2021 (4) TMI 972 - HC - Income Tax

Validity of Settlement Commission order - direction is sought for to reconsider the application and to pass a fresh order under Section 245(D)(4) of the Income Tax Act after affording opportunity to the petitioner - HELD THAT - In the present case, the findings of the Settlement Commission are unambiguous and specific facts and circumstances were also relied on by the Settlement Commission to arrive a decision regarding true and full disclosure by the petitioner. Such a finding of fact need not be interfered with by the High Court under Article 226 of the Constitution of India, unless such facts are found to be error apparent. When there was an adjudication of facts and the Settlement Commission arrived a finding that factually the petitioner has not established that he filed an application under Section 245(C) with true and full disclosure, then the High Court is expected to exercise restraint in entertaining a writ proceedings under Article 226 of the Constitution of India. In the present case, the petitioner could not able to establish that he approached the Settlement Commission with clean hands and the element of true and full disclosure as contemplated under Section 245(C) had not been established before the Settlement Commission and therefore, there is no perversity or infirmity as such in respect of the findings arrived. As brought to the notice of this Court that the Settlement Commission has already been abolished with effect from 01.02.2021. This being the factum established, the writ petition fails and accordingly, stands dismissed.

Summary

Issues:
Challenge to order of Settlement Commission under Section 245(D)(4) of the Income Tax Act for quashing and reconsideration.

Analysis:
1. The writ petitioner sought to quash the order of the Settlement Commission dated 27.06.2018 and requested a fresh order under Section 245(D)(4) of the Income Tax Act. The petitioner contended that full and true disclosure was made regarding income and disputed the Commission's understanding of facts, particularly related to a loan transaction. The petitioner argued against double taxation and requested reconsideration based on the misinterpretation of facts by the Commission.

2. The petitioner's counsel emphasized that the application was made with clean hands under Section 245(C) of the Income Tax Act and that the rejection was based on a misunderstanding of facts. The petitioner sought a fresh adjudication to clarify the facts and correct the Commission's misinterpretation.

3. The respondents' Senior Standing Counsel contended that the rejection was justified as the petitioner failed to make full and true disclosure, a prerequisite under Section 245(C). The Commission found that the petitioner retracted statements without valid reasons and did not provide sufficient clarification. Consequently, the Commission returned the case to the Department for regular assessment.

4. The Senior Standing Counsel cited the judgment in S.V.Shankar Vs. Settlement Commission, emphasizing the limited jurisdiction of the court in reviewing Settlement Commission decisions. The court cannot substitute its view for that of the Commission unless there are apparent mistakes. The Senior Standing Counsel argued that the writ petition lacked merit based on the Settlement Commission's findings.

5. Referring to the judgment in Abdul Rahim Vs. Income Tax Settlement Commission, the Senior Standing Counsel highlighted the stages of rejection by the Commission under Section 245D and the importance of true and full disclosure. The Commission's decision to reject the application was based on the lack of genuine disclosure by the petitioner, justifying the dismissal of the writ petition.

6. The Settlement Commission's findings were deemed unambiguous, with specific reliance on facts to determine the lack of full and true disclosure by the petitioner. The court noted that interference in such factual determinations is unwarranted unless there are clear errors. As the petitioner failed to establish clean hands and full disclosure, the court upheld the Commission's decision.

7. Lastly, it was noted that the Settlement Commission had been abolished, rendering the writ petition moot. The court dismissed the petition, emphasizing the importance of meeting the statutory requirements for settlement applications under the Income Tax Act.

This detailed analysis covers the issues raised in the legal judgment, providing a comprehensive overview of the arguments presented and the court's reasoning in dismissing the writ petition.