, granting partial immunity from imposition of penalty is subject to certain conditions stipulated therein, the order woul .....

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ther authority. 8.3 The above is particularly so, for one more important reason. Under Section 271(1) (c), if penalty is impossible, it should not be less than 100% of tax sought to be evaded and not exceeding 300% of tax sought to be evaded. The quantum of penalty to be imposed after withdrawal immunity has to be decided by Settlement Commission alone. Therefore, order of Settlement Commission is not conclusive within the meaning of Section 245-I in such a situation. It is then submitted that t .....

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ubmit that in view of this express provision, the order dated 1st December, 2011 cannot be said to be conclusive within the meaning of section 245-I read with Rule 68B of the Second Schedule of the IT Act. Mr. Sridharan, relying upon the language of section 245-H, submits that Expression save as otherwise provided in this chapter in Section 245-I is significant. Section 245-H(1A) mandates withdrawal of immunity and thereupon provisions of this Act shall apply as if such immunity has not be grant .....

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eclining more time will be material date for calculating limitation under Rule 68B. It is urged that the Settlement Commission has power to extend time for payment even after passing an order under section 245-D(4) and even after specifying the time in the order. The words within such further time as may be allowed by the Settlement Commission appearing in section 245-H(1A) are indicative of the legislative intent. Mr. Sridharan submits that page 513 of the counter affidavit of the Revenue is a .....

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the dues. In the face of this application of the petitioner to the Settlement Commission and the power of Commission under Section 245-H(1A) to extend time, it cannot be said that the order of the Commission has become conclusive within the meaning of Section 245-I. 38. Mr. Sridharan submits that section 245-H(1A) employs expression immunity granted shall stand withdrawn . This expression only means that Settlement Commission has no more discretion in granting of or continuing the immunity. How .....

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h orders on the quantum of penalty under section 271(1)(c). Only after passing of such an order, the order would be conclusive under Section 245-I. 39. Mr. Sridharan submits that let it be assumed that section 245-H(1A) does not contemplate a formal or fresh order withdrawing the immunity and by operation of section 245-H(1A) itself immunity stands withdrawn. Let it also be assumed that though a fresh order of penalty has to be passed, it can be by assessing officer himself and not necessarily t .....

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aran submits that the submission is not this: Non payment of installments as ordered by the Settlement Commission renders the order non-conclusive. The precise submission is this: Immunity from penalty is conditional upon payment of installments. Non adherence to installments implies immunity shall be withdrawn and penalties to be imposed afresh by the Settlement Commission/assessing authority. Therefore, the order of the Settlement Commission is not conclusive under Section 245-I. 41. Mr. Sridh .....

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ot been granted from penalty, but tax determined in the order is directed to be paid by installments and/or time for the same is provided by the Settlement Commission. Suppose the assessee does not adhere to theinstallments/time granted for payment, still, such a situation may not affect conclusiveness of the order, since no immunity from penalty has been granted by the Commission. Some immunity is granted from imposition of penalty and as a condition thereof, the tax liability is permitted to b .....

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this example/situation, non-payment of taxes within the stipulated time, may not affect the conclusiveness of the order for the purposes of Section 245-I read with Rule 68B of the Second Schedule of the IT Act. 42. Mr. Sridharan submits that position would be totally different if the order of Settlement Commission granting partial immunity from penalty is conditional upon payment of taxes in stipulated time. That is the position in the present case and that makes all the difference. In such a ca .....

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68B of the Second Schedule. The argument is clearly flawed. 44. Rule 68B of the Second Schedule to the IT Act prescribes that the period of limitation would be from order becoming conclusive and not from part or portion of the order giving raise to the demand of tax or penalty becoming conclusive . The order of the Settlement Commission is one order and has to be read as a whole. For the purposes of Rule 68B, the order of the Commissioner cannot be dissected into (a) part determining tax liabil .....

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evasion of tax. Section 221(1) of the IT Act is reproduced below:- 221. Penalty payable when tax in default.-(1) When an assessee is in default or is deemed to be in default in making a payment of tax, he shall, in addition to the amount of the arrears and the amount of interest payable under sub-section (2) of Section 220, be liable, by way of penalty, to pay such amount as the Assessing Officer may direct, and in the case of a continuing default, such further amount or amounts as the Assessing .....

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idharan submits that order of penalty under section 221(1) is a distinct and separate order from the order of the Settlement Commission and is passed by the assessing officer himself. Section 245I also reinforces this position. The levy of penalty under section 221(1) of the IT Act by the assessing officer is a distinct order, different from and over and above the order of the Settlement Commission. It is in fact imposed for nonpayment of tax as directed by the Settlement Commission. It is in fa .....

