2006 (7) TMI 204 - SC - Income Tax

Application under Chapter XIX-A of the Act for settlement of the dispute before the Settlement Commission for settlement of the dispute for the assessment years 1989-90 to 1993-94 Held that - Without expressing any opinion on the merits of the dispute, the findings recorded on the first report or the effect of not recording a finding on the second report, we set aside the impugned order and remit the case back to the High Court for a fresh decision, leaving the parties to raise all points including the point raised before us on behalf of the assessee that the High Court should not have entertained the Revenue s writ petitions in exercise of its discretionary jurisdiction under article 226 of the Constitution of India, and the stand taken by the Revenue that the application filed by the assessee for settlement before the Settlement Commission was not entertainable as the assessee had not made, inter alia, true and complete disclosure of its undisclosed income, as provided under the law. All contentions of the parties are left open to be agitated before the High Court.

Summary

Issues involved: Application for settlement before the Settlement Commission, validity of the order passed by the Settlement Commission, challenge by the Revenue, consideration of reports by the Commissioner of Income-tax, maintainability of writ petitions before the High Court, remission of the case back to the High Court for a fresh decision.

The judgment involves the disposal of civil appeals filed by the assessee and the Commissioner of Income-tax against a common judgment passed by the High Court of Judicature at Bombay. The case originated from a search conducted on the premises of the assessee resulting in the estimation of undisclosed income. The assessee filed an application for settlement before the Settlement Commission, which was initially challenged by the Revenue. The Settlement Commission admitted the application and passed an order determining the undisclosed income. Subsequently, the Revenue submitted reports estimating different undisclosed income amounts. The Settlement Commission made a final determination of the undisclosed income, imposed penalties, and granted immunity from prosecution to the assessee. The Revenue filed writ petitions challenging the maintainability of the application before the High Court, which were allowed in a common order dated July 28, 2000. Both parties filed appeals against the High Court's order, leading to the Supreme Court remitting the case back to the High Court for a fresh decision, allowing all contentions to be raised. The Supreme Court emphasized expeditious disposal of the writ petitions and left the option open for parties to approach the court if aggrieved by the findings. The appeals were disposed of with no order as to costs.

The judgment addresses the importance of considering all relevant reports submitted by the Commissioner of Income-tax in determining undisclosed income during settlement proceedings. It highlights the need for a comprehensive assessment of all factors and reports to ensure a fair resolution of disputes. The Supreme Court's decision to remit the case back to the High Court underscores the significance of a thorough examination of all points raised by the parties, including the validity of the application for settlement and the completeness of disclosure of undisclosed income. The judgment emphasizes the need for a fresh decision by the High Court, allowing all contentions to be agitated and ensuring a fair and just resolution of the dispute.