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2016 (9) TMI 555 - HC - Income TaxPetition challenging the order of the Commission under the writ jurisdiction - settlement commission - whether the impugned order passed by the Commission has reached its finality? - Held that - We are convinced that the Commission, after giving appropriate opportunity to the applicant and after going through the report of the Principal Commissioner/Commissioner made under Rule-9, has passed the order under Section 245D of the Act. Section 245D(3) of the Act has empowered the Commission to make inquiry/investigation further to find out the additional income. Commission has got the power to compute the aggregate income of the assessee by adding the additional income to determine the liability of the assessee towards tax, penalty and interest and also the Commission under Section 245F(I) of the Act has all the powers vested in the Income Tax Authority under the Act. So the allegation of the petitioner that the Commissioner made additional income of approximately ₹ 110 crores added finding thereby that there is no true and full disclosure income is untenable because the Commission has got not only power to decide the lis before them but also to find out if at all any income left out or could not be disclosed by the assessee to come to a mechanism of settlement. The settlement of lis is not only covered by the dispute arose before them but also for the dispute yet to come. So the Commission has got wide power to consider the income disclosed, add additional income after due investigation and also to add any income which is found to be valid as per report under Rule-9 submitted by the Department and finally settle the tax payable by the assessee. Where there is a term of settlement including demand by way of tax, penalty or interest and such payment has been made, but subsequently found by the Settlement Commission that it has been obtained by fraud and misrepresentation, the Commission has power to declare the said settlement as void. When the order of the Commission has been communicated to the Department, the Department could have agitated before the Commission to declare the same as void but instead as appears from the arguments of both sides that in terms of the settlement, the Assessing Officer has been directed to compute the tax as per law and charge the interest as directed at Para-7 of the report of the Commission and the applicant seeks direction to make payment and in fact it is admitted by the assessee that they have paid the tax as per terms of settlement. From the aforesaid provisions under Section 6 of the Act, while passing the order under Sub-section-4, the Commission can pass the order for settlement including the terms with regard to tax, penalty or interest to be paid under the settlement and in that order, it must be also maintained that if subsequently it is found by the Settlement Commission that the order has been obtained by fraud or misrepresentation, the Commission has the power to declare the settlement void. Where the settlement is found to be void as per sub-section 6 of the Act, all the proceedings would be heard de novo and the Commission has to complete the proceedings within a period of two years from the date of the final order in which the settlement became void. In the instant case, when the tax under Sub-section-6A of the Act has been paid by the assessee as per the demand by the Assessing Officer in consequence of the order of the Commission, it appears that the Commission has not found the order void obtained by fraud or misrepresentation. By reading the provision of Sub-section 6, 6A, 6B and 7, we are of the view that the Commission has got statutory power to implement, vary, modify and rectify its own order. So the Settlement Commission is self-regulatory body having all powers of adjudication and conciliation. Thus to concluded Commission has passed the order which has become conclusive and reached its finality and the same has already been implemented by collecting tax from the assessee-opposite parties 2 to 6 and the writ jurisdiction is not maintainable in view of the reasons as stated above
Issues Involved:
1. Jurisdiction and validity of the Income Tax Settlement Commission's (ITSC) order. 2. Full and true disclosure of income by the assessee. 3. Allegations of fraud and misrepresentation. 4. Adequacy of opportunity given to the Department. 5. Compliance with statutory provisions and natural justice. 6. Finality and conclusiveness of the ITSC order. 7. Maintainability of the writ petition under Articles 226 and 227 of the Constitution of India. Detailed Analysis: 1. Jurisdiction and Validity of the ITSC Order: The petitioner challenged the jurisdiction of the ITSC, arguing that the assessee failed to fulfill the statutory requirements under Section 245C of the Income Tax Act, 1961, which mandates a full and true disclosure of income. The ITSC, after considering the application and the report from the Commissioner, proceeded with the matter and passed an order under Section 245D(4). The court found that the ITSC had the authority to add additional income after due investigation and to settle the tax payable by the assessee, thereby validating the jurisdiction and the procedure followed by the ITSC. 2. Full and True Disclosure of Income by the Assessee: The petitioner contended that the assessee did not make a full and true disclosure of income, as required under Section 245C. The ITSC, however, examined the records, including the report from the Commissioner, and concluded that the disclosure was adequate. The ITSC added further income based on its investigation, which indicated that the assessee had not entirely understated their income. The court upheld the ITSC's findings, stating that the Commission has the power to determine the total income, including undisclosed income, for settlement purposes. 3. Allegations of Fraud and Misrepresentation: The petitioner alleged that the ITSC's order was obtained by fraud and misrepresentation. The court noted that under Section 245D(6), the ITSC has the power to declare a settlement void if it is found to be obtained by fraud or misrepresentation. The ITSC did not find any fraud or misrepresentation in this case. The court held that the petitioner should have raised these issues before the ITSC, which has the statutory authority to address such claims. 4. Adequacy of Opportunity Given to the Department: The petitioner argued that the ITSC did not provide adequate opportunity to the Department to rebut the claims made by the assessee. The court found that the ITSC had given proper opportunity to both parties to present their cases, and the Department's report was duly considered. The court concluded that the principles of natural justice were followed by the ITSC. 5. Compliance with Statutory Provisions and Natural Justice: The court examined whether the ITSC complied with the statutory provisions under Sections 245C and 245D and whether the principles of natural justice were adhered to. The court found that the ITSC followed the prescribed procedure, including calling for a report from the Commissioner, giving both parties an opportunity to be heard, and considering all relevant evidence before passing the order. The court held that the ITSC's order was in compliance with the statutory provisions and principles of natural justice. 6. Finality and Conclusiveness of the ITSC Order: The court emphasized that under Section 245I, the order of the ITSC is conclusive and final as to the matters stated therein. The court noted that the ITSC's order had been implemented, and the assessee had paid the tax as per the settlement terms. The court held that the order had reached its finality and could not be reopened in any proceeding under the Act or any other law, except as provided in the chapter. 7. Maintainability of the Writ Petition: The court addressed the maintainability of the writ petition under Articles 226 and 227 of the Constitution of India. The court held that judicial review of the ITSC's decision is limited to examining the legality of the procedure followed, not the merits of the decision. The court found no procedural illegality or violation of natural justice in the ITSC's order. Consequently, the court concluded that the writ petition was not maintainable. Conclusion: The court dismissed the writ petition, holding that the ITSC's order had reached its finality, was in compliance with statutory provisions, and was not obtained by fraud or misrepresentation. The court found that the ITSC had provided adequate opportunity to both parties, followed the principles of natural justice, and had the jurisdiction to pass the order. The court also held that the writ petition under Articles 226 and 227 of the Constitution of India was not maintainable in the given circumstances.
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