TMI Blog2021 (5) TMI 373X X X X Extracts X X X X X X X X Extracts X X X X ..... rrive a conclusion that the 2nd respondent has not filed an application under Section 245(C) of the Act with true and full disclosure. The additional statement of facts given during the adjudication of the application before the Settlement Commission, raises a doubt regarding the true and full disclosure and further, the reasonings given by the petitioner/Income Tax Department in the matter of true and full disclosure were not considered by the 2nd respondent. The Settlement Commission without adhering to the provisions of the Income Tax Act and more specifically, in violation of the mandatory requirement for entertaining an application for settlement, passed the impugned order of settlement, knowing fully well that the 2nd respondent has not made true and full disclosure as mandated under Section 245(C) of the Income Tax Act. The petitioner / Commissioner of Income Tax in his written submission dated 20.02.2008, specifically made certain points, which would reveal that the non-disclosure of wealth by the 2nd respondent came to notice as soon as the application for NOC under Section 281 of the I.T.Act was made. Thus, there is nothing new disclosed by the 2nd respondent before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d respondent/assessee at the time of filing of an application under Section 245(C) of the Income Tax Act. Even during adjudication, the petitioner/Department could able to establish that the assessee has not approached the Settlement Commission with true and full facts. In spite of the fact that the 2nd respondent/assessee approached the Settlement Commission with unclean hands, the Settlement Commission entertained the application in violation of the provisions of the Act and further, passed an order, which is not in consonance with the powers conferred to the Settlement Commission under the Income Tax Act. 3. The learned Senior standing counsel appearing on behalf of the petitioner Income Tax Department made a submission that the 2nd respondent/M/s.Sri Krishna Tiles and Potteries (Madras) Private Limited was the owner of 34.04 acres of immovable property situated at Anna Nagar, Chennai, out of which, 2 acres were sold on 11.09.2002 and 32.04 acres were sold on 02.03.2006. The 2nd respondent was assessed to tax by the Assessing Officer working under the petitioner both under the Income Tax Act and Wealth Tax Act. The 2nd respondent sold 2 acres of its property in the financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;ble Court or that the order was ante dated. In either case, the validity of the order stands vitiated. 6. The second respondent filed a counter affidavit, stating that the writ petition is nothing but abuse of process of law. The writ petition under Article 226 of the Constitution of India, is not maintainable as the orders passed by the Settlement Commission under Section 22D(iv) of the Wealth Tax Act cannot be interfered in a routine manner and except on exceptional circumstances. It is contended that the Court cannot substitute its views in the place of the first respondent/Settlement Commission, particularly on the question of full and true disclosure and complexity of the case. It is contended that the petitioner has never stated about the complexity involved in the present case and the question of law warranting interference of the Hon'ble High Court under Article 226 of the Constitution of India. Thus, the writ petition is liable to be dismissed on the ground of maintainability. 7. The second respondent states that he is the owner of 34.04 acres of immovable property situated at Anna Nagar and further admitted that the 2nd respondent sold two acres of the propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Year 2004-05 and ₹ 35 crores for the Assessment Year 2005-06 over and above the additional amounts disclosed in the statement of facts filed in those Assessment Years. It is contended on behalf of the 2nd respondent that offering additional amounts does not mean that the respondent had not fully and truly disclosed at the time of filing the application. It is contended that the Settlement Commission after verifying these basic factors, proceeded with an adjudication and based on the adjudication, the order was passed on merits and therefore, the writ petition is liable to be dismissed. 10. The learned counsel for the petitioner mainly contended that in the eventuality of identifying the fact that the assessee has not disclosed true and full income in the application filed under Section 245(C) of the Act, jurisdiction of the Settlement Commission stands ousted and they are estopped from entertaining any such application. Even after admission of the application at any stage of the proceedings on account of the objections raised or on identification of facts, if the Settlement Commission is able to identify that there was no true and full disclosure of income or any ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome Tax Department, challenging the Settlement Commission and further, decided about the manner in which an application to be filed under Section 245(C) of the Act. Thus, the issues raised in the present case also discussed in the above judgment and the relevant paragraphs are extracted hereunder: 8. Dissatisfied with the order passed by the Settlement Commission, the Commissioner challenged it by preferring a writ petition in the High Court of Bombay. Holding that the Settlement Commission had not given any finding as to whether there was full and true disclosure of the income by the assessee, by a strongly worded order, dated 28-7-2000, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strictly. In a taxing Act one has to look merely at what is said in the relevant provision. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. There is no room for any intendment. There is no equity about a tax. (See Cape Brandy Syndicate v. IRC [(1921) 1 KB 64] and Federation of A.P. Chambers of Commerce Industry v. State of A.P. [(2000) 6 SCC 550] ) In interpreting a taxing statute, the court must look squarely at the words of the statute and interpret them. Considerations of hardship, injustice and equity are entirely out of place in interpreting a taxing statute. 28. As aforestated, 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 estab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons would depress the value of the property on different valuation dates. 15. The Commissioner of Income Tax in proceedings dated 12.04.2007 submitted a report under Rule 9 of the Settlement Commission Procedural Rules with reference to the Assessment Years 1999-2000 to 2005-06. The Commissioner in the said report categorically stated with reference to the disclosure made by the 2nd respondent, whether full and true in Paragraph 3.1, which reads as under: 3.1 The value of the flats at Royapettah as mentioned in Para 6 of the Assessing officer's report have completely been omitted by the assessee from the computation of net wealth in the settlement application. Since the flats were not held by the assessee as stock in trade, the value of the flats is includable in the net wealth. The market value of the flats on hand has been worked out by the AO on the basis of sales near the respective valuation dates and the value is given in page 8 of AO's report. The applicant has no justification for omitting the market value of the said flats from the net wealth and this fact alone militates against one of the prerequisite of the Settlement Application (i.e.) full and true d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty in the return of wealth on the relevant valuation dates. Thus, omission of this property has also resulted in establishing that the disclosure made is neither true nor full. 19. The Settlement Commission made the following observations in Paragraph 5.2 of the impugned order, which reads as under: 5.2 At the admission stage, it was submitted before us that the applicant was primarily motivated by a serious apprehension of high pitched assessment in respect of the reopened assessments. The entire land in question was ultimately sold for ₹ 206.34 crores on 02.03.2008 to M/s.Ozone Projects Private Limited. In order to determine the market value for W.T.Purposes, the value of the property on various valuation dates was the sole consideration. Since the value of the property in question is subjected to various litigations, it has to be suitably adjusted as the litigations would depress the value of the property on different valuation dates. In para 5,6,7,8 and 9 of the order Under Section 22D(1) the A.R. pointed out various impediments which had the result of depressing the value of the property on various dates. In para 11 and 12 of the 22D(1) order the arguments and ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax is clear that the application filed under Section 245(C) must contain true and full disclosure of income. During the course of adjudication, if the Income Tax Department is able to establish that certain details and the properties and documents were not filed along with the application filed by the assessee or if the assessee files an additional statement of facts for the purpose of settlement, then it is to be construed that the application under Section 245(C) of the Income Tax Act was not filed with true and full disclosure, and the disclosures made cannot be trusted upon. Thus, the Revenue must be allowed to proceed with the assessment. 22. In view of the fact that the petitioner could able to establish that the 2nd respondent has not approached the 1st respondent / Settlement Commission with true and full disclosure of income and during the course of proceedings, offering additional income and findings of the Settlement Commission would also confirm the same, the said offerings of the additional income would be sufficient for the purpose of arriving a conclusion that the 2nd respondent filed an application under Section 245(C) of the Income Tax Act without disclosing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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