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. Sridharan submits that Section 245-J forms part of Chapter XIX-A relating to Settlement Commission. It expressly provides for the imposition of penalty, evidently under section 221(1) of the It Act, for default in making payment of sum specified by the Settlement Commission in its order. Therefore, the order of the assessing officer imposing penalty under section 221(1) read with section 245-J is distinct from the order of the Settlement Commission and is independent of it. 51. Mr. Sridharan s .....

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nter affidavit of the Revenue). 52. Mr. Sridharan submits that these Orders of penalties passed under section 221(1) have not been challenged by the petitioner and have become final. The petitioner has himself referred to these penalties, vide Exhibit 'C' at page 179 of the writ petition while setting out the total liability according to petitioner in the form of a table. The last item in that table is Add: Penalty under section 220(1) ₹ 48,00,000 (Referred to section 220(1) by the .....

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of the writ petition) was issued for ₹ 38,39,64,000/- attaching the impugned property. On an application filed by the petitioner, rectification was done giving credit for amount of ₹ 1,65,89,038/- paid by petitioner. Letter dated 26th October, 2016 was accordingly issued for a revised sum of ₹ 37,08,02,437/- (page 245-245 of the writ petition). This sum duly included the penalty amount of ₹ 48 lakhs. Thereafter the impugned property belonging to the petitioner was attache .....

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tter of intimation dated 30/01/2017, and the interest payable under Section 220(2) of the Income Tax Act, 1961 54. Mr. Sridharan submits that also a proclamation of sale was issued against the subject property vide Form ITCP 13 dated 17th February, 2017 inter alia, for non-payment of ₹ 48 lakhs (as part of total arrears of ₹ 16,51,55,214/-). 55. Mr. Sridharan submits that the advertisement published for auction of the property (at page 316 of the writ petition) and the communication .....

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by the Income Tax Department. 56. For all these reasons and relying upon the written submissions tendered on record by Mr. Sridharan on 24th April, 2017, it is urged that the writ petition be dismissed. 57. Reliance is placed upon judgments of the Hon'ble Supreme Court of India and this court to buttress and support the above contentions. 58. For properly appreciating the rival contentions, it would be worthwhile if one refers to the facts. An application for settlement was made by the peti .....

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mstances of the case and complexity of the investigation involved. 59. The issues to be settled by the Hon ble Settlement Commission were determined by the petitioner as under:- 3.1 Determination of the person in whose name the entire income relatable to land sale and land development part of Wakad Project is to be taxed. 3.2 Determination of the total undisclosed income of the appicant in respect of period covered under the assessment proceedings u/s 153A of the ITA, 1961 i.e. A.Y. 2002-03 to A .....

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found payable. 3.7 Grant of such other relief to the applicant as is deemed fit and proper by the Honorable Commission. 3.8 The applicant craves leave to add/amend/ delete/modify all / any of the issues to be settled. 60. Then, the petitioner at Annexure E (Item Nos. 1 to 5 of the confidential Annexure) gave a full and true statement of facts regarding the issues of settlement, including the terms of settlement sought by the petitioner. The petitioner sets out the manner in which the income was .....

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ut prejudice, it was requested that the interest may be charged in accordance with the judgment of the Hon ble Supreme Court of India in the case of Brijlal (supra). The Commission held that in the light of the Hon ble Supreme Curt decision in the case of M/s. Anjuman Ghaswalla (supra), it has no power to waive interest chargeable under the aforesaid provisions. However, it agreed with the alternate plea of the applicants that interest under section 234-B will be charged up to 6th August, 2010 i .....

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do consequent to these orders. Then, in para 30 of this order, the Settlement Commission dealt with the request for payment by installments and directed as under:- 30. Payment by installments: Both the applicants have requested for granting of 8 quarterly installments for making the payments against demand raised in pursuance of the order of settlement. It was submitted that financial condition of both the applicants is quite precarious, and it will not be possible for them to pay the demand in .....

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been noted and dealing with all this in para 31.1, the Commission held thus:- 31.1 The CIT(DR) left the matter at the discretion of the Commission so far as the immunity in regard to prosecution is concerned. He, however objected to the request of applicants that they should be granted immunity in respect of imposition of penalties. It was strongly pleaded that the applicants have not made true and full disclosure of their income in the petition filed before the Commission. According to him eve .....

