2019 (2) TMI 58 - HC - Income Tax

Settlement commission order - whether the Settlement Commission has defaulted in its exercise to warrant any interference? - Held that - Department can raise no objections on this count because every objection raised by the Commissioner, Income Tax as regarding non-disclosure by the assessee is well discussed and disposed with reasons. In the nature of exercise so undertaken by the Commission, we completely fail to appreciate as to the cause of action for the Department to maintain this writ petition. As we have noted above, Chapter XIXA of the Act incorporates a special procedure for settlement on the basis of full and true disclosure of income by an assessee and considering that the Commission has taken note of each of the objections raised by the Commissioner in his report and after testing the same against the disclosure made by the assessee in his application, proceeded to dispose of the matter by the order impugned, in our opinion, it is on a misconception of a legal position that the writ petition has been filed which does not raise any issue having lawful support warranting any indulgence. As we have already noted above, the power exercised by this Bench to examine an order passed by the Settlement Commission is limited on its statutory compliance or perversity and we do not find any instance present in the order impugned which draws itself in either of the two class requiring interference by this Court. We also do note that the Chairman and the Vice Chairman of a Settlement Commission are appointed from amongst serving Chief Commissioners or Principal Chief Commissioners or Principal Commissioner of Income Tax of equivalent rank and which again is a relevant factor for the Department to ponder, whether at all any order of a Settlement Commission unless staring on statutory violation or on perversity, should be assailed in a routine manner as having been done in the present case.

Summary

Issues Involved:
1. Validity of the Settlement Commission's order under section 245D(4) of the Income Tax Act, 1961.
2. Alleged failure by the assessee to make full and true disclosure of income.
3. Award of interest under sections 234A, 234B, and 234C of the Income Tax Act.

Issue-Wise Detailed Analysis:

1. Validity of the Settlement Commission's Order:
The Department of Income Tax challenged the Settlement Commission's order dated 30.9.2015, arguing that the assessee had not made a full and true disclosure of income. The Settlement Commission had allowed the assessee's application for settlement under section 245D(1) and proceeded with the case under section 245D(2C). The Department contended that the Commission ignored the objections raised by the Commissioner of Income Tax and proceeded to dispose of the application based on the materials on record, which they argued was against statutory provisions.

2. Alleged Failure by the Assessee to Make Full and True Disclosure of Income:
The Department argued that the assessee had not made a full and true disclosure of income, citing discrepancies in the disclosed and actual unaccounted costs of projects for the assessment years 2011-12 and 2012-13. For 2011-12, the Commissioner of Income Tax reported a discrepancy of ?12,84,97,024, and for 2012-13, an additional ?6,00,00,000 was suggested to be added to the total income. The Settlement Commission, however, considered the facts, including the complexity of the investigation and the materials seized, and concluded that a net profit rate of 10% on the undisclosed receipts was reasonable. The Commission's decision was based on a thorough examination of the materials and objections raised by the Commissioner.

3. Award of Interest under Sections 234A, 234B, and 234C:
The assessee filed a separate writ petition challenging the imposition of interest under sections 234A, 234B, and 234C. The court noted that a Special Leave Petition (SLP) involving the same issue was pending before the Supreme Court. Consequently, the court decided to await the outcome of the SLP before proceeding further with this writ petition.

Conclusion:
The court found that the Settlement Commission had duly considered the objections raised by the Commissioner of Income Tax and had provided detailed reasons for its conclusions. The court did not find any statutory violations or perversity in the Commission’s order that would warrant interference. Thus, the Department's writ petition was dismissed. The assessee's writ petition regarding the imposition of interest was adjourned pending the outcome of the related SLP before the Supreme Court.