TMI Blog2017 (9) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... r the one taken by the Settlement Commission. The petition is, therefore, dismissed. - Special Civil Application No. 12157 of 2017 - - - Dated:- 24-8-2017 - MR. AKIL KURESHI AND MR. BIREN VAISHNAV, JJ. For The Petitioner : Mr SN Divatia, Advocate For The Respondent : Mrs Mauna M Bhatt, Advocate ORAL JUDGMENT ( PER : HONOURABLE MR.JUSTICE BIREN VAISHNAV) 1. Petitioner has approached this Court challenging the order of the Settlement Commission dated 29.09.2016 passed under section 245D(4) of the Income Tax Act,1961 ['the Act' for short]. 2. Facts in brief are as under: The petitioner is an individual carrying on business as Labour contractor as well as a broker dealing in land and building. Survey under section 133A of the Act was conducted at the residence-cum-business premises of the assessee on 23.03.2013. During such survey, incriminating documents were found such as diaries and loose papers. These documents and papers were later impounded. According to the department, the documents impounded revealed unaccounted business dealings and unaccounted income of the assessee. The Income Tax authorities initiated re-assessment proceedings in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation was on two issues. First, on the buying and selling of immoveable properties for and on behalf of third parties. Second on managing of third party funds by making contributions in immoveable properties on their behalf. According to the Principal Commissioner of Income Tax, Surat, the author of the Rule 9 report, the disclosure on behalf of the assessee on such issues was without any supporting material. There was no full and true disclosure of the unaccounted income, in the application before the Settlement Commission. The report recorded the fact that based on the furnished details identification of the said third parties, became extremely difficult. It was, therefore, difficult to find out whether the funds were indeed obtained from third parties. 8. During the course of verification, the statement of Shri Hitesh Savani was recorded under section 131 of the Act. Shri Hitesh Savani in such statement recorded on 11.03.2015 denied any involvement in the land transaction. He also denied receipt of any part of the sale proceeds as stated by the assessee, Shri Baldev Patel. In view of the denial of Shri Savani of having any connection with the assessee the Principal Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cate for the petitioner has primarily contended that the order of the Settlement Commission violated the principles of natural justice.No sufficient opportunity and sufficient time was given to him after filing of the Rule 9 report. Inviting our attention to the proceedings Mr. Divetia submitted that after the report was filed, the Commission proceeded to hear the application on 09.09.2016, 14.09.2016 and 20.09.2016. The hearing was concluded on 26.09.2016 so as to meet the time limit on 30.09.2016. 11. On the question of natural justice, it was Mr. Divetia's contention that Shri Hitesh Savani was examined on 11.03.2015 however a copy of the statement of Shri Hitesh was not provided to him.Shri Savani was also not offered for cross examination. This, according to counsel, amounted to breach of the principles of natural justice. 12. The other contention that Mr. Divetia advanced was on the merits of the order of the settlement commission. It was contended that sufficient evidence was on record by way of entries in the cash books and the ledger accounts to show the connection of Shri Hitesh Savani with the dealing of the lands at Vesu. According to Mr. Divetia, one of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith regard to income. 18. He also opposed the contention of the petitioner that violation of principles of natural justice was established. Shri Bhatt further suggested that this Court in exercise of powers under Article 226 of the Constitution should not interfere with the order of the Settlement Commission. 19. Having heard learned advocates for the respective parties, the question before us is whether the order of the Settlement Commission in rejecting the application of the petitioner-assessee on the account of he having not made a full and true disclosure deserves interference? 20. Section 245C of the Income Tax Act enables the assessee to make application at any stage of a case relating to him. He can make such application in such form and the manner prescribed. The section further envisages that such an application imposed contain a full and true disclosure of his income which has not been disclosed before the Assessing Officer, the manner in which such income has been derived, the additional amount of income payable on such income and such other particulars as may be prescribed. 21. As far as the assessee in question is concerned, he filed an application under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally came to a finding of fact as under: 10. The applicant has stated that the impounded documents that bears signatures of Shri Hiteshbhai Savani as a witness to the joint venture deal emerges from document no. BFI page No.2 and page No. 12(backside), [pages 598 and 604 of applicant's PB submitted on 26.09.2016]. BFI 16 page no 2 relates to cash of 1000 (the figures have a circle around them) with signatures dated 18.08.2010 and BFI 16 page 12 (backside) relates to amounts of 25000.00 (the figures have a circle around them) and 12250/00 with signatures dated 16.06.2011 and 12.07.2011 respectively. Page 13 of the rule 9 report dated 15.07.2016 contains the English translated version of question no. 10,11 and 12 of the statement of the applicant recorded during the course of survey proceedings. Question No. 11 inter alia gives the details as per BFI 35 page No. 12 of the income plus money receivable as share on sale of land at survey no. 223,224 and 225 at Vesu, Surat. None of the dates in BFI 16 page 2 and page 12(backside) tally with the dates on which the share of sale of land of survey No. 223, 224 and 225 at Vesu Surat was received. Therefore, the connection sought t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Shri Hitesh Himmatbhai Savani has denied any involvement in the land transactions and denied having received any part of the sale proceeds as stated by Shri Baldevbhai Bhikhabhai Patel. The contents of the statement of Shri Hiteshbhai Himmatbhai patel have been discussed by the Pr CIT in his report under rule 9 submitted on 15.07.2016. The request for copy of the statement and cross examination of Shri Hitesh Himatbhai Patel is not made by the applicant even in the last hearing conducted on 26.09.2016. In view of these facts, the applicant's claim that the statement recorded behind the back of the assessee without an opportunity for cross examining the deponent has not evidentary value can not be accepted. It is therefore, respectfully submitted that the judgments relied upon by the applicant in Annexure 2 of PB submitted on 26.09.2016 are not applicable, since no request for cross examination of Shri Hiteshbhai Savani was made by the applicant. In para no 32 of the report dated 15.07.2016 supra, the Pr CIT has noted that in response to question no.11 where Shri Hitesh Himmatbhai Savani was required to give his comments on the statement of the applicant about their joint shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rious dates i.e. on the 21.07.2016, 23.08.2016, 09.09.2016, 20.09.2016 and 26.09.2016, did the assessee object to or ask for a copy of the statement of Shri Savani or raised an objection on relying on such a statement without offering Shri Savani for crossexamination. Evidently therefore, the contention that, principles of natural justice, were violated is an afterthought. 