Proceedings of Settlement Commission. - Income Tax - 1222/CBDT

INSTRUCTION NO. 1222/CBDT Dated : December 12, 1978 Section(s) Referred: 245D(1) , 22D of Wealth Tax Act Statute: Income - Tax Act, 1961 As you are aware, a Commissioner of Income-tax has been posted to represent the Department's view-point in the course of proceedings before the Income-tax/Wealth-tax Settlement Commission. Hearings are being given by the Commission under sub-sections(1) and (4) of sec. 245D of the I.T.Act/sec.22D of the Wealth-tax Act and normally notices of hearing are given to the Commissioners 15 days in advance. On receipt of such a notice, the Commissioner's office file alongwith any advice the Commissioner may like to give should be sent to the representing CIT so as to reach him at least 7 days before the date of hearing to enable him to make himself familiar with the facts of the case. The assessing ITO or the IAC, as the case may be should discuss the case with the representing CIT with reference to the assessment records the day before the hearing and should be invariably present at the time of hearing alongwith the complete case records and assist the latter to represent the case adequately. 2. An application made to the Settlement Commission cannot be proceeded with if the Commissioner objects on the ground that concealment of particulars of income on the part of applicant or perpetration of fraud by him for evading any tax or other sum chargeable or imposable under the Act, has been established or is likely to be established by any income-tax authority, in relation to the case. Instances have come to the Board's notice where the Commissioners are found not to have exercised their discretion on due evaluation of the available evidence. In a recent case, an objection was made simply because the Valuation Officer's estimate of the cost of the property was higher than that disclosed by the assessee. In this connection, the Board in their instruction No.968 [F.No.282/6/76-IT(INV)] dated 6th July 1976 have clarified the correct import and scope of the expression "concealment... or perpetration of fraud.... has been established or is likely to be established ". It has been pointed out therein that in judging whether a tax fraud or concealment of income is 'established' or is 'likely to be established', a realistic view has to be taken in the light of the law on the subject, the evidence in the Department's possession and the past experience of other cases. It was desired that except in cases where adequate justification exists, objections should not be raised under the second proviso to sub-section (1) of sec.245D(1)/22D(1) in order that the objectives underlying the provision in setting up the Settlement Commission are fully achieved. If, in a report under the second proviso to sec.245D(1)/22D(1), an objection is being made to the Commission proceeding with the application, the nature of the concealment or perpetration of fraud established or likely to be established should be clearly indicated without discussing the evidence. In the boards instruction No.1077 dated 16th July 1977 the Commissioners have been advised to offer an opportunity of being heard to the applicant in every case in which they are inclined to object to the admission of the application by the Settlement Commission. It has been further advised therein that if after the hearing, the commissioner is, of the view that the admission of the application should be objected to, he should record his reasons for his objection which need, not however, be communicated to the applicant. The reasons should be recorded in sufficient detail so that on going through them, the Representing CIT may normally be able to put forward the Department's case in the hearing before the Settlement Commission without further briefing. 3. The Settlement Commission gets exclusive jurisdiction to exercise the powers and perform the functions of an IT/WT authority in relation to the case only after the application made u/s.245C/22C has been allowed to be proceeded with. Therefore, till the date the Commission passes an order u/s.245D(1)/22D(1) allowing the case to be proceeded with, the assessing officer has to deal with the case and complete the relevant assessment or other proceedings that may be getting time barred during this period. Later, in the event of the application being allowed to be proceeded with, the Commission can modify such orders to the extent it considers necessary. 4. U/s.245H(1)/22H(1) it is open to the Settlement Commission to grant immunity, interalia, from prosecution for any offence under the I.T.Act/Wealth-tax Act or the Indian Penal Code or under any other Central Act for the time being in force with respect to the case covered by the Settlement. Instances are, therefore, likely to arise where an applicant may seek immunity from prosecution under one or more of the other Central Acts eg. Customs, Central Excise, Gold Control, FERA, and SAFEM (FOPA) etc. In such an event it will be appropriate for the commissioners to suggest to the settlement commission to obtain the views of the appropriate authority under the relevant enactment. 5. Both in the interest of the assessee and the Revenue, it is desirable to avoid delay in processing applications made to the Settlement Commission. Reports called for by the Commission should, therefore, be made expeditiously. If due to some exceptional circumstances, a report cannot be made within the time allowed, the Commission should be informed well in advance giving the reasons for delay and requesting for extension of time that may be required.