2016 (3) TMI 737 - HC - Income Tax

Application for settlement of cases - Held that - There is no material to reject the application for settlement at the stage of 245 D(2C) of the Act. The view taken in the present case is on the basis of submissions made by the parties before it and such a view has not been shown to be perverse and/or arbitrary. It must be emphasised that the impugned order does not postpone the consideration of the issue of true and full disclosure to a future date. However, we clarify that the view taken at this stage on the impugned order would not estop the Revenue from urging the issue raised at this stage before the Commission at the stage of Section 245D(4) of the Act. The Commission would consider and pass an order on its merits without in any manner being influenced by this order. This for the reason that the requirement of true and full disclosure on the part of the Applicant should be satisfied at all stages. Moreover, the impugned order of the Commission itself states that it is a primafacie view on consideration of facts and submissions made before it at Section 245D(2C) stage. Delay on the part of the Petitioner is not being considered. However, we only wish to point out that if and when any party is aggrieved by the order of the Commission (particularly interim orders) and it is sought to be challenged, it must be done expeditiously, particularly, bearing in mind that the Commission is under an obligation to pass an order within 18 months from the date of filing of application under Section 245(D)4(a)(iii) of the Act. In the above view, we see no reason to entertain the present Petition.

Summary

Issues:
Challenge to order under Section 245D(2C) of the Income tax Act, 1961 by the Revenue.

Analysis:
The High Court of Bombay heard a petition challenging an order passed by the Income-tax Settlement Commission (Commission) under Section 245D(2C) of the Income tax Act, 1961. The Revenue contended that the Commission's order did not definitively address the issue of undisclosed income by certain respondents, leading to a request for the settlement applications to be declared invalid. The Revenue cited a previous case where a similar order was set aside for fresh consideration. On the other hand, the Respondents argued against entertaining the petition due to alleged delays and highlighted that the Commission's order had considered and rejected the Revenue's objections, deeming the applications valid. The Respondents referred to a previous case where the court refused to interfere with a similar order, stating that the disclosure of income appeared to be full and true. The Supreme Court's guidelines on the exercise of jurisdiction under Article 226 were also referenced, emphasizing the need to focus on the decision-making process rather than the correctness of the order unless it is found to be perverse.

The Court observed that the Commission's order in the present case had addressed the Revenue's objections and concluded that there was no failure to disclose income fully and truly. It distinguished this case from the previous one where the Commission had not rendered any findings on the issue of disclosure, leading to a direction for reconsideration. The Court noted that the current order did not postpone the consideration of disclosure to a future date, unlike the previous case. It clarified that the Revenue could still raise the issue at a later stage without being influenced by the current order, as the requirement for full and true disclosure should be met at all stages. The Court emphasized that the Commission should pass orders expeditiously, considering its obligation to do so within a specified timeframe.

Ultimately, the Court dismissed the petition, stating that there was no reason to entertain it further. No costs were awarded in the matter.