2019 (11) TMI 874 - HC - Income Tax

Validity of order of Settlement Commission - full and true disclosure or not - additional income offered during section 245D(4) - HELD THAT - Proceedings before the Settlement Commission are in the nature of settlement between the parties and are not strictly speaking adjudicatory proceedings. On a perusal of the impugned order passed by the Settlement Commission, it is abundantly clear that both the respondents had not accepted the liability of 5% of trading expenses, but in the spirit of settlement offered to pay the amount computed by the AO with a view to bring the quietus to the matter and buy peace of mind. This court is of the view that the offer to pay such amounts in addition to the amounts disclosed in the applications under section 245C cannot be said to be disclosure of any further amounts under that section as the same have been offered only to bring about a settlement. The fact that the applicants have offered to pay such amounts, the liability whereof has not been accepted by them, cannot be termed as non-disclosure of full and true facts in the applications under section 245C of the Act. Under the circumstances, considering the amounts so offered by way of settlement which are quite meagre considering the overall disclosure made, this court does not find any infirmity in the impugned order passed by the Settlement Commission warranting interference in exercise of powers under article 226 of the Constitution of India. In the facts of the present case, no revised application under sub-section (1) of section 245C of the Act had been filed by the respondents revising the initial disclosures. The respondents/ applicants have not made any revised disclosures, nor have they accepted the liability to pay the additional amounts. Nonetheless, in the spirit of settlement, the respondents applicants have, offered to pay such amounts to bring a quietus to the matter and buy peace of mind. Moreover, the additional amounts which the respondents have agreed to pay are meagre considering the overall amounts disclosed in the applications under section 245C(1) of the Act. Under the circumstances, the contention that there was no full and true disclosure in the applications made under section 245C(1) of the Act, does not merit acceptance. Insofar as the contention that the impugned order is a non-reasoned order, from the facts noted hereinabove, it is evident that the Settlement Commission has applied its mind to the nature of disclosures, the contentions of the revenue and the explanation of the respondent applicants and has given its findings thereon. On a perusal of the impugned order it is not possible to state that it is a non-speaking order. Such contention is, therefore, misconceived. This court does not find any infirmity in the impugned order, so as to warrant interference.

Issues Involved:
1. Validity of the Income Tax Settlement Commission's order dated 17.7.2018.
2. Alleged non-disclosure of full and true income by the respondents in their settlement applications.
3. Whether the Settlement Commission's acceptance of additional amounts offered by the respondents constitutes an amendment of the original application under Section 245C(1) of the Income Tax Act.
4. Whether the Settlement Commission's order is a non-reasoned order.

Detailed Analysis:

1. Validity of the Income Tax Settlement Commission's Order:
The petitions challenge the order dated 17.7.2018 by the Income Tax Settlement Commission regarding assessment year 2004-2005 for both respondents. The Settlement Commission allowed the applications to proceed further under Section 245D(2D) of the Income Tax Act. The Commission settled the cases based on the additional income offered by the respondents and the explanations provided for the proposed additions.

2. Alleged Non-Disclosure of Full and True Income:
The petitioner argued that the respondents' offer of additional amounts to settle the issue indicates that they did not make a full and true disclosure of their income in their original applications. The petitioner cited the Supreme Court's decision in Ajmera Housing Corporation v. CIT, emphasizing that a full and true disclosure is a pre-condition for a valid application under Section 245C(1).

3. Amendment of the Original Application:
The petitioner contended that the respondents' offer of additional amounts via their letter dated 8.6.2018 amounted to an amendment of their original applications, which is not permissible under the Income Tax Act. The court, however, found that the respondents had not revised their original applications but had offered additional amounts in the spirit of settlement to bring a quietus to the matter and buy peace of mind.

4. Non-Reasoned Order:
The petitioner claimed that the Settlement Commission's order was non-reasoned. The court examined the impugned order and found that the Settlement Commission had considered the proposed additions, the respondents' explanations, and the documents submitted. The court concluded that the order was reasoned and not a non-speaking order.

Conclusion:
The court found no infirmity in the Settlement Commission's order. It noted that the respondents had offered additional amounts to settle the matter in the spirit of settlement, which does not constitute a revision of the original application under Section 245C(1). The court also found that the Settlement Commission's order was reasoned and addressed the contentions of both parties. Consequently, the petitions were dismissed.

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