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TMI Blog2019 (4) TMI 1165X X X X Extracts X X X X X X X X Extracts X X X X ..... he Radico Khaitan group of cases including the assessee company on 15.02.2011. The assessee company had also been covered in an earlier search u/s 132 of the Act on 14.02.2006. 6. Pursuant to the present search, i.e. on 15.02.2011, the Assessing Officer commenced the assessment proceedings as the present A.Y is 2005-06 is one of the six A.Ys, preceding the A.Y relevant to the previous year in which the search was conducted. 7. From the records available, the Assessing Officer observed that during the year under consideration, the assessee entered into a transaction with M/s Count Trade Links Pvt Ltd and booked expenses/made payment of Rs. 1,78,30,714/-. 8. On the basis of some information received from the DDIT, UNIT IV(3) [INV], New Delhi, the Assessing Officer found that that M/s Count Trade Links Pvt Ltd has received a large amount from the assessee towards reimbursement of marketing expenses. In this regard, some bills pertaining to the purchase of gold and diamond was also obtained by M/s Count Trade Links Pvt Ltd on behalf of the assessee. 9. On further enquiries, the Assessing Officer came to know that no sale of gold /diamond was made by the parties from whom M/s Count ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter before the CIT(A) but without any success. 13. Before us, the ld. AR vehemently stated that when the assessment was completed on the basis of search conducted on 14.02.2006, the A.Y under dispute was part of block assessment. The ld. AR pointed out that the quarrel was settled by the Income tax Settlement Commission vide order dated 13.03.2008. it is the say of the ld. AR that by this order, the Income tax Settlement Commission settled the income of the assessee, inter alia, for A.Y 2005-06 at Rs. NIL. The ld. AR further stated that in the subsequent search conducted on 15.02.2011, once again the A.Y under dispute falls into block period but since in the earlier search when the order of the Income tax Settlement Commission for A.Y 2005-06 had attained finality, and, therefore, the Assessing Officer was not in his jurisdiction to once again frame assessment u/s 153A of the Act for the year under consideration. 14. Strong reliance was placed on the decision of the Hon'ble Jurisdictional High Court of Delhi in the case of Omaxe Ltd. 209 Taxmann 443 and another decision, also of the Hon'ble High Court of Delhi in the case of Omaxe Ltd 364 ITR 423. 15. Per contra, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act for the year under consideration when the same has attained finality by the order of the Settlement Commission on 13.03.2008. 18. The Hon'ble Delhi High Court in the case of Omaxe Ltd 209 Taxmann 443 has considered similar issue though facts in that case relate to reassessment proceedings u/s 147 of the Act. But the observations and findings are relevant and read as under: "The main argument of the learned counsel for the petitioner is that once the ITSC has passed a final order of settlement for an assessment year under Section 245D (4), the assessment becomes conclusive and the Assessing Officer has no jurisdiction to reopen any matter relating to that assessment year under Section 148 of the Act. In order to appreciate the contention it is necessary to refer to a few provisions of the Act relating to the jurisdiction, powers etc. of the ITSC. Section 245C provide for application for settlement of cases and permits an assessee to approach the ITSC with a full and true disclosure of its income which has not been disclosed before the Assessing Officer, the manner in which such income has been derived and the additional amount of income tax payable on such income and suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any sum due in the settlement shall be paid and all other matters to make the settlement effective and shall also provide that the settlement shall be void if it is subsequently found by the ITSC that it has been obtained by fraud or misrepresentation of facts. Sub‐section (7) provides that where a settlement becomes void, the proceedings with respect to the matters covered by the settlement shall be deemed to have been revived from the stage at which the application was allowed to be proceeded with by the ITSC and the income tax authority concerned may complete such proceedings at any time before the expiry of two years from the end of the financial order in which the settlement became void. 11. Section 245E empowers the ITSC, for reasons to be recorded in writing, to reopen any proceeding connected with the case which has been completed under the Act before the application under Section 245C was made. The caveat is that this can be done by the ITSC only for the proper disposal of the case pending before it. There are other conditions by which the power is hedged but they are not relevant for our purpose. Section 245F provides for the powers and procedures of the ITSC. Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 89,20,76,630/‐. The Assessing Officer issued notices under Section 143(2) and 142(1) on 12.07.2007 but even before the questionnaire was issued the petitioner had approached the Settlement Commission by an application filed on 31.05.2007. Under Section 245F(1), the ITSC, in addition to the powers conferred on it under Chapter XIX‐A, shall have all www.taxpundit.org www.taxpundit.org www.taxpundit.org www.taxpundit.org Page 3 of 6 www.taxpundit.org www.taxpundit.org the powers which are vested in an income‐tax authority under the Act. By virtue of the provisions of Section 245F (2) once the application for settlement was filed and an order was passed allowing the application to be proceeded with, it was the ITSC which has the exclusive jurisdiction to exercise the powers and perform the functions of an income tax authority under the Act relating to the case, till the final order of settlement is passed under Section 245D (4). Thus the moment the application of the assessee was allowed to be proceeded with by the ITSC till the final order of the settlement is passed on 17.03.2008, it was the ITSC which had exclusive jurisdiction in relation to the assessee's ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ituation or the legal dispute arising therefrom in the present case, we hold that since the exclusive jurisdiction to exercise the powers and perform the functions of an income tax authority in relation to the case vests with the ITSC after an order is passed under Section 245D (1) till the final settlement order is passed under Section 245D (4), it is not possible to countenance a situation where it can be said that the assessee's claim for deduction under Section 80IB (10) was not the subject matter of the order. " 21. The Hon'ble High Court of Delhi in the case of Omaxe Ltd 364 ITR 423 had the occasion to consider similar averments as made by the present ld. DR that finality attaches itself only in respect of the matters which are considered by the Income tax Settlement Commission in the application before us and dealt with in the order. 