TMI Blog2023 (4) TMI 1178X X X X Extracts X X X X X X X X Extracts X X X X ..... While the assessee is required to make a full and true disclosure, the Settlement Commission is also authorised to render findings on any additional income that must be brought to tax and, consequently, the amount of tax, penalty or interest payable by the assessee that should be paid in addition to the tax, penalty or interest already paid on the income offered in the application for settlement. This is clear from a reading of Sub-Sections (4) and (6) of Section 245-D of the Act. It is clear that the Settlement Commission does not proceed merely on the basis of the statements contained in the application for settlement or any further pleadings before it and can, for reasons to be recorded, come to a conclusion that some higher income had to be offered by the assessee for arriving at a settlement. Therefore, taking into consideration the spirit and mandate of the provisions contained in Chapter XIX and merely for the reason that further amounts had to be offered by the assessee, the Settlement Commission cannot reject the application for settlement. This is not to say that the assessee is not required to make full and true disclosure. One of the main reasons which weighed wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which has to be disposed of by the interim board. Order of the Settlement Commission has been quashed, will be considered afresh by the Interim Board after affording an opportunity to the petitioner and to the respondent Department. - THE HONOURABLE MR. JUSTICE GOPINATH P. FOR THE PETITIONER : BY ADVS. G.HARIKUMAR (GOPINATHAN NAIR) AKHIL SURESH ANU BALAKRISHNAN NAMBIAR FOR THE RESPONDENT : BY ADVS. JOSE JOSEPH P.K.RAVINDRANATHA MENON (SR.)(R-348) P.S. RAMAN (SR.ADV.) JUDGMENT The petitioner has approached this Court being aggrieved by Ext.P12 order of the Income Tax Settlement Commission (1st respondent) through which the application filed by the petitioner for settlement has been rejected. 2. The brief facts are that, on 05.08.2016, there was a search and seizure under Section 132 of the Income Tax Act (In short 'the Act') in various business premises of the petitioner. The petitioner opted to settle the issues by adopting the procedure under Chapter XIX A of the Income Tax Act, 1961 [ the Act - as it stood at the relevant time]. The period for which the application was filed relate to the Assessment Years 2010-11 to 2017-18. In the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, which has a huge impact on the income realised by the petitioner under this head, was shown as 80%. It was pointed out that in respect of a transaction relating to one P.M.Reji, the Branch Manager of the petitioner had accepted that the purity of gold pledged by the aforesaid P.M.Reji was about 85%. This document was, according to the 2nd respondent, sufficient to establish that the petitioner had not made a full and true disclosure which alone would entitle it to have the case settled at the hands of the Settlement Commission. Based on the findings of the aforesaid two issues the Settlement Commission has rejected the application filed by the petitioner for settlement, on the finding that there was no full and true disclosure . The other objections raised by the 2nd respondent need not be discussed here because those objections do not form part of the reasons for rejecting the application for settlement. 4. The petitioner initially challenged the order of the Settlement Commission before the Madras High Court. However, by Ex.P14 judgment, a learned Judge of the Madras High Court disposed of the writ petition filed by the petitioner [W.P(C)No.22792/2019], holding that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the disclosure made by the petitioner that the purity of gold sold should be determined at 80%. It is submitted that the Settlement Commission irrationally found that the petitioner did not produce any document which substantiated that when the gold ornaments pledged by the aforesaid P.M.Reji were subsequently sold, the purity of gold was found to be 79.24% as opposed to the recording made by the Branch Manager at the time when the gold was pledged that the purity of gold was 85%. It is submitted that the finding of the Settlement Commission that the petitioner did not produce these documents at any earlier stage is itself unreasonable, as the first opportunity that the petitioner got to produce the documents in question was when the objection was raised by the 2nd respondent in the report filed as contemplated by Section 245 D (3). It is pointed by the learned Senior Counsel that the amount of gold actually pledged by the aforesaid P.M.Reji was 172.5 grams which are about 0.00058% of the gold actually sold by the petitioner in auction during the relevant period. It is submitted that the record shows that the petitioner had actually sold 29.6 Tons of gold during the relevant peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Managing Director of the petitioner Company, an amount of Rs.75 crores was stated to be undisclosed income for the Financial Year 2016-17 on account of unrecognized interest income. This income was not offered in the application for settlement, and only an ad-hoc amount of Rs.2 crores was offered as additional income. It is, therefore, submitted that the failure of the petitioner to make full and true disclosure resulted in the rejection of the application for settlement, and the order of the Settlement Commission is not liable to be interfered with in the exercise of jurisdiction vested in this Court under Article 226 of the Constitution of India. 9. The learned Senior Counsel, for the petitioner, in reply, reiterates the contentions taken and submits that the formula for ascertaining the purity of gold and analysing the actual income is one suggested by the petitioner. It is submitted that while the Department has accepted the methodology, the Department only disputes the percentage of purity of gold for the purposes of ascertaining the income to be offered for settlement. It is submitted that this difference in percentage is a matter for ascertainment and cannot be a ground t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of an order issued under Section Sub-Section (4) of Section 245-D can be recovered in accordance with the provisions contained in Chapter XXVII of the Act. The provisions of Section 245-K make it clear that an application for settlement is a one-time measure, and further applications for settlement will not be entertained at the instance of the assessee in question. An overall reading of the provisions of Chapter XIX of the act and the procedure to be adopted by the Settlement Commission clearly indicate that while the assessee is expected to make a full and true disclosure, a further process of adjudication at the hands of the Settlement Commission is involved, and the Settlement Commission can determine any further amounts payable by the assessee towards the tax, interest or penalty and such amount is also liable to be paid by the assessee in question. In other words, it is clear that the Settlement Commission does not proceed merely on the basis of the statements contained in the application for settlement or any further pleadings before it and can, for reasons to be recorded, come to a conclusion that some higher income had to be offered by the assessee for arriving a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f provisions contained in Finance Act, 2021, Sections 245-A and 245-B of the Act have been amended, and the Settlement Commission has ceased to exist. In the place of the Settlement Commission, an Interim Board has been constituted to consider and entertain applications for settlement which were pending. The question as to whether, in a case like this (where the order of the Settlement Commission is required to be quashed), the matter can be reconsidered by the Interim Board, came up for consideration of a Division Bench of the Madras High Court in K.S. Thirumalaivasan v. The Chairman, Income Tax Settlement Commission and others; (judgment dated 27.6.2022 in W.A.No.1851/2021) where in paragraph 31 it was held as follows:- 31. ............................... Upon the matter being remanded, the application filed by the Appellant would have to be treated as a pending application and appropriate orders are to be passed after giving the appellant sufficient opportunity and by considering all the materials placed by him. .......... I am in respectful agreement with the view taken by the Division Bench of the Madras High Court in the aforesaid judgment. The effect of an order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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