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2017 (5) TMI 848 - HC - Income TaxApplication under section 245C(1) to Settlement Commission - petitioner contends that the total unaccounted amount declared (over Rs. 10 crores) should have been accepted - Held that - The revenue had successfully opposed the application, contending that the assessee had not made full disclosure and that the amount declared had never belonged to him, but rather to M/s. Dolphin Developers Ltd, who had accepted cash but not declared it. This was accepted by ITSC. The petitioner has given his explanation and version as to why such rejection was unjustified and how such amount belonged to him. However, this court is of the opinion that the petitioner s contentions are entirely factual. Unless there is a manifest unreasonableness or perversity in the ITSC s order, the court cannot substitute its reasoning with that of the said body. The ITSC s findings here are based upon an analysis of the facts such as that the ABC s identity was unknown and that there was a certain degree of amorphousness in its functioning. Furthermore, the clear linkages between the amounts disclosed before the ITSC and the amounts declared by M/s. Dolphin Developers Ltd. was discernable. This court cannot review or second guess the findings of fact as would an appellate court. Given these parameters, the inference of facts having regard to the totality of circumstances, this court is of the opinion that the findings of fact which the ITSC rendered cannot be set aside or interfered with. The writ petition has to fail and is, therefore, dismissed.
Issues Involved:
1. Validity of the rejection of the petitioner's application by the Income Tax Settlement Commission (ITSC) under Section 245D(2C) of the Income Tax Act, 1961. 2. Whether the petitioner made a full and true disclosure of his income. 3. Whether the manner of earning the income was adequately explained by the petitioner. 4. The jurisdiction and scope of the High Court in interfering with the ITSC's findings. Detailed Analysis: 1. Validity of the Rejection of the Petitioner's Application by ITSC: The petitioner sought to quash the ITSC's order dated 03.05.2016, which rejected his application under Section 245C(1) of the Income Tax Act. The petitioner also requested a writ of mandamus directing the ITSC to treat his application as valid and to restrain the income tax authorities from taking any action until the disposal of his application by the ITSC. The ITSC initially allowed the application to proceed under Section 245D(1) but later rejected it under Section 245D(2C), stating that the petitioner failed to make full and true disclosure of his income and the manner of earning such income. 2. Full and True Disclosure of Income: The ITSC found that the petitioner did not make a full and true disclosure of his income. The petitioner had declared an additional income based on seized material and stated that the income belonged to him. However, the ITSC concluded that the additional income declared did not rightfully belong to the petitioner but to various companies of the Dolphin Group. The ITSC emphasized that the companies were separate legal entities, and the unaccounted monies received were against specific properties in particular projects, which should form part of the accounts of the respective companies. The petitioner’s claim that the income belonged to him was deemed far-fetched and lacking credibility. 3. Explanation of the Manner of Earning the Income: The ITSC also held that the petitioner failed to explain the manner of earning the additional income. The petitioner argued that the income was derived from funds received from flat buyers, investors, and refunds from amounts advanced. However, the ITSC found that the petitioner did not provide sufficient evidence to substantiate his claim. The seized material indicated that the unaccounted money related to specific projects of the group companies, and the petitioner’s explanation was not convincing. 4. Jurisdiction and Scope of the High Court in Interfering with ITSC's Findings: The petitioner contended that the ITSC's rejection of his application was erroneous and that the High Court should intervene. However, the High Court noted that its scope of interference is limited to examining whether the ITSC's order is contrary to the provisions of the Act or suffers from bias, fraud, or malice. The High Court emphasized that it cannot substitute its reasoning for that of the ITSC unless there is manifest unreasonableness or perversity in the ITSC's order. The court found that the ITSC's findings were based on an analysis of facts and were not unreasonable or perverse. The judgments of the Supreme Court in similar cases were cited to delineate the scope of the High Court’s review. Conclusion: The High Court dismissed the writ petition, upholding the ITSC's order. The court concluded that the petitioner failed to make a full and true disclosure of his income and did not adequately explain the manner of earning such income. The ITSC's findings were based on a detailed analysis of facts, and there was no manifest unreasonableness or perversity in its order. Therefore, the High Court found no grounds to interfere with the ITSC's decision.
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