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TMI Blog2019 (3) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer (for short "A.O.") framed an assessment determining undisclosed income of Rs. 1,17,85,885/-. 2. In the course of the verification proceedings, the assessee offered a further additional income aggregating Rs. 5,81,066/- vide its letter dated 02.08.2004. Later on 13.03.2008 in the course of hearing, the Commission directed the applicant's representative and the A.O. to sit with the Additional Director of Income Tax (Investigation) (of the Settlement Commission) to reconcile the disputes. As a result of the exercise, the Commission suggested certain further additions on the basis of the cash flow statements, as also the evidences pointed out by the A.O., which resulted in a further addition of Rs. 11,25,000/- under various heads. The assessee acceded to the said additions of undisclosed income. The Settlement Commission, hence, concluded the proceedings under Section 245D by an order finding the total undisclosed income to be Rs. 34,49,966/-. This included the original income as submitted by the respondent coming to Rs. 17,43,900/- in his application under Section 245C, as also the amounts conceded later of Rs. 5,81,066/- and Rs. 11,25,000/- as suggested by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Director of Income Tax (International Taxation) v. Income Tax Settlement Commission, [2014] 365 ITR 108 (Bom). The Division Bench of the High Court of Bombay also had distinguished the decision in Ajmera Housing Corporation. 6. The learned Senior Counsel for the Department would argue that the offers made by the assessee insofar as the additional undisclosed income ought to have resulted in a definite conclusion that the application made under Section 245C did not have full and true disclosure. On that conclusion there could be no further consideration made by the Settlement Commission. The learned Counsel for the assessee, however, would point out that it cannot be the position that, in every case of additions made by the Commission after referring to the report under Section 9, there would be a rejection of the application on grounds of full and true particulars of income having not been disclosed. If that be the case, there could be no settlement by the Commission and Chapter XIX-A itself would be rendered meaningless. As a matter of practice, it is pointed out, that the Commission on a hearing; not on law but only on the figures as offered by the assessee and objected to in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 245D; we emphasize; as it thinks fit. The examination of records, the reports and further evidences as also the hearing, cannot be understood as a mere exercise to decide on whether the application under Section 245C has fully and truly disclosed the income and how it was derived. The power conferred to make orders, as the Commission thinks fit, is a carte-blanche to determine the undisclosed income of the applicant, as deemed fit and reasonably arising from the materials before it. 8. The provisions under Chapter XIXA has been considered by the Hon'ble Supreme Court in Ajmera Housing Corporation, which was on quite distinct facts, but according to us not distinguishable on facts from the instant case. The proceedings therein also commenced with a search under Section 132. The assessments were completed for three years from 1989-90 to 1991-92 determining the total income and prior to completion of that assessment, under Section 132(5) concealed income of the group was determined at Rs. 200.60 crores for the assessment year 1993-94. 9. The assessee then filed an application under Section 245C before the Settlement Commission disclosing an additional income of Rs. 1,94,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iculars of undisclosed income and "the manner" in which such income was derived and, therefore, unless the Settlement Commission records its satisfaction on this aspect, it will not have the jurisdiction to pass any order on the matter covered by the application." The powers of the Commission as available under Chapter XIXA was delineated and stated so by the Hon'ble Supreme Court: "31. xx xx In our opinion, even when the Settlement Commission decides to proceed with the application, it will not be denuded of its power to examine as to whether in his application under Section 245-C(1) of the Act, the assessee has made a full and true disclosure of his undisclosed income. We feel that the report(s) of the Commissioner and other documents coming on record at different stages of the consideration of the case, before or after the Settlement Commission has decided to proceed with the application would be most germane to the determination of the said question. It is plain from the language of sub-section (4) of Section 245-D of the Act that the jurisdiction of the Settlement Commission to pass such orders as it may think fit is confined to the matters covered by the application a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1994 alone was sufficient to establish that the application made by the assessee on September 30, 1993 under section 245C(1) of the Act could not be entertained as it did not contain a 'true and full' disclosure of their undisclosed income and 'the manner' in which such income had been derived. However, we say nothing more on this aspect of the matter as the Commissioner, for reasons best known to him, has chosen not to challenge this part of the impugned order." It would, therefore be noted that the aforesaid issue of whether or not by virtue of disclosure of additional income, there was a failure to make a true and full disclosure was not an issue for consideration before the apex court. This is so as it was not a subject matter of challenge by the Revenue either before the High Court or before the Supreme Court. In view of the above, the above observations of the apex court in Ajmera Housing (supra), cannot be said to be a ratio decidendi of the decision. It is trite law that a decision of a court is not to be read as a statutory provision. The observation of the court must be read in the context of the facts before the court." 12. We cannot, with due respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a valid application under Section 245-C(1) of the Act, the High Court's opinion that it would not be proper to set aside the proceedings is clearly erroneous. The High Court appears to have not appreciated the object and scope of the scheme of settlement under Chapter XIX-A of the Act." 14. The High Court of Bombay, in Director of Income Tax (International Taxation) noticed two decisions of the same court, in C.I.T. v. Income Tax Settlement Commission, [2014] 365 ITR 68 and C.I.T. v. Income Tax Settlement Commission, [2014] 365 ITR 87 (Bom), the latter a decision rendered by the very same Division Bench on that day itself, wherein a contrary view had been taken. The decisions above referred had taken the view that at the stage of admission under Section 245D(2C), the Commission must decide on the validity of the application for settlement and the issue cannot be postponed to the stage of final hearing under Section 245D(4) of the Act, even though the requirement of making a true and full disclosure remains a continuous requirement to be satisfied at all times in settlement proceedings. We are in perfect and respectful agreement with this proposition which we have already notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Rs. 11,25,000/-, which was acceded to by the assessee. Hence, this is not a case in which the assessee had merely accepted the additions suggested by the Commission, to settle the matter once and for all times. At the first stage, even before the assessee was directed to sit along with the A.O. and the officer of the Commission to reconcile the differences, which led to the suggestions from the side of the Commission; a disclosure of further income was made, which was not available in the original application made under Section 245C. This leads to a definite conclusion that there was no full and true disclosure of the undisclosed income and the source from which it derived in the application filed under Section 245C as held in Ajmera Housing Corporation. We hence set aside the judgment of the learned Single Judge, as also the order of the Settlement Commission for reason of the assessee having not made full and true disclosure under Section 245C. The Commission ought not to have proceeded with the application when the assessee made a voluntary offer of additional income, when the application was pending, in addition to that disclosed in its application under Section 245C. 1 ..... 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