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2021 (4) TMI 1045 - HC - Income TaxApplications u/s 245(C) before the Settlement Commission to resolve the disputes with the Income Tax Department rejected - HELD THAT - Section 245(D) cannot be read in isolation. Section 245(D) is to be read along with 245(C). Both the provisions are to be read together to form an opinion and to cull out the spirit involved in the matter of receiving an application for settlement of cases. Section 245(C) contemplates 'Application for Settlement of cases'. Once an application is filed, it is to be verified, whether the application is filed with reference to the ingredients contemplated under Section 245(C). Once all such ingredients are fulfilled, then the Settlement Commission should follow the procedures as contemplated under Section 245(D). Under Section 245(D), various stages are provided. At any stage, if the Settlement Commission formed an opinion that there was no full and true disclosure with reference to the facts narrated in the application, then the Settlement Commission is empowered to reject the application filed under Section 245(C). Thus, the procedural aspects enumerated under Section 245(D) is to conduct the enquiry for the purpose of settlement and such a procedural aspects are to be read along with the spirit of the provision as contemplated under Section 245(C) of the Act. The report of the Commissioner of Income Tax, opportunity for the petitioner to convert the materials and all such aspects are provided, enabling the petitioner to establish his cases with reference to the applications filed and not in respect of the other income or other materials. Procedures are contemplated in order to cull out the truth regarding the true and full disclosure to be made along with the application filed under Section 245(C) and therefore, at any stage of the enquiry, the Settlement Commission, if able to form an opinion that an application is not filed with true and full disclosure, then such an application shall be rejected. The very legislative intention of the procedures formulated under Section 245(D) is to ensure that the application for settlement of cases are considered in accordance with Section 245(C) and therefore, the powers of the Settlement Commission is limited to the extent of the scope of Section 245(C) and the other provisions of the Act can be exercised only in order to formulate an opinion and not to make a regular assessment under the Act, which is the power to be exercised by the competent authority and certainly not by the Settlement Commission. In the present cases, 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 applications 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. 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. It is 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 petitions fail and accordingly, all the three writ petitions stand dismissed
Issues Involved:
1. Challenge to the orders of the Settlement Commission dated 16.11.2017. 2. Requirement of full and true disclosure under Section 245(C) of the Income Tax Act. 3. Jurisdiction and scope of the High Court under Article 226 of the Constitution of India. 4. Procedural aspects under Section 245(D) of the Income Tax Act. 5. Adequacy of opportunity provided to the petitioner by the Settlement Commission. Detailed Analysis: 1. Challenge to the Orders of the Settlement Commission: The petitioner challenged the orders of the Settlement Commission dated 16.11.2017, arguing that the Commission misunderstood the facts and circumstances, forming an erroneous opinion, and dismissing the applications. The petitioner sought an opportunity to re-adjudicate the issues before the Settlement Commission to clarify the facts. 2. Requirement of Full and True Disclosure under Section 245(C) of the Income Tax Act: The respondents contended that an application under Section 245(C) must be accompanied by full and true disclosure of income. The Settlement Commission found that the petitioner did not make full and true disclosure, particularly regarding foreign bank accounts and business activities in Dubai. The Commission noted concealment of facts and failure to explain the manner in which the income was earned, leading to the rejection of the application. 3. Jurisdiction and Scope of the High Court under Article 226 of the Constitution of India: The High Court emphasized that its jurisdiction under Article 226 is not appellate but limited to reviewing mistakes apparent on the face of the record. The court cannot substitute its view for that of the Settlement Commission. The High Court cited precedents to support this limited scope, including the judgments in S.V. Shankar Vs. Settlement Commission and Abdul Rahim Vs. Income Tax Settlement Commission. 4. Procedural Aspects under Section 245(D) of the Income Tax Act: Section 245(D) outlines the procedure for handling applications under Section 245(C). The Commission is empowered to reject an application at various stages if it finds that the disclosure is not full and true. The High Court noted that the procedural aspects under Section 245(D) are designed to ensure compliance with Section 245(C), and the Commission's findings on factual matters should not be interfered with unless there is an error apparent. 5. Adequacy of Opportunity Provided to the Petitioner by the Settlement Commission: The petitioner argued that insufficient opportunity was provided to respond to documents handed over on 09.11.2017, with the hearing scheduled for the next day. The High Court found that the Settlement Commission's findings on the involvement of the petitioner and the lack of full and true disclosure were based on substantial evidence and could not be re-adjudicated under Article 226. Conclusion: The High Court upheld the Settlement Commission's findings that the petitioner did not make full and true disclosure of income. The court emphasized the limited scope of its jurisdiction under Article 226 and the procedural requirements under Sections 245(C) and 245(D) of the Income Tax Act. The writ petitions were dismissed, and the Settlement Commission's orders were affirmed. The court also noted that the Settlement Commission had been abolished with effect from 01.02.2021, reinforcing the finality of the decision.
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