2018 (9) TMI 229 - HC - Income Tax

Settlement Commission order u/s 245D(2C) - petitioner seeks for a direction to the 1st respondent to reconsider the said application and to pass fresh orders under Section 245D(2C) - whether the order passed by the Settlement Commission u/s 245 D(2C) needs any interference by exercising this Court s discretionary jurisdiction under Article 226 of the Constitution of India - Held that - The phrase at any stage of a case relating to him used under section 245C is significant, which would only indicate that the case relating to the assessee in respect of a particular assessment year, in which, a full and true disclosure of income has not been disclosed before the AO etc. The bar provided under section 245K(2) for making subsequent application under section 245C is to be construed as a bar in respect of such assessment year, which is already the subject matter in the earlier application, and not in respect of any future application in respect of any other assessment year/years, being not the subject matter of the application already filed under section 245C, which was allowed to be proceeded with under sub-section (1) of Section 245D. Section 245K(2) is not imposing total bar on subsequent application, as apprehended by the petitioner in this case. On the other hand, such total bar is applicable only in respect of cases falling under Section 245K(1). As already stated supra, the bar under Section 245K(2) is against an application in respect of the same assessment year, so long as the applicant has not suffered any such disqualifications as stated u/s 245K(1). Thus, find that the apprehension of the petitioner about the anticipated total bar in approaching the commission in future is not well- founded. Settlement Commission, impugned in this writ petition, does not warrant any interference, more particularly, by exercising the discretionary jurisdiction of this Court under Article 226 of the Constitution of India.

Issues Involved:
1. Validity of Settlement Commission's order under Section 245D(2C) of the Income Tax Act, 1961.
2. Adequacy of the opportunity provided to the petitioner by the Settlement Commission.
3. Interpretation of "true and full disclosure" under the Income Tax Act.
4. Applicability of Section 245K(2) regarding the bar on subsequent applications for settlement.

Issue-wise Detailed Analysis:

1. Validity of Settlement Commission's Order under Section 245D(2C):
The petitioner, an assessee, challenged the Settlement Commission's decision that declared his application invalid under Section 245D(2C) of the Income Tax Act, 1961. The Commission found that the petitioner failed to make a full and true disclosure of his income, as required by the Act. The Commission's decision was based on the report from the Principal Commissioner, which highlighted discrepancies such as undisclosed income from impounded materials and unexplained gold jewelry. The court upheld the Commission's decision, emphasizing that the Commission is empowered to reject an application at any stage if it finds that the disclosure is not true and full.

2. Adequacy of the Opportunity Provided to the Petitioner:
The petitioner argued that he was not given sufficient opportunity to explain his case. However, the court noted that the petitioner was provided with the report from the Principal Commissioner and had filed a reply. The Commission found the reply unsatisfactory and noted that the petitioner failed to explain the discrepancies in the impounded materials. The court concluded that the petitioner was given adequate opportunity and that the Commission’s decision to reject the application was justified.

3. Interpretation of "True and Full Disclosure":
The court reiterated that "true and full disclosure" is a critical requirement for an application to be considered by the Settlement Commission. The Commission found that the petitioner had suppressed facts and misrepresented his income, which was evident from the impounded materials. The court emphasized that the applicant must provide material facts without any suppression and establish that the disclosure of income is true and full in its strict sense. The Commission is entitled to reject an application if it finds that the disclosure is not true and full at any stage.

4. Applicability of Section 245K(2) Regarding the Bar on Subsequent Applications:
The petitioner expressed concern that the rejection under Section 245D(2C) would bar him from making any future applications for settlement under Section 245K(2). The court clarified that Section 245K(2) imposes a bar on subsequent applications only in respect of the same assessment year for which the application was initially filed. The bar does not apply to applications for different assessment years. The court concluded that the petitioner’s apprehension about a total bar on future applications was unfounded.

Conclusion:
The court dismissed the writ petition, upholding the Settlement Commission's order. It found that the Commission had acted within its powers and provided adequate opportunity to the petitioner. The court emphasized the importance of true and full disclosure in settlement applications and clarified the scope of the bar under Section 245K(2).

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