2004 (9) TMI 69 - HC - Income Tax

Settlement - Petitioners seek a writ, order or direction in the nature of certiorari quashing the order passed by the Income-tax Settlement Commission - The petitioners further seek a writ, order or direction declaring the provisions of section 245G as null, void, unconstitutional - finding recorded by the Settlement Commission that after being confronted with incontrovertible evidence the petitioners had approached the Settlement Commission, cannot be said to be based on irrelevant material and consideration and the only aim was to avoid penal consequences following the discovery and establishment of concealed income by the Department. The Settlement Commission has further found that there has been no true and full disclosure of income not admitted before the Income-tax Officer by the assessee. - No prejudice has been caused to the petitioners. We do not find any infirmity in the order passed by the Settlement Commission. Writ petition lacks merit and is dismissed

Summary

Issues:
Challenge to order of Income-tax Settlement Commission under article 226 of the Constitution of India, validity of section 245G of the Income-tax Act, 1961, principles of natural justice violation, reliance on apex court decisions, lack of true and full disclosure of income, relevance of evidence in assessment proceedings, opportunity for rebuttal, and prejudice caused by not providing report.

Analysis:
The petitioners filed a writ petition challenging the order of the Income-tax Settlement Commission and seeking to declare section 245G of the Income-tax Act as null and void. The facts revealed that a search was conducted, leading to the discovery of cash, jewellery, and utensils. The petitioners were issued notices and faced assessment proceedings, penalties, and appeals. The Settlement Commission rejected the petitioners' application under section 245C of the Act, which led to the writ petition.

The petitioners argued that the Settlement Commission violated principles of natural justice by not providing a copy of the report from the Commissioner of Income-tax. They cited relevant court decisions to support their claim. The respondents contended that the loose papers belonged to the petitioners, who approached the Settlement Commission to avoid penal consequences. The respondents also argued that no prejudice was caused by not providing the report.

The court found that the petitioners approached the Settlement Commission after being confronted with evidence, indicating a lack of true and full disclosure of income. The court referenced apex court decisions emphasizing the right to be heard on objections and the importance of fairness in decision-making processes. The court concluded that the Settlement Commission's findings were based on evidence and material on record, and no prejudice was caused by not providing the report.

Ultimately, the court dismissed the writ petition, finding no infirmity in the Settlement Commission's order. The court did not address the validity of section 245G of the Act as it was not raised during arguments.