TMI Blog2021 (5) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 245C of the Act and adjudicate the additional income found by the Department during seizure, which is admittedly not disclosed in the application filed at the first instance by the assessee. Assessee in the present case filed statement of facts in vide two letters dated 10.03.2008 and 14.03.2008, offering additional income and the Settlement Commission also proceeded and settled the issues, it is to be inferred that the assessee at the first instance, had not disclosed true and full income and therefore, the subsequent additional statements cannot be relied upon in order to satisfy the requirements of the provisions u/s 245(C). The principles involved in Section 245(C) of the Income tax is that the person approaching the Settlement Commission should file an application with clean hands and surrender the full and true disclosure of income. Only in the eventuality of proving the genuinity, then alone the Settlement Commission is empowered to settle the disputes and not otherwise. Thus, the prime consideration and pre-condition for entertaining an application is true and full disclosure of income and subsequent adding, deletion or insertion would dis-entitle the Settlement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d several inadmissible and unconnected expenses as deduction from the sale price, and also took the base value of the land as on 1981 at an unrealistically high figure to reduce the amount of capital gains. 5. On account of vast contradictions noticed by the Income Tax Department, the Revenue asked before the Settlement Commission that it had no jurisdiction to take up the application filed by the 2nd respondent for Settlement as there was no case pending as on the date of filing the application for the Assessment Year 2006-07 since no assessment proceedings had commenced by issuance of notice. In contradiction with the submissions made by the Assessing Officer, the Settlement Commission treated that the applicants settlement application and passed an order. It is contended that Clause (iv) in explanation to Section 245A(b) has been inserted with effect from 01.06.2007, it would convey the meaning of proceedings for assessment for the earlier also and can be deemed to be considered retrospective in nature . 6. In this context, the learned Senior Standing counsel appearing on behalf of the petitioner Department mainly contended that the assessee wanted the amendment in Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC) is relied upon and paragraph 10 is extracted hereunder: 6. Chapter XIX-A providing for settlement of cases was introduced in the Income Tax Act, 1961 pursuant to the recommendations of the Direct Tax Inquiry Committee headed by Justice Wanchoo. It is necessary to notice a few provisions relevant herein. Section 245-A defines certain expressions occurring in the chapter. Clause (b) defines the expression case in the following words- (b) case means any proceeding under this Act for the assessment or reassessment of any person in respect of any year or years, or by way of appeal or revision in connection with such assessment or reassessment, which may be pending before an income tax authority on the date on which an application under sub-section (1) of Section 245-C is made: Provided that where any appeal or application for revision has been preferred after the expiry of the period specified for the filing of such appeal or application for revision under this Act and which has not been admitted, such appeal or revision shall not be deemed to be a proceeding pending within the meaning of this clause; 10. Section 245-D prescribes the procedure to be fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -7-2000, the High Court allowed the writ petition and set aside the order. 14. Next, it was urged by the learned Senior Counsel for the assessee that the High Court erred in entertaining the writ petition filed by the Commissioner under Article 226 of the Constitution against the order passed by the Settlement Commission because: (i) in terms of Section 245-D(1) of the Act, the order made by the Settlement Commission under subsection (4) of the said section is conclusive as to the matters stated therein and no matter covered by such order can be reopened in any proceedings under the Act or under any other law for the time being in force; and (ii) in the absence of any illegality in the procedure followed by the Settlement Commission, the power of judicial review could not be exercised by the High Court to interfere with the findings of fact recorded by the Settlement Commission. To buttress his proposition that judicial review is concerned only with the decision-making process and not with the final decision, learned counsel referred us to the decisions of this Court in Jyotendrasinhji v. S.I. Tripathi [1993 Supp (3) SCC 389] , R.B. Shreeram Durga Prasad v. Settlement Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forestated, in the scheme of Chapter XIX-A, there is no stipulation for revision of an application filed under Section 245-C(1) of the Act and thus the natural corollary is that determination of income by the Settlement Commission has necessarily to be with reference to the income disclosed in the application filed under the said section in the prescribed form. 31. We are convinced that, in the instant case, the disclosure of ₹ 11.41 crores as additional undisclosed income in the revised annexure, filed on 19-9-1994 alone was sufficient to establish that the application made by the assessee on 30-9-1993 under Section 245-C(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. 12. Relying on the above judgments, the learned Senior Standing counsel made a submission that there was no true and full disclosure of income by the assessee in respect of the application filed under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry section itself. Therefore, it is an exclusive provision under the Act, wherein the procedures are also contemplated and certain terms and conditions are also stipulated for the purpose of settling the disputes. 15. Law presumes that every assessee discloses his true and full income at all times. Law mandates that an assessee must file his returns and show the income in a true and correct manner. While the law expects that an assessee to be truthful and correct in his particulars, the additional provisions for settlement of the disputes are provided enabling the assessee to settle the disputes in the event of any correction, omission, commission or mistakes etc. Thus, an application for settlement of cases cannot be construed as an absolute right. But, it is a right of an assessee to approach the Settlement Commission with full and true disclosure of his income. The right of the assessee is well enumerated in many other provisions of the Income Tax Act. The assessment made by the Assessing Officer at the first instance would be the factor for all purposes and the settlement of the disputes is an additional provision, enabling the assessee to correct certain mistakes, if at all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax Act. When the Section in unambiguous terms contemplates that the application in such form and in such manner as may be prescribed containing a full and true disclosure alone is entertainable, then it becomes a pre-requisite condition for entertaining an application under Section 245(C). The phraseology 'full and true disclosure of his income' is contemplated in Section 245(C)(1) itself. Thus, it is for the assessee to establish at the first instance that the application contains full and true disclosure of the income. Once the said factum is established, then alone the question of settlement would arise and not otherwise. 19. As far as the original power of the Assessing Officer under Section 153(A) of the Act is concerned, the Division Bench of this Court in the case of CANARA JEWELLERS vs. SETTLEMENT COMMISSION reported in [2009] 184 Taxman 491 (Madras) held that the Settlement Commission is empowered to have all the powers which are vested in an income-tax Authority under the Act, in addition to the power conferred under Chapter XIX-A, but such power can be exercised for the purpose of procedure of settlement of application under Section 245C an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar authority. In the instant case, the power of the Settlement Commission is well enumerated under Section 245C and 245D of the Act. The manner in which settlement is to be arrived is also contemplated under the Act. Certain preconditions are also stipulated. Thus, the Settlement Commission cannot enter into the venture of assessment, which is the power of an Assessing Officer under Section 153A of the Act. Therefore, this Court is of an opinion that in the absence of any true and full disclosure, the Settlement Commission cannot go beyond the scope of Section 245C of the Act and adjudicate the additional income found by the Department during seizure, which is admittedly not disclosed in the application filed at the first instance by the assessee. 24. In view of the fact that the respondent/assessee in the present case filed statement of facts in vide two letters dated 10.03.2008 and 14.03.2008, offering additional income and the Settlement Commission also proceeded and settled the issues, it is to be inferred that the assessee at the first instance, had not disclosed true and full income and therefore, the subsequent additional statements cannot be relied upon in order to sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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