TMI Blog2009 (12) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... presentation of facts - 1231 of 2008 - - - Dated:- 18-12-2009 - Prakash Krishna and Subhash Chandra Nigam,JJ. Petitioner Counsel :- Praveen Kumar,D.Awasthi,Swapnil Kumar Respondent Counsel :- Additional Solicitor General of India for the repondents. JUDGEMENT All the above writ petitions were heard together and, as jointly agreed by the learned counsel for the parties, are being disposed of by a common judgment. Writ Petition No. 1231 of 2008 was considered as a lead case and the arguments were advanced with reference to the facts of the said case. Therefore, the facts from the said writ petition are being taken into consideration. 2. Challenge in this petition is the notice dated 14-5-2008 and the order dated 22-5-2008 passed by the Deputy Commissioner of Income Tax, Central Circle, Agra. The impugned notice dated 14-5-2008 has been issued under Section 142(1) read with Sections 153A and 245D(4) of the Income Tax Act 1961, for the purposes of assessment under Section 153A 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Settlement Commission and that from perusal of the document no. 40 seized from the premises of M/S Chemi Colour, Delhi it was found that the petitioner made certain investments in bonds and units which were not disclosed before the department nor the petitioner has explained the source of investments therein either before the department or even in the statement of facts filed before the Settlement Commission and that during the search it was found that the petitioner and her family members were maintaining luxurious life style and the details of the withdrawal for household expenses were not given. 6. In response to the said notice, objections were filed by the petitioner and one of the objections was that once the order is passed by the Settlement Commission under Section 245D(4) of the Act, the order of Settlement Commission is conclusive as to the matters stated therein as provided under Section 245 I of the Act. The matters covered by the order of the Settlement Commission cannot be reopened in 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- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Settlement Commission, hence the issues cannot be matter of inquiry relating to giving effect to the settlement order. 10. Heard the learned counsel for the parties and perused the record. 11. Sri Ravi Kant, learned Senior Counsel for the petitioner did not argue the point of limitation which was initially pressed at the time of obtaining the interim order. The only point urged by the learned Senior Counsel is that the very issuance of the impugned notice is without jurisdiction in view of statutory scheme of the Act. The order of the Settlement Commission is final and binding on all the parties and the assessing authority has no jurisdiction to reopen the matter under any circumstances except in the case of fraud or misrepresentation of facts, which is not so here. The facts were truly and correctly disclosed and were in the knowledge of the department as a result of search operation. The petitioner has not misrepresented the matter in any manner. 12. On the other hand, Sri D. Awasthi,learned Standing 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 wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or through a representative duly authorised in this behalf, and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission may, in accordance with the provisions of this Act, pass such order as it thinks fit on the matters covered by the application and 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).(emphasis supplied) x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x (6) Every order passed under sub-section (4) shall provide for the terms of settlement including any demand by way of tax, penalty or interest, the manner in which any sum due under 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 Settlement Commission that it has been obtained by fraud or misrepresentation of facts." 16. The aforestated 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his chapter, be reopened in any proceeding under the Act. In other words the income tax authorities have no jurisdiction either to issue the impugned notice or to pass the impugned order, notwithstanding para 7 of the order of the Settlement Commission. Assuming for the sake of argument that the ground on which the notice was given was not covered by the application, even then it cannot be a ground to issue the impugned notice in view of plain language of sub-section (4) of Section 245D. 20. Section 245F(4), reference of which has been made in the order of Settlement Commission, provides that in the absence of any express direction by the Settlement Commission to the contrary, nothing in Chapter XIXA shall affect the operation of the provisions of this Act in so far as they relate to any matters other than those before the Settlement Commission. The notice has been issued in purported exercise of power under Section 245D(4), already reproduced above. Under sub-section (4) of Section 245D power has been conferred on the 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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). Thus, the contention of the department that the investment in bonds etc. was not subject matter of the order of Settlement Commission is not correct. Investment in bonds etc. and paper no. 40, on which the assessment is sought to be completed by the assessing officer by giving impugned notice, were before the Settlement Commission by implication of law. The investment in bonds and security etc. was in the knowledge of the department as also the document no. 40 recovered during the search operation and if they were not pressed in service by the department before the Settlement Commission, the department should thank itself. It is no longer open to the department to urge that it can assess the income of the petitioner on the basis of the investment in bonds etc and the document no. 40. It shall be deemed that the Settlement Commission has taken into consideration the above matters also. 24. Our above view also finds corroboration from the subsequent order passed by the Settlement Commission on the misc. application filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod, one by the Settlement Commission and another by the assessing officer, otherwise the very purpose of filing application before the Settlement Commission would be frustrated. It is obligatory on the Settlement Commission to pass an appropriate order after taking into consideration the entire material brought before it by the parties including the department. Learned Standing Counsel could not point out any statutory provision which may empower the Settlement Commission to restore back the matter in respect of certain items to the assessing officer and also finally settle income of the applicant. The scheme of Chapter XIXA does not envisage vesting of any such power in the Settlement Commission, as interpreted by the Apex Court in the case of Anjum M.H. Ghaswala and others (supra) that a Settlement Commission shall pass an order in accordance with law means- that it can stipulate the conditions of payment like instalments, last date for payment etc. and not beyond that. 27. The following passage from the aforestated judgment 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 definiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or misrepresentation of facts, it cannot be said that there was true and fair disclosure. It was noted here that unlike Section 139 of the Act which provides for filing of revised return, there is no provision for revision of an application made in terms of Section 245C. That shows clear legislative intent that the applicant for settlement has to make a true and fair declaration from the threshold. It is on the basis of the application received that the Commissioner calls for report to decide whether the application is to be rejected or permitted to be continued. The declaration contemplated in Section 245C is in the nature of voluntary disclosure of concealed income, but as noted above it must be true and fair disclosure. Voluntary disclosure and making a full and true disclosure of the income are necessary pre-conditions for invoking the Commission's jurisdiction." 29. In view of the above, we are of the considered opinion that after passing of the order dated 31-3-2008 by the Settlement Commission, no power vests in the assessing authority or any other authority to issue impugned notice in respect of the period and income covered under the order of the Settlement Commission. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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