2016 (9) TMI 1466 - HC - Income Tax

Settlement commission order - order of said commission in exercise of writ jurisdiction keeping in view the scope of judicial review - additional incomes offered by the applicants were not disclosed before the Assessing Officer - Power to grant any waiver or reduction of interest chargeable under Sections 234A and 234C - Held that - Having heard learned counsel appearing for the respective parties and having perused the orders passed by the learned Commission and having gone through the report submitted before the Settlement Commission, we found that the findings arrived at by the Commission is just and proper and the respondents have disclosed additional income in the spirit of settlement during the course of proceedings and therefore, in the absence of any nondisclosure deliberately on part of the respondent the Commission has exercised due discretion vested in law and therefore, such finding of fact does not deserve to be disturbed or substituted. From the record we found that the application submitted by the respondents have been dealtwith were within the schedule prescribed by the provision of law. A detailed procedure has been observed while exercising power under section 244D so much so that a report has also been examined thoroughly by the said Commission. During the course of hearing proper opportunity was also given to the respective parties and therefore, amount which have been determined by the said Commission are just and proper. The issue before the Court in the background of this fact is whether during the course of hearing even the amount which has been increased by way of additional disclosure whether can be entertained or considered by the Commission or not? Recently, if we recall that this very issue has been dealt with in detail and taking note of the decision delivered by this Court, in a group of petition which has considered the said issue in a decision delivered on 12.07.2016 it was found by the Court that if during the course of proceedings if the revised offers are being generated then in the nature of spirit of Settlement the same is permitted to be considered by the Commission. We are of the opinion that the order passed by the said Commission does not call for any interference

Summary

Issues Involved:
1. Validity of the order passed by the Income Tax Settlement Commission under Section 245D(4) of the Income Tax Act, 1961.
2. Full and true disclosure of undisclosed income by the assessee.
3. Procedural propriety and adherence to principles of natural justice by the Settlement Commission.
4. Immunity from prosecution and penalty under Section 245H of the Act.
5. Waiver or reduction of interest chargeable under Sections 234A and 234C of the Act.

Detailed Analysis:

1. Validity of the Order under Section 245D(4):
The petitioner challenged the validity of the order passed by the Income Tax Settlement Commission, which exercised its powers under Section 245D(4) of the Income Tax Act, 1961. The Commission had formulated an opinion that the applicants disclosed additional income and accepted the offer of additional undisclosed income at 15% of the reworked on money. The Commission found the offer reasonable and ordered the issue to be settled accordingly.

2. Full and True Disclosure of Undisclosed Income:
The petitioner contended that the Settlement Commission erred in not examining whether there was a full and true disclosure of undisclosed income by the assessee. The Commission, however, found that the respondents had disclosed additional income in the spirit of settlement and had fully cooperated during the proceedings. The Commission concluded that there was no deliberate nondisclosure by the respondents.

3. Procedural Propriety and Natural Justice:
The petitioner argued that there was a serious procedural infirmity and a failure to adhere to principles of natural justice. Specifically, the petitioner claimed that the Settlement Commission did not fully consider the report filed under Rule 9. The court, however, found that the Commission had thoroughly examined the detailed reports and provided proper opportunities to both parties. The court upheld the Commission's findings as just and proper.

4. Immunity from Prosecution and Penalty:
The respondents requested immunity from prosecution and penalty under Section 245H of the Act. The Commission granted this request, satisfying itself that no material facts were concealed during the proceedings and that the respondents had voluntarily disclosed the required information. The Commission noted that the respondents had cooperated fully, and therefore, immunity was granted.

5. Waiver or Reduction of Interest:
The Commission dealt with the issue of waiver of interest and concluded that it had no power to grant any waiver or reduction of interest chargeable under Sections 234A and 234C. The interest under Section 234B was ordered to be charged up to the date of passing the order under Section 245D(1), keeping the interest of Revenue in mind.

Conclusion:
The court, after hearing both sides and reviewing the detailed reports and procedures followed by the Settlement Commission, found the Commission's findings to be just and proper. The court noted that the Commission had exercised due discretion vested in law and that the findings did not deserve to be disturbed or substituted. The petition was dismissed, and the order of the Settlement Commission was upheld. The court also addressed a procedural correction regarding a wrong reference to a Supreme Court judgment in its previous order.