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rores disclosed in SOF=3.95 crores. It shows that the applicant was aware of the fact that he was not making true and full disclosure while coming before the Commission. Secondly, surrender of following items suo-moto in PB-II clearly shows applicant's casual approach while preparing the SOF: Credit balance written off Rs.20,76,792 Profit on sale of shares Rs.52,77,657 Salary fresh offer Rs.23,91,548 Peak shortage in cash flow Rs.1,41,35,301 Interest on fixed deposit Rs.23,03,819 Unaccounted .....

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is set out in a chart at page 155 of the paper book. In para 32, the Settlement Commission observes that the immunity granted to the applicants vide this order may be withdrawn if they fail to pay the applicable tax demanded within time, and in the manner specified by this order, or fail to comply with other conditions stated therein. In para 33, the Commission directed as under:- 33. Immunity granted to the applicants may also at any time be withdrawn, if the Commission is satisfied that the ap .....

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been granted. 63. Thus, in para 33 and 34, the Settlement Commission made certain pertinent observations. The Settlement Commission then forwarded the figures in terms of its directions. 64. The petitioner himself, in the writ petition, mentioned that the chart of the year-wise working has been annexed as Annexure 'C' to the petition. The petitioner then states in para 16 of the petition that the Deputy Commissioner of Income Tax, Circle - 1(2), Pune passed order under section 153-A read .....

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on 14th August, 2013 and in para 17, the petitioner says that he paid an amount of ₹ 3.55 crores against the total amount of ₹ 11.98 crores and the final unpaid amount thus works out to ₹ 8.43 crores as per Annexure 'F'. 65. In para 18, the petitioner states that due to non-payment of installments, the Tax Recovery Officer, Circle - 1, Pune, drew a certificate of recovery in the prescribed form for the amount of ₹ 9.68 crores. Thereafter the error in payment of ta .....

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ial problems. Thus, the orders giving effect to the directions of the Settlement Commission had to be passed. Then, there was a notice of demand, which was issued. The petitioner disputed the computation thereof. Admittedly, on 16th January, 2012, there was a penalty order under section 271(1)(c) read with section 245-D(6) of the IT Act passed by the Deputy Commissioner of Income Tax, Pune, which order also given effect to the directions of the Settlement Commission. We have on record the petiti .....

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rears of Rajiv Bhale for the dues laid down by settlement commission for the A. Y. 2003-04 to 200809, as we are requesting the Hon. Settlement Commission to give us a personal hearing, and allow us an extended time period for paying all the dues,. We are doing the same as we are facing several genuine liquidity problems, demonstrating submission for the same are already made to the Hon. Settlement Commission. We are also attaching the copy of the submission letter accepted by the Hon. Settlement .....

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e, is now complaining that the sale of the attached property violates Rule 68B of the Second Schedule to the IT Act. It is the petitioner, who makes a specific case in this letter that he wishes to approach the Settlement Commission seeking a personal hearing on the issue of extension of time for paying all the dues. The request in that behalf, according to the petitioner is already made in writing to the Settlement Commission. It is in these circumstances that we are of the opinion that a defau .....

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ettlement Commission to accommodate him. It is such a petitioner who now faults the whole process and by purporting to raise a legal challenge. 67. We have before us the communications from the petitioner to the Tax Recovery Officer. At Annexure 'N' at page 240 of the paper book, there is a copy of the letter dated 20th June, 2016 addressed by the petitioner to the Assistant Commissioner of Income Tax, Circle - 2, Income Tax Department, PMT Building, Pune. This letter is on the subject o .....

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mmissioner of Income Tax to release two current accounts, one with the HDFC Bank and another with Janata Sahakari Bank Limited, Pune so that some financial transactions can be undertaken from these accounts and at least he can restart operations. Presently, there is complete stoppage. 68. The attachments were levied, but on 26th October, 2016, the Tax Recovery Officer communicated to the petitioner the outcome of the request made on 26th June, 2016 by the petitioner in writing. The Assistant Com .....

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artment wrote to the petitioner that a notice in the requisite format was issued to pay a sum of ₹ 9.86 crores. However, that demand was revised by giving effect to a rectification as requested by the petitioner. The revised demand of ₹ 8.52 crores plus interest and penal interest was intimated on 26th October, 2016. Such a demand was covered by the order of the Settlement Commission, Mumbai. Further, as instructed by the Settlement Commission, Mumbai, vide the hearing conducted on 1 .....