26. With regard to the second transaction concerning the land dealings on behalf of Shri Vince Patel, the Commission has categorically observed as under: 13. . .However the zip code is not given and no confirmation for the address is made available. The deployment of funds in Saroli land and Ved-Dabholi land is claimed to be out of India Rupees locally sent to the applicant by the father and brother of Shri Vince Patel. However, their present addresses are not given. Confirmations that the investments and further transactions were on behalf of Vince Patel, Piyush and Sanjay are not furnished. The complete details of the land have not been made available for determining the identity of the person entirely into the transactions. The entries in the impounded documents do not prove that the transactions ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;s power of judicial review under Article 226 of the Constitution of India in connection with the orders of the Settlement Commission has been considered by this Court on several occasions. In case of Saurashtra Cement Ltd and ors vs. Commissioner of Customs and anr reported in 2012 (3) GLH 235 while considering the power of judicial review in connection with the orders passed by the Settlement Commission, the Court had held that the Settlement Commission is a special body and while examining the scope of an order under review of Settlement Commission, this Court should be slow in interfering with the orders: 9. The Settlement Commission is a special body constituted for the purpose of settlement of revenue cases. It is wellrecognised that the order that the Settlement Commission passes would be effective only for that particular case and would not bind the department in later years. The Settlement Commission is not even obliged to give reasons. It thus does not lay down any law of binding nature. It, of course, passes an order which would be effective and binding between the parties of that case. 10. The nature of scope of judicial review of a High Court under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions which induce the Commission to make a particular order, unless of course the Commission itself chooses to give reasons for its order. Even if it gives reasons in a given case, the scope of enquiry in the appeal remains the same as indicated above viz., whether it is contrary to any of the provisions of the Act. In this context, it is relevant to note that the principle of natural justice (audi alteram partem) has been incorporated in Section 245-D itself. The sole overall limitation upon the Commission thus appears to be that it should act in accordance with the provisions of the Act. The scope of enquiry, whether by High Court under Article 226 or by this Court under Article 136 is also the same whether the order of the Commission is contrary to any of the provisions of the Act and if so, has it prejudiced the petitioner/appellant apart from ground of bias, fraud malice which, of course, constitute a separate and independent category. Reference in this behalf may be had to the decision of this Court in R.B. Shreeram Durga Prasad and Fatechand Nursing Das v. Settlement Commission (IT and WT) which too was an appeal against the orders of the Settlement Commission. Sabyasac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be open for the Settlement Commission to examine the fulfillment thereof at several stages of the settlement proceedings. If therefore, while at the threshold, considering the question whether such application should be allowed to be proceeded with or be rejected, the Commission examined such questions on the basis of disclosure made by the applicants and the supporting material produced along with the applications, we do not see that the Commission committed any legal error. As already noted, it was well within the jurisdiction of the Commission at the stage of sub-section(1) of section 245D of the Act to examine whether application for settlement fulfills the statutory requirements contained in sub-section(1) of section 245C of the Act. At this stage we may refer to the decision of the Supreme Court in case of Ajmera Housing Corporation and another (supra). It was a case in which the assessee had made certain disclosures in the initial application under section 245C(1) of the Act. Such disclosures were however, revised and additional income was disclosed in the revised annexures. The Apex Court held that the assessee had no right to revise an application under section 245C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of State of U.P. And Another vs. Johri Mal reported in (2004) 4 SCC 714 observed that the scope and extent of power of judicial review of the High Court under Article 226 of the Constitution of India would vary from case to case, the nature of the order, the relevant statute as also other relevant factors including the nature of power exercised by the public authorities, namely, whether the power is statutory, quasi-judicial or administrative. It was observed that the power of judicial review is not intended to assume a supervisory role. The power is not intended either to review governance under the rule of law nor for the courts to step into the areas exclusively reserved by the suprema lex to the other organs of the State. The court observed that the limited scope of judicial review is ( i) Courts, while exercising the power of judicial review, do not sit in appeal over the decisions of administrative bodies; ( ii)A petition for a judicial review would lie only on certain well-defined grounds ( iii) An order passed by an administrative authority exercising discretion vested in it, cannot be interfered in judicial review unless it is shown that exercise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecial body created and constituted for a special purpose. The order that the Settlement Commission may pass though is binding between the parties, does not lay down a ratio or a precedent. 17. Despite such narrow confines of judicial review of the decision of the Settlement Commission, it is undeniable that the jurisdiction under Article 226 of the Constitution is not totally ousted. In a given situation if the Settlement Commission has taken into consideration irrelevant facts and such consideration has gone into its decision making process resulting into grave injustice and prejudice to the party then within the narrow confines of the judicial review, interference would still be open. 19. When the Settlement Commission examines an application in terms of statutory powers and finds that such application does not satisfy the legal requirements, as contained in section 245C(1) of the Act, in our view, unless such decision of the Commission is contrary to the statutory provisions contained in the Act, interference in exercise of writ jurisdiction under Article 226 of the Constitution of India would not be warranted. The counsel for the petitioners, as recorded earlier, m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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