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2021 (8) TMI 1226 - HC - Income Tax


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.

 

 

 

 

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