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low and adjust the sale proceeds against the tax liability. 70. The petitioner preferred an appeal and in which, he himself states that the Commission passed an order under section 245D(4) of the IT Act dated 1st December, 2011. The financial year ends on 31st March, 2012. Yet, the petitioner, in para 6 of the statement of facts, preceding the grounds of appeal, stated that the assessing officer passed an order giving effect to the directions of the Settlement Commission on 16th January, 2012. H .....

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t to the Settlement Commission's directions was passed on 16th November, 2012 together with final notice of demand. However, the petitioner raises the issue of applicability of Rule 68B of the Second Schedule to the IT Act and submits that the Tax Recovery Officer erred in law and on facts and proceeded to acquire vacant possession of the residential bungalow for effecting its sale vide his letter dated 1st November, 2016. The Tax Recovery Officer ought to have appreciated the provisions of .....

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refers to all the communications emanating from him, yet, the permissible period of four years has been carved out in the above manner. This, the petitioner computes on the basis of a standing order 164E dated 1st March, 1996, under which, the period was extended to four years. The petitioner, thus, was not sure as to whether the period is three years from the end of the financial year in which the order giving rise to the demand of any tax, interest, fine, penalty or any other sum, for the reco .....

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one stage, refers to the order dated 1st December, 2011 passed by the Settlement Commission as triggering point. However, in the grounds, he conveniently, does not refer to the period consumed by his own applications before the Settlement Commission and his own request for postponement or deferment of the recovery proceedings or to hold them in abeyance. These requests were made by thepetitioner on his own and because of the financial problems faced by him. All this was a creation of the petiti .....

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ssioner. (2) Every appeal under this rule must be presented within thirty days from the date of the order appealed against. (3) Pending the decision of any appeal, execution of the certificate may be stayed if the appellate authority so directs, but not otherwise. (4) Notwithstanding anything contained in sub-rule (1), where a Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is authorised to exercise powers as such in respect of any area, then, all app .....

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der the Second Schedule, not being an order which is conclusive. While dealing with this appeal, all the facts and circumstances have been referred in great details. The argument based on the Division Bench judgment of this court, to which we will advert a little later, has also been noted. While rejecting this appeal, the appellate authority held thus:- 17. In this case, it is undisputed that the order of the Hon'ble Settlement Commission dated 01.12.2011 in para 30 very clearly stated that .....

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y instalments granted to the assessee on his request. Till date, the assesse has not paid any of the instalments on time and has only paid ₹ 1,65,89,038 which is slightly more than the amount of first instalment and was also paid beyond the time for payment of the first instalments as required by the order of the Hon'ble Settlement Commission. 18. Hence, assessee is in default-which is continuing default till date since no further instalments have been paid by the assessee and so much .....

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ee has failed to comply with till date and it is a continuing default on the part of the assessee which attracts interest, penalty under the relevant provisions of the Income Tax Act for failure to comply with the payment of instalments granted to the assessee at his request. 19. Now therefore the assesse cannot say that the order of the Hon'ble Settlement Commission has become conclusive because he has defaulted in making the payments in instalments and thereby obstructed the fulfillment of .....

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ecause the time to pay the 8 quarterly instalments has run out and therefore he is absolved and discharged of all liabilities and his property cannot be sold to recover the dues not paid by him. The order of the Hon'ble Settlement Commission in para 30 imposing conditions for payment of the tax liability in 8 quarterly instalments is compulsory condition on the fulfillment of which only the order can become conclusive because the order has to be read as a whole and not selectively and theref .....

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Commission expires. These interests will be calculated till the date on which assessee pays his entire demand. Thus demand arising out of these interests has not yet reached finality. The Rule 68 is not only about the 'tax demand' but also covers 'interest demand'. As explained above, the amount of interest is not yet crystalized in this case. Hence, from this angle also, it cannot be said that the demand in the context of Rule 68 became final in F.Y. 2011-12. 21. Rule 68B (2)(i) .....

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gave sine-die adjournment for the hearings u/s 245H(1A). Thus, proceedings are pending in the Hon'ble Settlement Commission in connection with pending demand from 20.11.2012 till today, it can be said that this period of 4 years (20.11.2012 to 25.11.2016) should be excluded while computing the period of limitation under 68B(1). Thus, from this angle also, it cannot be said that the time period available for the department for the sale of the Aundh property has been expired. 22. Further from .....

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a violation of principle of estoppel. Assessee cannot raise one point before one authority and another before other authority to suit his needs. 23. Also, it is pertinent to note that the assessee having defaulted on 01.09.2016 for peyment of ₹ 1.25 crores as required by the Hon'ble Settlement Commission to demonstrate his intention to comply with the terms & conditions of the order has by his acts of omission and commission falied to fulfill the mandate of the Hon'ble Settleme .....