22. The Hon'ble High Court considered the relevant provisions which read as under: "14. It would be necessary to reproduce Sections 245D and 245I - both of which are relevant for the present purposes. These provisions read as follows: "245D. Procedure on receipt of an application under section 245C (1) On receipt of an applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see shall be liable to pay simple interest at fifteen per cent per annum on the amount WP( C) 1451/2013 Page 12 remaining unpaid from the date of expiry of the period of thirty-five days referred to in sub-section (2A)]. [(2D) Where the additional amount of income-tax referred to in sub-section (2A) is not paid by the assessee within the time specified under that sub-section or extended under sub- section (2B), as the case may be, the Settlement Commission may direct that the amount of income-tax remaining unpaid, together with any interest payable thereon under sub-section (2C), be recovered and any penalty for default in making payment of such additional amount may be imposed and recovered, in accordance with the provisions of Chapter XVII, by the 75- [Assessing] Officer having jurisdiction over the assessee.] (3) Where an application is allowed to be proceeded with under sub-section (1), the Settlement Commission may call for the relevant records from the Commissioner and after examination of such records, if the Settlement Commission is of the opinion that any further enquiry or investigation in the matter is necessary, it may direct the Commissioner to make or cause to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount remaining unpaid from the date of expiry of the period of thirty-five days aforesaid.] (7) Where a settlement becomes void as provided under sub-section (6), the proceedings with respect to the matters covered by the settlement shall be deemed to have been revived from the stage at which the application was allowed to be proceeded with by the Settlement Commission and the income-tax authority concerned, may, notwithstanding anything contained in any other provision of this Act, complete such proceedings at any time before WP( C) 1451/2013 Page 14 the expiry of two years from the end of the financial year in which the settlement became void. [(8) For the removal of doubts, it is hereby declared that nothing contained in section 153 shall apply to any order passed under sub-section (4) or to any order of assessment, reassessment or recomputation required to be made by the 83[Assessing] Officer in pursuance of any directions contained in such order passed by the Settlement Commission 84[and nothing contained in the proviso to sub-section (1) of section 186 shall apply to the cancellation of the registration of a firm required to be made in pursuance of any such directions as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The observations in Brij Lal (supra) cited earlier are extremely pertinent in this context. Likewise, in Express Newspapers Ltd. (supra), the Supreme Court had earlier stated as follows : ""....... It is equally evident that once an application made under Section 245C is admitted for consideration (after giving notice to and considering the report of the Commissioner of Income Tax as provided by Section 245D) the Commission shall have to withdraw the case relating to that assessment year (or years, as the case may be) from the assessing/appellate/revising authority and deal with the WP( C) 1451/2013 Page 16 case, as a whole, by itself. In other words, the proceedings before the Commission are not confined to the income disclosed before it alone. Once the application is allowed to be proceeded with by the Commission, the proceedings pending before any authority under the Act relating to that assessment year have to be transferred to the Commission and the entire case for that assessment year will be dealt with by the Commission itself. The words "at any stage of a case relating to him" only make it clear that the pendency of proceedings relating to that assessment year, whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ension. Misrepresentation has not been defined under the Income Tax Act; importing the definition of misrepresentation or for that matter fraud from the Contract Act in the circumstances would not be appropriate. As one understands, the term "misrepresentation" would mean failure to disclose material or facts which are germane and relevant, or suppressing facts and materials which are germane and relevant or holding out a falsehood which gives the rise to an assumption that what is so stated or represented is true or correct. These are only illustrative and by no means conclusive as to what can be misrepresentation. The facts of each case would WP( C) 1451/2013 Page 18 throw light on whether the individual or person concerned was guilty of misrepresentation having regard to the totality of the circumstances, given the nature of duty cast on him or her. This interpretation is in consonance with the ruling of the Supreme Court in Commissioner of Income Tax v Om Prakash Mittal [2005] 273 ITR 326(SC) where it was held as follows: "The decision whether the order has been obtained by fraud or misrepresentation of facts is that of the Commission. But it is not a requirement that the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to be proceeded with as provided in Section 245D(1). It has to be noted that the Commission exercises power in respect of income which was not disclosed before the authorities in any proceeding, but are disclosed in the petition under Section 245C. It is not that any amount of undisclosed income can be brought to the notice of the Commission in the said petition. Commission exercises jurisdiction if the additional amount of tax on such undisclosed income is more than a particular figure (which at different points of time exceeded rupees fifty thousand or rupees one hundred thousand, as the case may be). The assessee must have in addition furnished the return of income which he is or was required to furnish under any of the provisions of the Act. In essence the requirement is that there must be an income disclosed in a return furnished and undisclosed income disclosed to the Commission by a petition under Section 245C. There is a purpose why the legislature has prescribed the WP( C) 1451/2013 Page 20 condition relating to declaration of the order void when it is obtained by fraud or misrepresentation of facts. It cannot be said that there has been a true and fair declaration o ..... 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