TMI Blog2017 (6) TMI 787X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1961. In the present case, the impugned order is well-reasoned. It is not alleged that, the impugned order suffers from the vice of bias or is vitiated by fraud or is actuated by malice. No part of the impugned order has been substantiated to be perverse. The Settlement Commission has noted three instances where the petitioner did not make full and true disclosures of its income. Even before the High Court, the petitioners have not come clean with regard to the three issues noted by the Settlement Commission. - Decided against petitioner. - W. P. No. 126 of 2017 - - - Dated:- 14-6-2017 - Debangsu Basak, J. For the Petitioners : Mr. Samaraditya Pal, Sr. Advocate Mrs. Manju Manot, Advocate Mr. Bajrang Manot, Advocate Mr. Deepan Kr. Sarkar, Advocate Mr. Ram Chandra Agarwal, Advocate For the Income Tax : Md. Nizamuddin, Advocate Department Mr. Soumitra Mukherjee, Advocate JUDGMENT Debangsu Basak, J. The petitioners have assailed an order of the Settlement Commission dated January 24, 2017. Learned Senior Advocate for the petitioners has submitted that, the Settlement Commission did not adhere to the scheme laid down under Chapter XIXA of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ettlement Commission by such order wanted to proceed with the application for settlement. Having done so, it was incumbent on the Settlement Commission to proceed in accordance with law on the application for settlement. Referring to the second order of the Settlement Commission dated October 28, 2015, learned Senior Advocate for the petitioners has submitted that, the petitioners were not given a copy of the report noted in such order. Referring to the third order dated September 2, 2016 of the Settlement Commission, learned Senior Advocate for the petitioners has submitted that, the Settlement Commission did not adhere to the provisions of Section 245D(3) of the Act of 1961. It did not call for the records from the Principal Commissioner or the Commissioner. The records do not show that the Settlement Commission had examined such records. It did not undertake any further enquiry or investigation. It ought to have done so. The Settlement Commission, therefore, could not form a valid opinion as to whether or not to proceed further with the settlement. Any proceedings undertaken by the Settlement Commission, without the requisite formation of opinion under Section 245D(3) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artment. Since the Settlement Commission did call for the records, the question of examination of such records did not arise. The Settlement Commission is required to examine the records and to form an opinion whether or not further enquiry or investigation in the matter is necessary. As the records were not called for, the Settlement Commission could not form such opinion. The Settlement Commission is required to direct the Principal Commissioner or Commissioner, as the case may be, to make or cause to be made further enquiry or investigation after formation of the opinion. In the present case, since no opinion was formed, such direction was not given by the Settlement Commission. None of the orders of the Settlement Commission can be construed in a manner to have given such a direction. The order dated September 2, 2016 does not give such direction. It refers to a letter dated November 25, 2016 which was not disclosed to the petitioners at the material point of time. Since the Settlement Commission is required to form an opinion as envisaged in the Act and the Settlement Commission not having done so, the Settlement Commission has failed to exercise jurisdiction vested upon it in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esident Indian. The Income Tax authority including the Settlement Commission has no business to look into the source of fund of the NRI partner. The Settlement Commission ought to have taken note of such fact. It should have proceeded on the basis of the fund being brought into the firm for the purpose of computation of the income of the firm. Moreover, the Settlement Commission is sufficiently empowered under the provisions of Chapter XIXA of the Income Tax Act, 1961 to make further investigation into the affairs of the firm, in the event, the Settlement Commission is of the view that, it requires further investigation as to the source of fund. It ought not to have decided such issue on the basis that, the Settlement Commission was not in a position to decide the genuineness and sources of the fund brought into the firm by the partner, as returned in the impugned order. Referring to the second issue, learned Senior Advocate for the petitioners has submitted that, the Settlement Commission again could have entered into the genuineness of the claim made by the assessee with regard to the transactions concerned. So far as the third issue is concerned, he has submitted that, the trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te for the department has relied upon 1993 (201) Income Tax Reports page 611 (SC) (Jyotendrasinhji v. S.I. Tripathi Ors.), 2017 (78) taxmann.com page 85 (Bombay) (Rashmi Infrastructure Developers Ltd. v. Income tax Settlement Commission), All India Reporter 1993 Supreme Court page 2212 (Shriyans Prasad Jain v. Income-tax Officer), 1999 (236) Income Tax Reports page 581 (Madras) (V.M. Shaik Mohammed Rowther v. Settlement Commissioner (IT WT) Ors.), 1999 (235) Income Tax Reports page 118 (SC) (Appropriate Authority Anr. v. Smt. Sudha Patil Anr.) and 2011 Volume 4 Supreme Court Cases page 635 (Union of India Ors. v. M/s. Ind- Swift