2007 (10) TMI 237 - HC - Income Tax

Settlement Of Cases - Held that - There cannot be a fresh application in respect of the same subject matter, if the first application is rejected, after assuming jurisdiction, as the Settlement Commission is a quasi judicial authority.It is true that in the second order, the Commission relied on its first order. At the same time, the Commission did take note of the fact that the income disclosed in the second application is more than what was disclosed in the first application. Apart from that in the miscellaneous application, the petitioner has raised the issue that no reasons had been given for holding that the quantum of undisclosed income was not correct. A person who seeks to invoke the jurisdiction of the Commission must come and disclose the true facts. Nothing had happened between the first disclosure and the second disclosure warranting the petitioner to disclose a larger quantum. On this count also, the finding arrived at by the Commission does not suffer from any error and consequently, the petition is liable to be dismissed.

Issues Involved:
1. Validity of the first application under Section 245C(1) before the Settlement Commission.
2. Full and true disclosure of income by the petitioner.
3. Maintainability of the second application under Section 245C(1) before the Settlement Commission.
4. Jurisdiction and powers of the Settlement Commission.
5. Complexity of the case and its relevance to the Settlement Commission.

Issue-wise Detailed Analysis:

1. Validity of the First Application under Section 245C(1):
The petitioner filed an application under Section 245C(1) before the Settlement Commission, which was rejected on two grounds: lack of valid pendency of any proceeding and no full and true disclosure of income. The petitioner argued that the first application was dismissed because the entire adjudication tax was not paid in the pending appeal, making the appeal improperly constituted. The Settlement Commission was correct in dismissing the first application due to the absence of pending proceedings.

2. Full and True Disclosure of Income:
The Settlement Commission rejected the first application on the grounds of no full and true disclosure, which the petitioner contested as being without jurisdiction once the application was dismissed for lack of pending proceedings. The second application was also dismissed on the same grounds, with the Settlement Commission emphasizing that full and true disclosure is a one-time activity. The petitioner argued that the finding disclosed an error of law apparent on the face of the record.

3. Maintainability of the Second Application under Section 245C(1):
The petitioner filed a second application under Section 245C(1), offering a higher amount of Rs. 15 lakhs. The Settlement Commission dismissed this application, stating that making full and true disclosure is a one-time activity. The court held that a second application is not maintainable without setting aside the first order of the Commission, as the first order was not a nullity at law. The court emphasized that finality must be attained to an order passed by a quasi-judicial authority.

4. Jurisdiction and Powers of the Settlement Commission:
The court examined the powers of the Settlement Commission under Section 245D, which involves calling a report from the CIT and deciding on the application based on the material, nature and circumstances of the case, and complexities of the investigation. The court noted that the Settlement Commission is a quasi-judicial authority, and its orders must be challenged before the competent forum. The court concluded that the Settlement Commission had jurisdiction to entertain the application and that the second application was not maintainable without challenging the first order.

5. Complexity of the Case and Its Relevance to the Settlement Commission:
The respondent argued that the petitioner's income was assessed under Section 44AE of the IT Act, and there were no complexities that warranted consideration by the Settlement Commission. The CIT (Central) Bangalore's report also indicated that the case was not complex. The court noted that the issue of complexities was not argued before the Commission nor addressed in its orders. Therefore, the question of complexities did not arise for determination.

Conclusion:
The court dismissed the petition, holding that the second application under Section 245C(1) was not maintainable without setting aside the first order of the Settlement Commission. The court emphasized that full and true disclosure is a one-time activity, and multiple disclosures are not permissible. The court also noted that the issue of complexities was not relevant to the case. Consequently, the petition was dismissed, and the rule was discharged with no order as to costs.

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