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TMI Blog2014 (5) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... Settlement Commission are final and conclusive as to matters stated therein - The “matters” necessarily could comprehend disputed questions, items or heads of income, disallowance, etc. or variants of it, but always with reference to a particular assessment year - the Commission exercises power in respect of income which was not disclosed before the authorities in any proceeding, but are disclosed in the petition u/s 245C. It is not that any amount of undisclosed income can be brought to the notice of the Commission in the petition - the requirement is that there must be an income disclosed in a return furnished and undisclosed income disclosed to the Commission by a petition u/s 245C - It cannot be said that there has been a true and fair declaration of income which is the pre- requisite for settlement by the Commission - If an order is obtained by fraud or misrepresentation of facts, it cannot be said that there was true and fair disclosure - The declaration contemplated in Section 245C is in the nature of voluntary disclosure of concealed income, it must be true and fair disclosure - Voluntary disclosure and making a full and true disclosure of the income are necessary precon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reassess the petitioner s income, inter alia, for assessment years 2004-05 to 2009- 10. Responding to notice dated 26.12.2011 issued under Section 153C of the Act, the petitioner objected to assessment/ reassessment of income for assessment years 2004-05 to 2006-07 under the said provision since the assessments had already been concluded by the order of the Settlement Commission dated 17.03.2008. 5. This Court by judgment dated 13.07.2012 allowed WP(C) No.7975/2011 and quashed the notice for reassessment under Section 147 of the Act (dated 30.6.2010) for the AY 2006-07. 6. The Revenue rejected the objections of the petitioner preferred against the notice under Section 153C. The petitioner thereafter filed detailed objections to notice dated 26.12.2011 issued under Section 153C of the Act, inter alia, objecting to assessment/ reassessment of income for assessment years 2004-05 to 2006-07, particularly in the light of the judgment of this Court dated 13.07.2012. The Revenue issued the impugned order dismissing the said objections. During the course of proceedings under Section 153C, the Revenue also issued notices under Section 142(1) inter alia calling for detailed information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of fraud and misrepresentation. Under Section 245F(1), in addition to the powers conferred on the Settlement Commission under Chapter XIX-A, it shall also have all the powers which are vested in the incometax authority under the Act. In this connection, however, we need to keep in mind the difference between procedure for assessment under Chapter XIV and procedure for settlement under Chapter XIX-A .. (refer page 500). 10. The Revenue contends that the application preferred before the Settlement Commission and an order related to five issues. The search carried out in the case of Shri Modi was subsequent to its order, i.e., on 19.6.2009. The materials were not part of the settlement and more importantly revealed fresh non-disclosure of facts concerning allotment and transfer of 1.25 lakh sq.ft. area by the petitioner to Shri Modi at Rs.3500/- per sq.ft. Furthermore, an agreement dated 03.10.2006 between the petitioner and one Fantastic Buildcon (P) Ltd. for sale of a hotel project and another letter of 19.3.2009 from the petitioner to the said Fantastic Buildcon (P) Ltd. for payment of balance amount were seized. These pointed to undisclosed income, which cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m in the order of the ITSC. It is therefore submitted that the issue relating to deduction under Section 80IB(10) is not a matter covered by the order of the ITSC, and can be reopened by the Assessing Officer. 13. We are afraid that the submission of the Revenue overlooks the fact that in the return the assessee had claimed deduction of Rs.78,99,00,509/- u/s. 80IB (10) and it was only after claiming such deduction that the net taxable income was declared at Rs.89,20,76,630/-. The Assessing Officer issued notices under Section 143(2) and 142(1) on 12.07.2007 but even before the questionnaire was issued the petitioner had approached the Settlement Commission by an application filed on 31.05.2007. Under Section 245F(1), the ITSC, in addition to the powers conferred on it under Chapter XIX-A, shall have all the powers which are vested in an income-tax authority under the Act. By virtue of the provisions of Section 245F (2) once the application for settlement was filed and an order was passed allowing the application to be proceeded with, it was the ITSC which has the exclusive jurisdiction to exercise the powers and perform the functions of an income tax authority under the Act rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding counsel relied upon before us are observations of the Court clarifying the earlier observations made in the case of Express Newspapers Ltd. (supra). The gist and purport of the observations made by the Supreme Court in the case of Damani Brothers (supra), however, is not what the learned standing counsel would like us to accept. These observations of the Supreme Court in Damani Brothers (supra) do not at all support his plea that the matter relating to the deduction under Section 80IB (10) could not have been before the ITSC. The observations of the Supreme Court in Damani Brothers (supra) clarifying the observations of the Court in Express Newspapers Ltd. (supra) only mean that the ITSC does not deal with the disclosed income of the assessee even before it decides to proceed with the case by passing an order under Section 245D (1). It does not however imply that once an order is passed under the aforesaid provision, the ITSC does not deal with both the disclosed and undisclosed incomes of the assessee. On the contrary, it would inevitably follow that once a settlement application is allowed to be proceeded with, the entire case stands transferred to the ITSC and thereafter i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20. The issue can also be viewed from another angle. Barring the exception of the provisions relating to appeal and revision, the Act does not contemplate or provide for disturbing the finality of an order or proceeding passed or completed by an income-tax authority, by any order or proceeding passed or initiated by a different income-tax authority. An assessment order passed by an Assessing Officer can be rectified or amended under Section 154 or Section 155 or reopened under Section148 only by him, and by no other income-tax authority. Similarly, an assessment by way of settlement of a case, which is made by the ITSC, can be reopened only by the ITSC and that too only in certain circumstances. Applying this general principle that runs through the Act, an assessment by way of a settlement order passed by the ITSC cannot be reopened by a different authority, viz., the Assessing Officer. The fact that the ITSC has not been designated as an income-tax authority under Section 116 of the Act makes the position a fortiori . Section 147 of the Act does not employ language that permits him to do so, nor are the powers and orders of the ITSC made subject to the provisions of Section 147 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the amount which remains unpaid or allow payment thereof by installments if the assessee furnishes adequate security for the payment thereof.] 