9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (8) TMI 666 - HC - Income TaxApplication for settlement of cases - Fulfillment of the requirement of Section 245C relating to making a full and true disclosure of its income which has not been disclosed before the AO - Held that - No doubt, Section 245C (1) of the Act requires the applicant to make a full and true disclosure of the income which has not been disclosed before the AO and the manner in which said income has been earned but this, by no means, requires to the applicant to demonstrate that there is a fresh source of income which was not earlier disclosed by the Assessee. It can happen that an income which was not earlier offered to tax, like an excessive claim for depreciation, is now withdrawn and, as a result, income is offered to tax before the ITSC. This will satisfy the requirement of Section 245C (1) of that Act that what was not earlier disclosed before the AO is now offered to tax. Consequently, the Court sets aside the order dated 4th November, 2016 passed by the ITSC and restores the Petitioner s application to the file of the ITSC. The said application will be taken as having been proceeded with by the ITSC in terms of Section 245D (1) of the Act. For the further stages in the application, it will be listed before the ITSC on 20th September, 2017.
Issues involved:
Challenge to the order of the Income Tax Settlement Commission under Section 245D (1) of the Income Tax Act, 1961 for declining to proceed on the petitioner's application under Section 245C (1) of the Act. Detailed Analysis: 1. Challenge to ITSC Order: The petitioner, a subsidiary company, challenged the order of the Income Tax Settlement Commission (ITSC) declining to proceed on the application under Section 245C (1) of the Income Tax Act, 1961. The petitioner had applied for surrender of its licenses and became non-operational after transferring its business to another entity. The ITSC held that the petitioner failed to fulfill the requirement of Section 245C by not making a full and true disclosure of its income that was not disclosed before the Assessing Officer (AO). 2. Disclosure of Income: The petitioner offered to give up certain claims for depreciation, unearned revenue, legal expenses, and finance charges for obtaining a Bank Guarantee. However, the ITSC found that these were amounts earlier claimed as deductions in the returns filed before the AO and were now sought to be withdrawn. The ITSC concluded that there were no fresh issues or incomes being offered for tax that had not been declared before the AO. 3. Court's Analysis and Decision: The High Court disagreed with the ITSC's approach, stating that the requirement of Section 245C (1) is to disclose income not previously declared before the AO. The Court highlighted that withdrawing excessive claims for deductions and offering income to tax before the ITSC satisfies this requirement. Citing decisions of the Bombay and Karnataka High Courts, the Court held that demonstrating a fresh source of income not disclosed before the AO is not mandatory. 4. Court's Decision: The High Court set aside the ITSC order and restored the petitioner's application, directing the ITSC to proceed with the application under Section 245D (1) of the Act. The matter was listed for further proceedings before the ITSC on a specified date. In conclusion, the High Court allowed the writ petition, disposing of it in favor of the petitioner and directing the ITSC to reconsider the application in light of the Court's interpretation of the disclosure requirements under the Income Tax Act.
|
