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TMI Blog2024 (6) TMI 1369X X X X Extracts X X X X X X X X Extracts X X X X ..... re, all these appeals are disposed of by this common judgment. 3. The necessary facts leading to the filing of these appeals are as follows: (i) One P.Anand, an individual, was a Director of M/s.Anand Granite Exports Private Limited and Proprietor of two concerns viz., Anand Enterprises and Snow White Salts. He was also a partner in M/s.Global Exports, a partnership firm holding 5% shares in the said firm. He was primarily engaged in the business of trading in granite and manufacturing salt. (ii) According to the appellants, a search was conducted by the respondent authorities on 25.02.2014 in exercise of power conferred under Section 132 of the Income Tax Act, 1961 (in short, "the Act") in the registered and administrative office of Anand Granite Exports Private Limited and in the residential premises of the said Dr. P.Anand. Simultaneously, search was also conducted under Section 133A of the Act in the business premises of M/s. Global Exports, during which sworn statements of the appellant in WA No.1936 of 2021 and other employees were recorded under Section 131/ 132 (4) of the Act. While so, on 25.11.2014, the said Dr.P.Anand had died. (iii) Subsequent to the search and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e first respondent to conduct further enquiry/investigation on certain issues. Accordingly, the first respondent, after hearing both sides, passed orders dated 02.05.2017 permitting the Principal Commissioner of Income Tax to file report under Section 245D(3). Accordingly, the Principal Commissioner of Income Tax filed their reports on 04.07.2017 endorsing the reports of the second respondent and lower authorities. (vii) On 12.10.2017, during the personal hearing under Section 245D(4) of the Act, the first respondent directed the Principal Commissioner of Income Tax to cause verification in respect of certain issues raised in Rule 9 reports. Pursuant to such direction, the Principal Commissioner of Income Tax submitted their replies on 08.11.2017 and served the same on the appellants on 09.11.2017. Even in the said replies dated 08.11.2017 of the Principal Commissioner of Income Tax, it was not stated that there is failure on the part of the appellants to make full and true disclosure of all the facts. The only discrepancy noticed was with regard to the quantification of additional income. Thus, the appellants had truly and fully disclosed all the incomes in the settlement applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contemplated under Section 245(D) and the procedures as contemplated under Section 245(D) would not provide powers to the Settlement Commission to travel beyond the scope of the provisions and with reference to Section 245(C). Procedures are contemplated in order to cull out the truth regarding the true and full disclosure to be made along with the application filed under Section 245(C) and therefore, at any stage of the enquiry, the Settlement Commission, if able to form an opinion that an application is not filed with true and full disclosure, then such an application shall be rejected. The very legislative intention of the procedures formulated under Section 245(D) is to ensure that the application for settlement of cases are considered in accordance with Section 245(C) and therefore, the powers of the Settlement Commission is limited to the extent of the scope of Section 245(C) and the other provisions of the Act can be exercised only in order to formulate an opinion and not to make a regular assessment under the Act, which is the power to be exercised by the competent authority and certainly not by the Settlement Commission. 19. In this regard, it is relevant to consider th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication under Section 245C and not for re-assessment of tax of a particular year which is vested with the Assessing Authority." 20. The High Court of Delhi in the case of Rohit Kumar Gupta Vs. Principal Commissioner of Income Tax, Central-II, reported in [2019] 109 taxmann.com 257(Delhi), held as follows: "45. The above decision interprets Section 245D (4) as a substantive provision from where the powers of the ITSC to pass such order as if it thinks fit arises. The next question that arises is whether the expression 'such orders if it thinks fit' would include the power to pass an order rejecting an application. If the interpretation placed by the Petitioners on this provision is accepted it would mean that after having allowed the applications to be proceeded with in terms of its order passed under Section 245D (1) of the Act, the ITSC cannot at this stage, after the report of the Commissioner has been submitted to it pursuant to an order under Section 245D (2C) of the Act, dismiss the application at all and that it would necessarily have to pass an order providing for the terms of settlement. However, this does not appear to be a correct understanding of the