2017 (6) TMI 787 - HC - Income Tax

Settlement commission order - Is the impugned order of the Settlement Commission vitiated due to jurisdictional errors in conduct of the proceedings before the Settlement Commission? - Held that - In the present case, the assessee did not made a full and true disclosure of its income before the Settlement Commission. Such is the finding of the Settlement Commission. Such finding has not been substantiated to be perverse or to be suffering from such a legal infirmity so as to warrant an interference by a Writ Count. It is not for the Writ Court to exercise appellate jurisdiction over an order passed by the Settlement Commission. The Writ Court is not called upon to reappraise the evidence placed before the Settlement Commission. It is also not called upon to enlarge its jurisdiction under Article 226 to have a more detailed scrutiny of the order of the Settlement Commission in view of the nonavailability of an appellate forum. The order of the Settlement Commission has not been established to be contrary to the provisions of the Income Tax Act, 1961. In the present case, the impugned order is well-reasoned. It is not alleged that, the impugned order suffers from the vice of bias or is vitiated by fraud or is actuated by malice. No part of the impugned order has been substantiated to be perverse. The Settlement Commission has noted three instances where the petitioner did not make full and true disclosures of its income. Even before the High Court, the petitioners have not come clean with regard to the three issues noted by the Settlement Commission. - Decided against petitioner.

Issues Involved:
1. Jurisdictional errors in the conduct of proceedings by the Settlement Commission.
2. Relief or reliefs entitled to the parties.

Issue-wise Detailed Analysis:

1. Jurisdictional Errors in the Conduct of Proceedings by the Settlement Commission:

The petitioners challenged the Settlement Commission's order dated January 24, 2017, on the grounds that it did not adhere to the scheme laid down under Chapter XIXA of the Income Tax Act, 1961. The petitioners argued that the Settlement Commission failed to determine the quantum of tax liability and did not follow the procedural requirements under Sections 245D(3), 245D(4), and 245D(5) of the Act. They contended that the Settlement Commission did not call for or examine the records from the Principal Commissioner or Commissioner, nor did it undertake further enquiry or investigation as required by law. The petitioners also claimed that they were not provided with copies of certain reports, which vitiated the decision-making process.

The court noted that the Settlement Commission had passed several orders during the proceedings, including orders dated September 15, 2015, October 28, 2015, September 2, 2016, and January 24, 2017. The petitioners did not raise any objections to these orders at the relevant times, nor did they challenge the procedural aspects during the proceedings. The court found that the petitioners had waived their rights to contest the procedural infractions by not raising them before the Settlement Commission. The court also emphasized that the Settlement Commission's findings of fact, including the determination that the petitioners did not make a full and true disclosure of income, were not open to judicial review unless they were shown to be perverse, biased, or malicious.

The court referred to various precedents, including "Jyotendrasinhji v. S.I. Tripathi & Ors." and "Union of India & Ors. v. M/s. Ind-Swift Laboratories Ltd.," which held that the scope of judicial review of the Settlement Commission's orders is limited to examining whether the order is contrary to the provisions of the Income Tax Act and whether it suffers from bias, fraud, or malice. The court concluded that the Settlement Commission had conducted the proceedings in accordance with the law and that the petitioners had not substantiated their claims of procedural violations or jurisdictional errors.

2. Relief or Reliefs Entitled to the Parties:

The court held that the petitioners were not entitled to any relief. It found that the Settlement Commission had given a well-reasoned order, which was not shown to be perverse or suffering from legal infirmities. The court emphasized that the Settlement Commission's finding that the petitioners did not make a full and true disclosure of their income was not open to judicial review unless it was established to be perverse or biased. The court also noted that the petitioners had not improved on the facts presented before the Settlement Commission and had not provided any new evidence to challenge the Commission's findings.

In conclusion, the court dismissed the writ petition, holding that the Settlement Commission's order was valid and did not suffer from any jurisdictional errors. The petitioners were not granted any relief, and the court did not award any costs in the case.

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