2021 (4) TMI 1214 - HC - Income Tax

Application u/s 245D (4) to Settlement Commission rejected - learned Senior Standing Counsel is of the opinion that in the present case, the Settlement Commission formed an opinion that the petitioner had not made full and true disclosure with reference to certain incriminating evidence. Therefore, the order of rejection is in consonance with the provisions of the Act - HELD THAT - This Court is of the considered opinion that it is a pre-requisite condition that an assessee, who approaches the Settlement Commission under Section 245C of the Act, must disclose true and full income. How to form an opinion regarding true and full disclosure of the assessee. Undoubtedly, it is a difficult procedure to be adopted and further, various facts and circumstances are also to be ascertained. Thus, the procedures are contemplated under Section 245D of the Act. Various stages are provided for the purpose of deciding the application filed under Section 245C. While the process of adjudication of an application is in progress, the Authorities Competent are empowered to provide additional informations, report enabling the Commission to decide the issues in a proper perspective. The application filed under Section 245C is a special provision contemplated for the purpose of settling the cases in a speedy manner, only in the event of furnishing the true and full disclosure of income by an assessee along with the application. Doubts raised based on incriminating evidence by the Department and the particulars produced by the assessee are sufficient enough to form an opinion that there was no true and full disclosure. The true and full disclosure contemplated under the provision must be understood that the said disclosure must be an acceptable disclosure with reference to the documents and evidences available with the Department. The very settlement is a consensus to arrive a settlement and the parties are expected to be fair and honest. With this idea, the concept of true and full disclosure is contemplated in the provision. As far as the writ proceedings are concerned, such disputed facts and circumstances with reference to the documents and evidence cannot be adjudicated under Article 226 of the Constitution of India. Such an adjudication must be done by the Competent Authority by conducting a fullfledged enquiry/trial. In the event of rejection of an application filed under Section 245C, the matter shall go before the Assessing Officer before whom the assessee would get an opportunity to submit his explanation or documents or otherwise. Thus, the High Court under Article 226 cannot adjudicate or made any finding with reference to the disputed facts. Thus, the contention raised by the writ petitioner in this regard need not be considered. The entire findings of the Settlement Commission reveal that certain contra materials were produced by the Department before the Settlement Commission and disputed statements are also made. All such disputed statements and evidences cannot be adjudicated by the High Court. This being the factum, this Court is not inclined to entertain the writ petition and further, the procedures followed for deciding the issues as well as the decision arrived are in consonance with the provisions of the Act and there is no perversity or infirmity as such. Accordingly, the writ petition stands dismissed.

2022 (7) TMI 438 - HC

Issues Involved:
1. Rejection of the application by the Settlement Commission under Section 245D(4) of the Income Tax Act.
2. Allegation of malafide against the Authority.
3. True and full disclosure of income by the petitioner.
4. Procedural adherence by the Settlement Commission.
5. Jurisdiction of the High Court under Article 226 of the Constitution of India.

Issue-wise Detailed Analysis:

1. Rejection of the application by the Settlement Commission under Section 245D(4) of the Income Tax Act:
The primary issue is the rejection of the petitioner's application by the Settlement Commission under Section 245D(4). The petitioner contended that he had made a true and full disclosure of his income when filing the application under Section 245C. The petitioner argued that the Settlement Commission had initially accepted this disclosure at various stages under Sub-clauses (1), (2), and (3) of Section 245D. However, at the final stage, the Commission formed an erroneous opinion and dismissed the application. The respondent countered that the Settlement Commission is empowered to form an opinion at every stage regarding the true and full disclosure of income. The Commission's decision to reject the application at any stage is valid if it finds that there was no true and full disclosure.

2. Allegation of malafide against the Authority:
The petitioner raised allegations of malafide against the Authority who investigated the matter. However, the court noted that the Authority concerned was not impleaded in his personal capacity, which is a prerequisite for raising such allegations. The court emphasized that allegations of malafide must be substantiated with evidence and the concerned Authority must be impleaded as a party in the writ proceedings in his personal capacity. General contentions or unsubstantiated allegations cannot be entertained.

3. True and full disclosure of income by the petitioner:
The court discussed the necessity of true and full disclosure of income by an assessee approaching the Settlement Commission under Section 245C. The Commission is vested with the power to reject an application at various stages if it finds that the disclosure is not true and full. The court cited previous judgments to underline that the term "true and full disclosure" means that the disclosure must be acceptable with reference to the documents and evidence available with the Department. In this case, the Settlement Commission found that the petitioner had not made a true and full disclosure based on certain incriminating evidence and discrepancies in the petitioner's statements.

4. Procedural adherence by the Settlement Commission:
The court examined whether the Settlement Commission followed the procedures contemplated under Section 245D of the Act. It was noted that the Commission is empowered to conduct investigations and receive additional materials throughout the process. The Commission's decision to reject the application was found to be in consonance with the provisions of the Act, as it formed an opinion based on the evidence that the petitioner had not made a true and full disclosure.

5. Jurisdiction of the High Court under Article 226 of the Constitution of India:
The court highlighted that disputed facts and circumstances with reference to documents and evidence cannot be adjudicated under Article 226 of the Constitution of India. Such matters must be resolved by the Competent Authority through a full-fledged enquiry or trial. The High Court's jurisdiction under Article 226 does not extend to making findings on disputed facts. The court concluded that the findings of the Settlement Commission regarding the lack of true and full disclosure by the petitioner were sufficient to dismiss the writ petition.

Conclusion:
The High Court dismissed the writ petition, finding no perversity or infirmity in the Settlement Commission's decision. The procedures followed by the Commission were in accordance with the provisions of the Act, and the petitioner's contentions were not substantiated. Consequently, the connected miscellaneous petitions were also closed.

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