2020 (10) TMI 569 - HC - Income Tax

Validity of Settlement commission order - Revenue attempts to reopen one such settlement after a period of more than one year on account of a single observation made in the order, It is not practicable for the Commission to examine the records and investigate the cases for proper settlement - HELD THAT - If the Settlement Commissioner had all records before him, Revenue had duly made its representation, and the Settlement Commission had thereinafter accepted the settlement, to us the only way of reading the impugned sentence is that the matter was straightforward on the face of the record. It is also not disputed before us that the Settlement Commission necessarily was required to pass orders before 31.3.2008, else the proceedings would have abated. Revenue has not pointed any finger of misconduct against any one of the members of the Settlement Commission. Even before us, the integrity and ability of the members of the Settlement Commission are not in doubt. In this background, can an isolated sentence, purportedly crept into the order, be allowed to defeat the object and purpose sought to be achieved with the enactment in question? Impugned order stood passed in the presence of the Revenue and none objected to the same. As per the assessee of which we do not express any opinion, the stand taken is highly immoral for the Authorities to file the instant petition even though enhancement is to the extent of 100 per cent. And the amount deposited in terms thereof was accepted without any protest or demur. All this is for the Settlement Commission to examine if the need so arises. The settlement was mutually beneficial and acceptable. The money stood accepted without any protest or demur. As such, at a belated stage in the year 2020, more so, after a period of one year from the settlement, Revenue cannot be allowed to raise pleas, technical in nature, particularly when matter stood conclusively decided and concluded even at the end of Revenue. Further, with the mere change of the Revenue Officer, opinion cannot be allowed to change.

Summary

Issues:
Petition seeking writs to quash an order by the Income Tax Settlement Commission.

Analysis:
The judgment by the High Court of Patna dealt with a petition seeking writs to quash an order by the Income Tax Settlement Commission. The purpose of Chapter XIX-A of the Income Tax Act, 1961, was to provide a mechanism for settling tax evasion cases expeditiously and truthfully. The Settlement Commission acts as a neutral body to settle issues between the assessee and the Revenue. The Commission has extensive powers, including granting immunity from prosecution and penalties. The legislation aims for finality and certainty in decision-making processes.

The case in question involved the Revenue attempting to reopen a settlement made under an application by the assessees for assessment years from 2000-01 to 2006-07. The petition challenged the Commission's order, primarily focusing on the statement that it was not practicable to examine records further for proper settlement. The High Court reviewed the records and noted the substantial additional income disclosed by the assessees, which was significantly higher than the initial declaration.

The Court concluded that the Settlement Commission's statement indicated that the objective of the application had been achieved, as all necessary records were available, and the settlement was straightforward. The Commission was required to pass orders before a specified date, which was duly complied with. The integrity and ability of the Commission members were not in doubt, and the Revenue did not raise any misconduct allegations.

The Court emphasized that technical objections raised by the Revenue after a significant period from the settlement should not be entertained, especially when the settlement was mutually beneficial and accepted without protest. The judgment referenced various legal precedents and highlighted the discretionary nature of writ jurisdiction, emphasizing the need to prevent legal fraud and promote equity.

In conclusion, the High Court disposed of the petition, considering all the arguments presented and emphasizing the importance of upholding justice and equity in such matters.