2003 (6) TMI 19 - HC - Income Tax

By this writ application the writ petitioner has challenged an order, passed by the Settlement Commission refusing to entertain the case on the ground that the failure on the part of the petitioner in deducting tax at source does not come within the purview of section 245C(1) - I am unable to accept the contentions of the learned advocate for the petitioner that for the purpose of assessing the jurisdiction of the Commission the provisions contained in section 245C(1) of the Act should be ignored. I thus find that the Commission rightly refused to entertain the application filed by the petitioner as it had no jurisdiction to entertain the dispute involved. The writ application is thus devoid of any substance and is dismissed accordingly.

Summary

Issues:
Challenge to Settlement Commission's order refusing to entertain case based on failure to deduct tax at source under section 245C(1) of the Income-tax Act, 1961.

Analysis:
The writ petitioner challenged an order of the Settlement Commission refusing to entertain the case due to the failure to deduct tax at source, which was deemed not falling within the purview of section 245C(1) of the Income-tax Act, 1961. The key issue for determination was whether the Commission was justified in refusing to entertain the application in these circumstances.

The provisions of section 245C(1) were crucial in this case. It was highlighted that for the Commission to consider an application, certain conditions must be met, including the assessee making a full and true disclosure of income not previously disclosed before the Assessing Officer. In this instance, as the petitioner had not failed to disclose any income before the Assessing Officer, invoking section 245C(1) was deemed inappropriate when the income-tax authority alleged a failure to deposit the correct amount of tax deducted at source.

The petitioner's argument, based on the definition of "case" in section 245A(b) and section 245B of the Act, to establish that jurisdiction lies with section 245B rather than section 245C, was not accepted. Referring to a Supreme Court decision, it was emphasized that an assessee cannot approach the Commission for settlement regarding income already disclosed before the Assessing Officer if the conditions of section 245C are not fulfilled. The strict interpretation by the Supreme Court led to the conclusion that the Commission rightly rejected the petitioner's application due to lack of jurisdiction. Consequently, the writ application was dismissed for being devoid of substance.

In conclusion, the judgment underscored the importance of fulfilling the conditions specified in section 245C(1) for the Settlement Commission to entertain an application. The decision highlighted the significance of full and true disclosure of income not previously revealed to the Assessing Officer, emphasizing the jurisdictional limitations faced by the Commission in such cases.