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ing default of the assessee for failure to make the payment the plea of the assessee fails and the appeal is therefore dismissed. 74. It is in the light of these observations that the Principal Commissioner dismissed the petitioner's appeal. We do not think that the view taken by the Principal Commissioner was either perverse or vitiated in law. It is a passible view of the matter. We equally agree with the Principal Commissioner when he faults the petitioner for having not disclosed the com .....

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#39;s rectification application and interest under section 220(2) and 245-D(6A) of the IT Act. This letter having been brought on record that the Department's action is justified, according to this Principal Commissioner. We see much force in this stand of the Revenue. On facts, we find that this is not a case which requires our interference in writ jurisdiction. This court's jurisdiction under Article 226 of the Constitution of India is both, extraordinary and discretionary. It is equit .....

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y clearly spell out the position that in the order of the Settlement Commission, there was a request noted. That was a request made by the petitioner and for payment of the tax in installments. That request was granted and time was stipulated for payment by installments. All this is incorporated in the order of the Settlement Commission. It is the petitioner, who could not abide by the time limit and applied for extension. It is the petitioner, who proceeded on the footing that such an applicati .....

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clusive . The rule does not end here as well, but makes a specific reference to the provisions of section 245-I and Chapter XX. Section 245-I has been referred by us already. The conclusivity of the order passed by the Settlement Commission is to matters stated in such orders and passed under section 245D(4). Save as otherwise provided in Chapter XIXA, no matter referred by the order can be reopened in any proceeding under this Act or any other law for the time being in force. However, there is .....

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was entertained. It is in thesecircumstances, the reliance placed on sub-section (6) of section245-D is justified as that determinates that it is the Settlement Commission, which has to make an order in terms of sub-section (4) of section 245-D, but such order shall provide for the terms of settlement, including any demand by way of tax, penalty or interest, the manner in which any sum due under the settlement shall be paid and all other matters to make the settlement effective. Therefore, the .....

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section 245-D empowers the Settlement Commission to entertain an application for rectification of any mistake apparent on the face of the record, amend any order passed by it under sub-section (4) with a view to rectify any mistake apparent from the record. Hence, our view that the Settlement Commission retains control over the proceedings and that is how it entertained the further application of the petitioner is in accord with the statutory scheme. We have not deviated from it. We do not think .....

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nd must be, therefore, given that meaning. In these circumstances, we do not think that the view taken is in any way perverse or contrary to law. 77. The decisions relied upon by Mr. Kaka and particularly in the case of M. U. Joshi (supra) are distinguishable. In M. U. Joshi (supra), the petitioner, at the relevant time, was a partner of a firm. The assessment orders were passed, huge demands were raised against the firm. The appeals by the firm against these assessment orders were dismissed and .....

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t the firm. Pertinently, an attempt was made by proclamation of sale dated 26th August, 1996 to sell the flat by public auction on 26th September, 1996, but it did not materialise. Then, the petitioner filed a miscellaneous application before the Income Tax Appellate Tribunal seeking stay of the auction. That application was also dismissed on 19th May, 1998. 78. The Division Bench noted that on several occasions the Revenue attempted to auction the flat, but it did not materialise. Ultimately, t .....

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finality, several attempts were made to sell the flat, but they did not materialise. The eventual auction notified on 23rd February, 2004 was clearly beyond statutory period. In para 12, based on this reasoning, the Revenue s contention was rejected and the argument of the petitioner Joshi was accepted. It was also the case of the Revenue that the miscellaneous application of petitioner Joshi was dismissed by the tribunal and the starting point would be the date of the order of the tribunal on t .....

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the ground that the attached flat was the only flat owned by the petitioner and if he is evicted from the same, he and his family members would be rendered homeless. Even if such an application was pending, there was no stay against the recovery or enforcement of the demand. It is on such a view that the petition was allowed by applying Rule 68B. 79. The facts before us are not identical. The petitioner himself seeks a substantive relief in the form of extension of time to comply with the Settl .....

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t if the time to make payment expires, the auction may follow. Therefore, the request of the petitioner was to extend the time to make payment in installments and if that had been granted, nothing could have been done by the Revenue pursuant to the attachment. If the time was extended and the payment was made, then, the sale could not have taken place at all. In these circumstances, based on the petitioner s request, no steps were taken. Secondly and more importantly, the Settlement Commission&# .....

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