Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2021 (8) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (8) TMI 1226 - HC - Income TaxRejection of Settlement application u/s 245C - allegation of Suppression of facts - non disclosure of earning the additional income - whether the petitioners have disclosed fully and truly all the informations and the materials relating to their foreign bank accounts and certain information not produced by the Assessee may be construed as not within their knowledge? - HELD THAT - All along the petitioners have not submitted the source and figures and the manner in which the income has been derived. If the Assessee has not furnished the details regarding the income as well as the manner in which such income has been derived, it may not be possible for the Competent Authorities to complete the process of assessment/ reassessment as only if the manner in which the income has been derived is traced out. In the absence of producing such details, it is the requirements contemplated under Section 245C of the Income Tax Act, the authorities may not be in a position to settle the issues. The repeated findings of the Settlement Commission that the petitioners have failed to state the source from which the income has been derived and the said non-furnishing of information resulted in rejection of application on the ground that the petitioners have suppressed the vital informations. Petitioners have not complied with the conditions stipulated under Section 245C of the Income Tax Act and when the petitioners were not complied with the conditions stipulated under Section 245C of the Act, the judgments relied on by the petitioners- Assessees have no avail to them for the purpose of considering the present writ petitions. Legislative intention is to ensure that the manner in which the income has been derived must be disclosed by the Assessee while submitting an application under Section 245C of the Income Tax Act and in the absence of furnishing all such details, settlement cannot be arrived and the authorities are bound to continue their investigation and proceed for assessment or for reassessment under the relevant provisions of the Income Tax Act. - Writ petition dismissed.
Issues Involved:
1. Rejection of applications by the Income Tax Settlement Commission under Section 245D of the Income Tax Act. 2. Alleged non-disclosure of foreign bank accounts and related income by the petitioners. 3. The petitioners' contention of having provided full and truthful disclosure. 4. The Settlement Commission's findings on the non-cooperation and suppression of facts by the petitioners. 5. Legal precedents and their applicability to the case. Detailed Analysis: Issue 1: Rejection of Applications by the Income Tax Settlement Commission The petitioners challenged the rejection of their applications by the Income Tax Settlement Commission, which were deemed not maintainable under Section 245D of the Income Tax Act. The applications sought to settle income tax assessments for the years 2005-2006 to 2014-2015. The Commission's decision was based on the petitioners' failure to provide a full and true disclosure of their income and the manner in which it was derived. Issue 2: Alleged Non-Disclosure of Foreign Bank Accounts and Related Income The petitioners admitted to not declaring income deposited in foreign bank accounts under their names or those of Moon Mist Enterprises Ltd. and Fairwood Services Ltd. They opened various foreign accounts, which were later closed, and funds were transferred to new accounts. The Deputy Director of Income Tax (Investigation Wing) issued summons and conducted searches, leading to the discovery of these accounts. The Settlement Commission found that the petitioners did not disclose all relevant foreign bank accounts and transactions, which was crucial for determining the correct income. Issue 3: The Petitioners' Contention of Having Provided Full and Truthful Disclosure The petitioners argued that they had disclosed all materials within their knowledge and could not be penalized for not providing information they were unaware of. They expressed willingness to accept the findings of the investigation and settle the tax dues accordingly. However, the Settlement Commission concluded that the petitioners had not disclosed all necessary details, including the manner in which the income was derived, thus failing to meet the requirements under Section 245C. Issue 4: The Settlement Commission's Findings on Non-Cooperation and Suppression of Facts The Settlement Commission noted that the petitioners did not fully cooperate during the proceedings and suppressed vital information regarding their foreign bank accounts and transactions. Specific findings included the non-disclosure of certain bank accounts, incomplete details of transactions, and the failure to provide the source of income. The Commission emphasized that the petitioners' disclosures were neither full nor true, leading to the rejection of their applications. Issue 5: Legal Precedents and Their Applicability The petitioners relied on several judgments, including those from the Supreme Court and High Courts, to argue their case. However, the court found that these precedents did not support the petitioners' position due to their failure to comply with the statutory requirements of full and true disclosure under Section 245C. The court reiterated that the Settlement Commission's role is to ensure compliance with these preconditions before entertaining any application for settlement. Conclusion: The court upheld the Settlement Commission's decision, finding no infirmity or perversity in its order. The petitioners' applications were dismissed due to their failure to provide full and true disclosure of their income and the manner in which it was derived, as required under Section 245C of the Income Tax Act. The court emphasized the importance of compliance with statutory requirements for the settlement of tax disputes and dismissed the writ petitions.
|