Laboratories Ltd.). On the aspect of procedural violation learned Advocate for the department has submitted that, in the event the so-called procedural violations do not go to the root of the matter an interference by way of a Writ Court is not called for. Moreover, in the facts of the present case, he has submitted that, the assessee has allowed the settlement proceedings to continue without pointing out the so-called procedural infractions. The assessee has accepted the procedural infractions, if any, alleged to be committed by the Settleme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfaction that, the disclosures made by the assessee at that stage, to be full and true. It went on to say that, the correctness of the alleged additional income would, however, be considered in the course of Section 245D(4) proceedings. It had held that, the application filed by the assessee was not invalid. It had called for a report under Rule 9 from the Principal Commission. The petitioners being aware of the Order dated October 28, 2015 did not challenge the same. They did not object to the Settlement Commission deciding on the correctness of the full and true disclosure of income at the Section 245D(4) stage. They did not object to the Settlement Commission asking for a report under Rule 9. They did not contend before the Settlement Commission that, a report under Rule 9 was not contemplated under the provisions of Section 245D(2B) of the Act. A report under Rule 9 of the Income Tax Settlement Commission Rules dated January 16, 2016 was submitted by the Principal Commissioner with the Settlement Commissioner. The assessee had received an opportunity to deal with the report dated January 7, 2016 under Rule 9 of the Settlement Rules. The assessee had filed a reply dated Augu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of its income. In the proceedings before the Settlement Commission, the assessee was represented by its Advocates. At no point of time before the Settlement Commission, did the assessee raise any jurisdictional issue with regard to the conduct of the proceedings by the Settlement Commission. It did not complain to the Settlement Commission as to the alleged infractions of any statute made by the Settlement Commission in the conduct of the settlement proceedings, at all. It has been contended on behalf of the petitioners that, the petitioners having offered settlement, they had considered it prudent not to raise any jurisdictional issues with regard to the conduct of the proceedings by the Settlement Commission during its process on the apprehension that such issues may derail the settlement proceedings. In the facts of the present case and particularly in view of the conduct of the parties before the Settlement Commission, I am afraid that, I am not in a position to accept such contention. The infraction, if any, was not pointed out to the Settlement Commission by the petitioners at the relevant point of time. The petitioners had filed detailed replies before the Settleme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch issues, the provisions for settlement under Chapter XIXA of the Act of 1961 have been discussed. It has also held that, the provisions for settlement are different to the provisions for regular assessment. On the scope and ambit of judicial review of an order passed by the Settlement Commission, Jyotendrasinhji (supra) has held that, although there is no bar to the writ jurisdiction of the High Court under Article 226 of the Constitution of India to scrutinize an order of the Settlement Commission, the scope of judicial review under Article 226 of the Constitution of India is to consider whether the order of the Settlement Commission is contrary to the provisions of the Income Tax Act, 1961 and if so, whether it has prejudiced the petitioner and whether the impugned order suffers from bias, fraud or malice. Similar view has been expressed in Ind-Swift Laboratories Ltd. (supra). It has also held that, so far as the findings of fact recorded by the Settlement Commission or questions of facts are concerned, the same is not open for examination either by the High Court or by the Supreme Court. Shriyans Prasad Jain (supra) has held that, findings of fact recorded by the Settlement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt proceedings subsequently. The correctness of the disclosures made by the assessee was taken up for consideration by the Settlement Commission on different occasions. The assessee could not satisfy the Settlement Commission as to the correctness of the disclosures made to it. The assessee was found not to have made full and true disclosure of its income. A finding of fact made by the Settlement Commission is not open to judicial review unless it is established that, such finding of fact suffers from perversity or is vitiated due to bias or malice. None of the grounds known to law to upset a finding of fact returned by a Settlement Commission has been substantiated in the facts of the present case. The findings of the Settlement Commission on the correctness of the disclosures made by the assessee before it have not been substantiated to be perverse. The contention that, the Settlement Commission ought to have arrived at the tax liability on the materials disclosed before it, is unacceptable. For the Settlement Commission to assume jurisdiction, it must return a finding that, the assessee before it has made a full and true disclosure of its income and the other matters referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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