2022 (1) TMI 125 - HC - Income Tax

Rejection of application for Settlement - Validity of order of Settlement Commission Order u/s 245C - Assessment u/s 153A - HELD THAT - Close reading of the above findings of the Settlement Commission, would reveal that there are many lapses established on the part of the petitioner / assessee in disclosing all the material facts truly and fully. It is not one instance wherein a doubt raised but on several issues the Settlement Commission could able to identify non-disclosure of material facts on the part of the Assessee. Commission made a finding that the Assessee disclosed certain income only after the confrontation with the Department Officials. Certain disclosures are made in piecemeal then and to suit their convenience. This being the conduct of the assessee established before the Settlement Commission and the Settlement Commission also categorically made a finding, this Court has no reason to interfere with such findings as the said findings are candid and convincing and in consonance with the provisions of the Income Tax Act. In view of the fact that the application submitted by the petitioner under Section 254C was rejected as not maintainable in view of the non-compliance of the Mandatory conditions stipulated under the provisions and the petitioner/assessee could not able to establish that he has filed an application with true and full disclosure of facts. Thus, the petitioner is not entitled for any relief as such sought for in the present writ petition.

Summary

Issues Involved:
1. Challenge to the order passed by the Income Tax Settlement Commission.
2. Alleged violation of principles of natural justice.
3. Claim of bias against the Vice-Chairman of the Income Tax Settlement Commission.
4. Non-compliance with CBDT Circulars.
5. Non-disclosure of full and true income by the petitioner.
6. Claim under Section 80IB of the Income Tax Act.
7. Maintainability of the application under Section 245C of the Income Tax Act.

Detailed Analysis:

1. Challenge to the Order Passed by the Income Tax Settlement Commission:
The petitioner challenged the order dated 30.09.2016 passed by the Income Tax Settlement Commission and sought to prevent the fourth respondent from proceeding with the assessment proceedings. The petitioner contended that the application was rejected as not maintainable due to alleged non-disclosure of material facts.

2. Alleged Violation of Principles of Natural Justice:
The petitioner argued that they were not provided with an opportunity to defend their case at several stages, which violated the principles of natural justice. The petitioner also raised a ground of bias in the writ petition, although this was not raised before the Settlement Commission.

3. Claim of Bias Against the Vice-Chairman of the Income Tax Settlement Commission:
The petitioner contended that the Director General of Income Tax (Investigation) took charge as Vice-Chairman subsequent to a search conducted on 17.07.2013, leading to an official bias. This was claimed to have influenced the proceedings and the administrative circulars and directions issued.

4. Non-Compliance with CBDT Circulars:
The petitioner argued that the Settlement Commission violated the CBDT Circular dated 18.12.2014, which provided guidelines against undue influence or coercion during search/survey proceedings. The petitioner claimed that the circular was binding and not followed by the authorities.

5. Non-Disclosure of Full and True Income by the Petitioner:
The Settlement Commission found that the petitioner did not disclose all material facts fully and truly. The petitioner made disclosures in piecemeal and only after being confronted by the Department. The Commission identified several instances of non-disclosure, leading to the rejection of the application as not maintainable.

6. Claim Under Section 80IB of the Income Tax Act:
The petitioner claimed deductions under Section 80IB for the assessment years 2012-13, 2013-14, and 2014-15. The Commission found that the petitioner’s claim was not tenable as there was no new unit started in the assessment year 2012-13, and the business activities had been ongoing since several years. The Commission also noted that separate books of accounts were not maintained, and the conditions for claiming the deduction were not fulfilled.

7. Maintainability of the Application Under Section 245C of the Income Tax Act:
The Court held that for an application under Section 245C to be maintainable, the assessee must disclose true and full income. The Commission found multiple lapses and non-disclosures by the petitioner, leading to the conclusion that the application was not maintainable. The Court agreed with the Commission’s findings and dismissed the writ petition.

Conclusion:
The Court dismissed the writ petition, stating that the petitioner failed to establish that they filed an application with true and full disclosure of facts. The findings of the Settlement Commission were found to be convincing and in accordance with the provisions of the Income Tax Act. Consequently, the connected miscellaneous petitions were also closed.