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2023 (1) TMI 489 - HC - Income TaxApplication for settlement of cases - Settlement Commission u/s 245B - Validity of order passed by the Settlement Commission under Section 245D(4) - estimation and quantification of undisclosed income - HELD THAT - Having regard to the nature of settlement contemplated under Chapter XIX-A, Supreme Court in JYOTENDRASINHJI 1993 (4) TMI 1 - SUPREME COURT held that the scope of enquiry under Article 226 of the Constitution of India would be very limited confined to procedural irregularity or violation of the principles of natural justice (audi alteram partem), challenge on the ground of bias, fraud and malice. Supreme Court referred to its earlier decision in Sri Rant Durga Prasad v. Settlement Commission 1989 (1) TMI 4 - SUPREME COURT wherein it was held that judicial review is concerned with the legality of procedure followed and not with the validity of the order; judicial review is concerned not with the decision, but with the decision making process. After reference to the factual matrix and after hearing the revenue as well as the assessee, Settlement Commission found that there was no basis for estimation and quantification of undisclosed income by the department. Settlement Commission found that a sum of Rs.2,00,00,000.00 comprising of Rs.50,00,000.00 offered in the return filed under Section 153A, Rs.1,13,70,000.00 in the settlement application as well as a further sum of Rs.36,30,000.00 offered in the course of hearing would meet the ends of justice. The same was accepted and the issue was settled. No procedural or substantive error or infirmity in the approach of the Settlement Commission. Settlement Commission had followed the laid down procedure contemplated under Chapter XIX-A of the Act as well as under the Rules. Principles of natural justice were duly complied with. There is no allegation of any fraud or misrepresentation. In the absence thereof, we are afraid we cannot reopen a concluded settlement in a proceeding under Article 226 of the Constitution of India like an appellate authority. No merit in the writ petition.
Issues Involved:
1. Legality and validity of the order dated 18.03.2008 passed by the Income Tax Settlement Commission. 2. Maintainability of the application filed by respondent No.2 for settlement. 3. Procedural compliance and adherence to principles of natural justice by the Settlement Commission. 4. Scope of judicial review in the context of orders passed by the Settlement Commission. Detailed Analysis: 1. Legality and Validity of the Order Dated 18.03.2008: The Commissioner of Income Tax (Central), Basheerbagh, Hyderabad, challenged the order dated 18.03.2008 passed by the Income Tax Settlement Commission, Additional Bench, Chennai, in Settlement Application No.AP/HD51/06-07/17/IT. The petitioner contended that the Settlement Commission's acceptance of the additional income disclosed by respondent No.2 was erroneous and lacked a proper basis. 2. Maintainability of the Application for Settlement: The petitioner argued that the application filed by respondent No.2 for settlement was not maintainable and should be rejected. It was contended that there was no additional disclosure of concealed income in the application for settlement, and the income detected during the search and seizure was merely reiterated. The Settlement Commission, however, admitted the application and proceeded to settle the matter, directing the petitioner to issue a demand notice for the payment of income tax as per the order. 3. Procedural Compliance and Adherence to Principles of Natural Justice: The Court examined whether the Settlement Commission followed the procedural requirements under Chapter XIX-A of the Income Tax Act, 1961, and the Income Tax Settlement Commission (Proceedings) Rules, 1986. The Court noted that the Settlement Commission had called for reports under Rule 6 and Rule 9 of the Rules, provided opportunities for both parties to be heard, and examined the evidence before passing the order. The principles of natural justice were adhered to, and there were no allegations of fraud or misrepresentation. 4. Scope of Judicial Review: The Court referred to the Supreme Court's decision in Jyotendrasinhji v. S.I.Tripathi, which held that judicial review of Settlement Commission orders is limited to examining procedural irregularities or violations of natural justice principles. The Court reiterated that judicial review is concerned with the legality of the procedure followed, not the validity of the order itself. The Court found no procedural or substantive errors in the Settlement Commission's approach and concluded that the order was in accordance with the provisions of the Act. Conclusion: The writ petition was dismissed, and the Court upheld the Settlement Commission's order dated 18.03.2008. The Court found no merit in the petitioner's arguments and confirmed that the Settlement Commission had complied with the required procedures and principles of natural justice. The Court emphasized that it could not act as an appellate authority to reopen a concluded settlement in a proceeding under Article 226 of the Constitution of India.
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