ambit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and circumstances of the case and by conducting necessary enquiries. However, the first respondent failed to conduct adequate enquiry, which has vitiated the orders of rejection. The learned Judge, without taking note of the above facts, has dismissed the writ petitions as not maintainable. In this context, the learned Senior counsel relied on the decisions of the Apex Court in Jyotendrasinhji vs. Tripathi and others reported in (1993) 201 ITR 611 (SC) and C.A. Abraham vs. ACIT reported in 255 ITR 340 and submitted that an order of the Settlement Commission can be subjected to judicial review when such an order is in violation of mandatory procedural requirements or principles of natural justice or where there was no nexus between the reason given and the decision taken. (ii) The learned Senior counsel further submitted that the appellants had truly and fully disclosed the income as required under Section 245C of the Act. However, the first respondent, without any material evidence, concluded that the appellants had suppressed the income. Thus, on mere surmises and suspicion, the first respondent passed the orders of rejection. This was not properly appreciated by the learned Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pressing any material particulars. Unless the assessee fulfils the statutory guidelines provided under Section 245(C), he is not entitled for the settlement of the dispute before the Commission. When it is noticed that the assessee has not truly and fully disclosed all the incomes within his knowledge, then, the application for settlement cannot be entertained and it can be rejected in limine. In the present case, the appellants failed to fulfil the mandate provided under Section 245(C) of the Act and therefore, the orders of rejection passed by the first respondent are lawful and the same cannot be said to be arbitrary. Continuing further, he submitted that the assessee, while filing an application under Section 245(C) of the Act, must establish at the first instance that true and full disclosure of income is made before the Settlement Commission; and that, if there is any controversy or discrepancy in disclosure of income, then, the Settlement Commission is empowered to reject the application. In this case, the Commission, after affording opportunity at all stages of the proceedings, dissatisfied with the disclosure of income by the appellants and rejected the settlement applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome in full and also due to deficiency in explaining the facts gathered by the Department from UAE and the manner in which the income was earned, the applications for settlement were rightly rejected by the first respondent. In such circumstances, the learned Judge is justified in dismissing the writ petitions filed by the appellants by the order impugned herein, which does not require any interference by this court. 8. We have heard the learned Senior counsel for the appellants and the learned Senior Standing Counsel for the respondents and also perused the materials placed on record. 9. It is not in dispute that the original assessee Dr.P.Anand had died on 25.11.2014 and his son by name Sridhar Anand is the only legal heir of the deceased. It appears that pursuant to the search and recovery made in the business and residential premises of the original assessee, notices under Section 153-A of the Act were issued to the appellants for the assessment years 2008-2009 to 2013-2014. Subsequently, another notice was issued in respect of the Assessment year 2014-2015. On intimation of the demise of the original assessee, notices issued under section 153A were withdrawn and fresh notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17, we find that there are several shortcomings in the particulars of income disclosed by the appellants in their settlement applications. 12. Further, it is evident from the orders of the settlement commission that the first respondent, after considering Rule 9 reports of the Principal Commissioner of Income Tax and the replies submitted by the appellants, rejected the settlement applications filed by the appellants, by observing that the disclosure is not full and true and that, there is deficiency in explaining the manner in which the income has been earned. On a detailed analysis, it is also apparent that there is no disclosure of the facts in the applications or in the returns of income about the foreign bank accounts or deposits or investments and income from M/s. Universal Construction Supplies, FZE, Sharjah, UAE and flat at Dubai Marina, UAE of the original applicant late Dr.P.Anand. That apart, the business activities of the applicant and his company M/s.Anand Granite Exports Pvt Ltd. situated in Dubai, have not been mentioned in the applications or returns of income. Therefore, the settlement commission was of the view that there is concealment of facts, which require de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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