74[(2C) Where the additional amount of income-tax is not paid within the time specified under sub-section (2A), then, whether or not the Settlement Commission has extended the time for payment of the amount which remains unpaid or has allowed payment thereof by installments under subsection (2B), the assessee shall be liable to pay simple interest at fifteen per cent per annum on the amount remaining unpaid from the date of expiry of the period of thirty-five days referred to in sub-section (2A)]. 74[(2D) Where the additional amount of income-tax referred to in sub-section (2A) is not paid by the assessee within the time specified under that sub-section or extended under sub-section (2B), as the case may be, the Settlement Commission may direct that the amount of income-tax remaining unpaid, together with any interest payable thereon under sub-section (2C), be recovered and any penalty for default in making payment of such additional amount may be imposed and recovered, in accordance with the provisions of Chapter XVII, by the 75 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of facts. 81[(6A) Where any tax payable in pursuance of an order under sub-section (4) is not paid by the assessee within thirty-five days of the receipt of a copy of the order by him, then, whether or not the Settlement Commission has extended the time for payment of such tax or has allowed payment thereof by installments, the assessee shall be liable to pay simple interest at fifteen per cent per annum on the amount remaining unpaid from the date of expiry of the period of thirty-five days aforesaid.] (7) Where a settlement becomes void as provided under sub-section (6), the proceedings with respect to the matters covered by the settlement shall be deemed to have been revived from the stage at which the application was allowed to be proceeded with by the Settlement Commission and the income-tax authority concerned, may, notwithstanding anything contained in any other provision of this Act, complete such proceedings at any time before the expiry of two years from the end of the financial year in which the settlement became void. 82[(8) For the removal of doubts, it is hereby declared that nothing contained in section 153 shall apply to any order passed under sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. The fallacy in the Revenue s argument is that it overlooks the remedy available for the Revenue, i.e to approach the Settlement Commission under Section 245D(6) contending that its previous order of 17.3.2008 ought to be reopened because the non-disclosure amounted to a fraud or misrepresentation. The observations in Brij Lal (supra) cited earlier are extremely pertinent in this context. Likewise, in Express Newspapers Ltd. (supra), the Supreme Court had earlier stated as follows : . It is equally evident that once an application made under Section 245C is admitted for consideration (after giving notice to and considering the report of the Commissioner of Income Tax as provided by Section 245D) the Commission shall have to withdraw the case relating to that assessment year (or years, as the case may be) from the assessing/appellate/revising authority and deal with the case, as a whole, by itself. In other words, the proceedings before the Commission are not confined to the income disclosed before it alone. Once the application is allowed to be proceeded with by the Commission, the proceedings pending before any authority under the Act relating to that assessment year hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue had voiced apprehensions that the Commission might well be of the opinion that misrepresentation has to fall within the four corners of the meaning of such expression under the Contract Act. This Court sees no rationale for such apprehension. Misrepresentation has not been defined under the Income Tax Act; importing the definition of misrepresentation or for that matter fraud from the Contract Act in the circumstances would not be appropriate. As one understands, the term misrepresentation would mean failure to disclose material or facts which are germane and relevant, or suppressing facts and materials which are germane and relevant or holding out a falsehood which gives the rise to an assumption that what is so stated or represented is true or correct. These are only illustrative and by no means conclusive as to what can be misrepresentation. The facts of each case would throw light on whether the individual or person concerned was guilty of misrepresentation having regard to the totality of the circumstances, given the nature of duty cast on him or her. This interpretation is in consonance with the ruling of the Supreme Court in Commissioner of Income Tax v Om Pra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial contained in the report and having regard to the nature and circumstances of the case or complexity of the investigation involved therein, it can either reject the application or allow the application to be proceeded with as provided in Section 245D(1). It has to be noted that the Commission exercises power in respect of income which was not disclosed before the authorities in any proceeding, but are disclosed in the petition under Section 245C. It is not that any amount of undisclosed income can be brought to the notice of the Commission in the said petition. Commission exercises jurisdiction if the additional amount of tax on such undisclosed income is more than a particular figure (which at different points of time exceeded rupees fifty thousand or rupees one hundred thousand, as the case may be). The assessee must have in addition furnished the return of income which he is or was required to furnish under any of the provisions of the Act. In essence the requirement is that there must be an income disclosed in a return furnished and undisclosed income disclosed to the Commission by a petition under Section 245C. There is a purpose why the legislature has prescribed the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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