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TMI Blog2009 (12) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... 3A for the assessment years 1999-2000 to 2005-06. The background facts of the case, which led the issuance of the said notice, may be stated in brief. 3. On 23-7-2004, a search was conducted by the Income Tax department at the residential and business premises of the petitioner under the provisions of Section 132 of the Income Tax Act (hereinafter referred to as the Act). The petitioner is a partner in the firm M/S Indian Ceramic House. The said firm is engaged in the business of manufacturing and sale of ceramic colour and lustre. The petitioner filed her return of income on 12-5-2006 for the assessment years 1999-2000 to 2005-06 in response to the notice issued under Section 153A of the Act. The petitioner also filed an application under Section 245C(1) of the Act before the Settlement Commission for settlement of the case arising out of search operation conducted on 23-7-2004. In the said search operation, documents were seized. The matter was ultimately considered by the Settlement Commission and by the order dated 31-3-2008 passed under section 245D(4) of the Act, the Settlement Commission settled undisclosed income of the petitioner as under:- (1) Indian Ceramic House Rs. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any proceeding under the Act or under any law for the time being in force. 7. The said objection did not find favour with the assessing officer, who vide impugned order dated 22-5-2008, rejected them by making clarification that the notice has been issued to make assessment after considering only those matters which were not placed before the Settlement Commission. Challenging the aforestated notice and the order dated 22-5-2008, the present writ petition has been filed. 8. A counter affidavit has been filed on the pleas inter alia that the Settlement Commission, while passing the order, remanded the matter back to the authority concerned to take appropriate action on the issues not placed before the Commission and on that basis the impugned notice was issued and impugned order was passed. It has been stated that the proceedings are not barred by time as the notice was issued in a pending matter and secondly the Settlement Commission had granted liberty to the concerned officer to take action on the issues not placed before the Commission to compute the quantum. The impugned notice has been sought to be justified on the pleas inter alia that in the seizure operation under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel for the department submits that in view of the order dated 31-3-2008 passed by the Settlement Commission, the matter has been remanded back to the assessing officer who is required to frame the assessment order in respect of the matters not covered by the order of the Settlement Commission. He tried to justify the action of the department on the strength of the order of the Settlement Commission. 13. Considered the respective submissions of the learned counsel for the parties and perused the record. 14. The question which falls for consideration in the present petition is- what is the ambit, scope and purport of the order dated 31-3-2008 passed by the Settlement Commission, on the facts of the present case. 15. But before doing it, it is necessary for us to examine various provisions of the Act which are germane to the controversy on hand. The provisions relating to the settlement of the cases can be find out in Chapter XIX of the Income Tax Act which provides for constitution of Settlement Commission by the Central Government for the settlement of cases under that Chapter. Section 245B provides that the Chairman, Vice Chairman and other members of the Settlement Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forestated provisions came up for consideration before the Apex Court, though in a slightly different context, were interpreted in Commissioner of Income Tax Vs. Anjum M.H. Ghaswala and others, (2001) 252 ITR 1. In this case the Apex Court was considering the ambit and scope of power of Settlement Commission to order waiver of statutory interest. In that connection, the Apex Court interpreted sub-sections (4) and (6) of Section 245D. Emphasis was laid by it on the phrases "in accordance with the provisions of the Act" used in sub-section (4) of Section 245D and "terms of settlement" used in sub-section (6) thereof. On examination of scheme as provided under Section 245D of the Act, the Apex Court has held that the Settlement Commission has to settle the dispute in accordance with the provisions of Income Tax Act and the expression "terms" used in sub-section (6) does not refer to the power of the Commission to waive or reduce the tax, penalty etc. Following observation made with reference to the word "term" is apposite:- ".............Therefore, all that the expression "term" in section 245D(6) means is that the Commission can stipulate the conditions of payment like instalments, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Settlement Commission to pass such order as it thinks fit on the matters covered by the application as also any other matter relating to the case not covered by the application, but referred to in the report of the Commissioner under sub-section (1) or sub-section (3) of Section 245D. Secondly, it is not the case of the department that the ground on which the notice has been to the petitioner was a matter which was not referred in the report of the Commissioner under sub-section (1) or sub-section (3) of Section 245D. 21. The aforesaid section should be read conjointly with section 245 I of the Act which attaches finality and conclusiveness to every order of settlement. Legislative intent is loud and clear. The order passed by the Settlement Commission has been treated to be conclusive. It can be recalled only under the circumstance if it is subsequently found by the Settlement Commission that the order was obtained by fraud or misrepresentation of facts, as per sub-section (6) of Section 245D of the Act. On a conjoint reading of sub-sections (4) and (6) of Section 245D and Sections 245F(4) and 245 I, it would appear that except in the case of fraud or misrepresentation of facts, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above matters also. 24. Our above view also finds corroboration from the subsequent order passed by the Settlement Commission on the misc. application filed by the petitioner. The operative portion of the said order is reproduced below:- "8. We have perused the notices issued by the A.O. u/s 142 (1)/143(2) read with section 245D(4). It is evident that the investigations/inquiry sought to be made by the A.O. relate to the seized material. The search assessments were part of the proceedings before the Settlement Commission. In the "Terms of settlement" applications, it was specifically stated that the overall additional income covered fully the monetary effect of the seizure as a whole. We, therefore, hold that as the facts of the search were placed before the Settlement Commission; hence issues cannot be matters of inquiry relating to giving effect to the settlement orders." 25. There is another aspect of the case. The search operation was carried on by the department and certain documents were seized by it. The department was in possession of the entire material including the investments made by the petitioner in bonds and units. Therefore, it cannot be said that the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also relevant:- " It is no doubt true that the terminology "settlement" has a very wide dictionary meaning and in the absence of a statutory definition generally the word "settlement" in sub-section (4) of section 245D would give the Commission sufficient power to arrive at a settlement which it deems fit, but when the statute qualifies such expression like "settlement" with mandatory words like "in accordance with the provisions of this Act" the width of the term "settlement" becomes subject to the mandate found in that section, which would mean that while a Commission has sufficient elbow-room in assessing the income of the applicant under section 245D(4) it cannot make any order with a term of the settlement which would be in conflict with the mandatory provisions of the section like in the quantum and payment of tax and/or interest. In this view of the matter, we are of the opinion that assuming that there is any room for interpretation of the provisions of Part F of Chapter XVII and Chapter XIX-A, we would hold that it would not in any manner empower the Commission to either waive or reduce interest which is statutorily payable under the provisions of Part F of Chapter XV ..... X X X X Extracts X X X X X X X X Extracts X X X X
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