TMI Blog2018 (1) TMI 1048X X X X Extracts X X X X X X X X Extracts X X X X ..... plicated tax disputes, where the assessee gets relief, more particularly from penalty and prosecution. However, to be entitled for such a remedy, the conduct of the assessee is primordial. In my considered view, the conduct of the assessee as pointed out by the Tribunal definitely leads to the irresistible conclusion that there has been no full or true disclosure. Petition dismissed. - Writ Petition No. 666 of 2018, WMP Nos. 836 to 838 of 2018 - - - Dated:- 19-1-2018 - T. S. Sivagnanam, JJ. For the Petitioner : Mr. R. V. Eshwar, Senior Counsel for Mr.R.Sivaram For the Respondents : Mr.A.P.Srinivas, Senior Standing Counsel assisted by Mr.A.N.R.Jayapradhap, Junior Standing Counsel ORDER The petitioner has filed this writ petition challenging the order passed by the Income Tax Settlement Commission (hereinafter referred to as the Settlement Commission ), Additional Bench, Chennai, dated 05.01.2018, passed under Section 245D(1) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). By the impugned order, the petitioner's application for settlement of his case was rejected on the ground that he failed to make full and true disclosure and also the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Producers/Sub-distributors are also partly in cash and partly through Bank, as the nature of trade is such. A search proceeding under Section 132 of the Act was conducted in the offices and residential premises of the petitioner in Chennai and Madurai on 30.09.2015 and 01.10.2015, during which, materials were seized/impounded as well as cash amounting to ₹ 67,00,000/- from the residential premises of the petitioner. Pursuant to the search, notices under Section 153A of the Act dated 28.11.2016, were issued for the assessment years 2010-11 to 2015-16. The petitioner, over and above the income returned for the relevant assessment years amounting to ₹ 5,91,56,880/- had admitted undisclosed income of ₹ 25,10,95,304/- under Section 132(4) of the Act. 5.The petitioner would state that for the assessment year 2016-17, he filed original return under Section 139(1) of the Act on 15.12.2016, declaring the total income of ₹ 4,00,00,000/-. Thereafter, the petitioner preferred an application before the Settlement Commission on 28.07.2017, to settle the issues. The said application was rejected by order dated 10.08.2017, apart from other reason that the petitioner ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, when the petitioner had made extensive submissions, explanations and evidences with respect to the undisclosed income. The Settlement Commission ought to have appreciated the page wise explanation of seized materials and detailed explanations of seized annexures along with confirmations received from the counter parties. The Settlement Commission erred in observing that the diary notings did not match with the amount offered by the petitioner despite the authorized representative explaining the modus operandi of the petitioner that the Settlement Commission ought to have formed a prima facie opinion on the aspect of full and true disclosure of the particulars of income after going through the contents, submissions and additional paper books preferred by the petitioner. The Settlement Commission did not provide reasonable opportunity to the petitioner to clearly substantiate their claims and arbitrarily passed the impugned order. 9.The learned Senior Counsel has drawn the attention of this Court to the order passed by the Settlement Commission dated 10.08.2017, by which, the first application for settlement was rejected and pointed out that the Settlement Commission had held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Senior Counsel for the petitioner convinced this Court to remand the matter to the Settlement Commission for fresh consideration. This submission is largely based on the materials placed before the Settlement Commission along with the second application, which are voluminous and require thorough verification. It is not in dispute that the second application is maintainable before the Settlement Commission. Nevertheless it has to be seen as to whether the order passed by the Settlement Commission is so arbitrary or unreasonable suffering from errors apparent on the face of the order or that no reasonable person could comprehend the reasons assigned by the Settlement Commission for rejection of the application. It is no doubt true that the object of introduction of Section 245 into the provisions of the Income Tax Act is to bring about an early resolution of tax disputes, by which the assessee gets immunity from penalty and prosecution. However, the provision contain strict parameters, which guide the Settlement Commission as to how to go about when an application for settlement is made. The first and foremost condition for an assessee to fulfill before the Settlement Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 5.2 of the impugned order. The Settlement Commission has recorded that it considered the application filed by the petitioner, the paper books filed, the submissions of the authorized representative of the petitioner and the available records and recorded the submissions made on facts. After considering the same, the Settlement Commission pointed out that the authorized representative of the petitioner was not able to cogently explain any of the entries relating to the applicant's claim on 'not done' transaction. Therefore, opined that trueness and fullness of the disclosure is lacking in the application. The Settlement Commission took into consideration the written submissions filed by the authorized representative of the petitioner during the course of hearing said to contain the co-relation statement of diary notings with actual transaction and list of 'not done' transaction as claimed by the petitioner. The Settlement Commission pointed out that the authorized representative was unable to clarify the notings in diary and the quantum of transaction in paper book IV. 17.The Settlement Commission appears to have pointed out certain deficiencies with regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner should satisfy the Settlement Commission that there has been full and true disclosure. At that stage of the matter, the Settlement Commission cannot be expected to or cannot be compelled to utilize the machinery available with it or to invoke Rule 9 or Section 245C of the Act. It is for the Settlement Commission to regulate its business. The manner in which the Settlement Commission proceeded cannot be stated to be either arbitrary or unreasonable. The Court cannot dictate the procedure that the Settlement Commission has to follow at the stage of Section 245D(1) of the Act unless there is a palpable error or violation of any procedures under the Act. In other words, broad parameters required to satisfy a prima facie case before a Court of law is what is required at the stage of Section 245D(1) of the Act. The degree of proof for a prima facie case is on higher pedestal before a judicial forum. It is no doubt true that Section 245 was inserted into the provisions of the Income Tax Act for an early resolution of complicated tax disputes, where the assessee gets relief, more particularly from penalty and prosecution. However, to be entitled for such a remedy, the conduct of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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