2019 (8) TMI 1434 - HC - Income Tax

Undisclosed income admitted in the Settlement Application was a commission earned from accommodation transaction - HELD THAT - It is not in dispute that the transactions pertaining to the undisclosed income of the petitioner herein is also the subject matter of the Settlement Application in the case of Parasmal Jain. If that being so, there is a possibility that such a subsequent consideration by the Settlement Commission could be deemed as double taxation, in case the order dated 23.10.2009 passed by the Settlement Commission in the case of the petitioner herein, is upheld. It is also stated that the order passed in the case of Parasmal Jain by the Settlement Commission has become final. While that being so, if the objections of the learned Standing Counsel for the respondents is to be accepted, the possibility of double taxation for one transaction may occur. As such, this Court is of the view that the issue in the case of the petitioner herein could be reconsidered, in the light of the subsequent development through the orders passed by the Settlement Commission in the case of Parasmal Jain. Consequently, I deem it proper to refrain from addressing any other grounds raised by the petitioner, challenging the impugned proceedings in this writ petition and that any further decision could await, after final orders are passed by the Settlement Commission on remand. The impugned order dated 23.10.2009 is set aside and the matter is remanded back to the Income Tax Settlement Commission for fresh consideration. The petitioner is granted liberty to file a rejoinder to his original application, along with any other supporting documents before the 1st respondent-Commission, within a period of 15 days from the date of receipt of a copy of this order.

Summary

Issues:
1. Rejection of Settlement Application by Income Tax Settlement Commission
2. Possibility of double taxation due to subsequent Settlement Application
3. Discretionary nature of Settlement Commission proceedings

Analysis:
1. The petitioner's Settlement Application before the Income Tax Settlement Commission was rejected, leading to the filing of a writ petition challenging the rejection. The petitioner claimed that the undisclosed income was earned from a commission in an accommodation transaction, which was disbelieved by the Commission, resulting in the rejection of the application on 23.10.2009.

2. The petitioner argued that another individual involved in the same transaction filed a Settlement Application before the Commission, which was disposed of, preventing double taxation. The petitioner sought a re-visit of their case based on the subsequent order in the other individual's case to avoid double taxation.

3. The respondents contended that the Settlement Commission proceedings are discretionary, and the income offered in one case cannot automatically be applied to another, even if the transactions are the same. The respondents objected to the petitioner's request for remand, emphasizing the need for independent satisfaction of all criteria mandated under the Income Tax Act for each case.

4. The Court acknowledged that the transactions related to the undisclosed income of the petitioner were also part of the other individual's Settlement Application. Considering the possibility of double taxation if the original rejection order is upheld, the Court decided to set aside the order dated 23.10.2009 and remand the matter back to the Settlement Commission for fresh consideration.

5. The Court highlighted that the subsequent final order in the other individual's case could lead to double taxation if the petitioner's case is not reconsidered. Therefore, the Court refrained from addressing other grounds raised by the petitioner, allowing for further decisions after the Settlement Commission's final orders on remand.

6. Consequently, the Court allowed the writ petition, setting aside the original order and remanding the matter for fresh consideration by the Income Tax Settlement Commission. The petitioner was granted the liberty to file a rejoinder within 15 days, and the Commission was instructed to consider it in accordance with the law and pass fresh orders promptly.

7. The writ petition was allowed without costs, and connected miscellaneous petitions were closed as per the judgment of the Madras High Court delivered by Mr. J M.S. Ramesh, J.