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TMI Blog2016 (8) TMI 1004X X X X Extracts X X X X X X X X Extracts X X X X ..... er materials. 3. On 21.01.2014, the firm filed an application before the Settlement Commission for the assessment years 2011-12 to 2013-14 requesting for settlement of the case. On 29.01.2014, the Settlement Commission passed order under Section 245D(1) of the Act allowing the application to proceed further. On 12.03.2014, the Settlement Commission passed a further order under Section 245D(2C) of the Act. On 16.06.2014, the Commissioner of Income Tax filed a report under Rule 9 of the Income Tax Rules, 1962. On 19.01.2015, the petitioner filed a rejoinder to such report. The Settlement Commission thereafter, fixed the hearing of the application on 20.01.2015. 4. On 04.02.2015, the Settlement Commission passed impugned order under Section 245D(4) of the Act. In such order, the Settlement Commission ignored the pleas of the Revenue that the assessee had not disclosed true and full particulars of the income and allowed the request of the assessee for settlement. The Settlement Commission accepted the assessee's declaration of further additional income of Rs. 56 lacs, over and above what was already declared in the application for settlement and permitted the assessee to make pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... writ petition against the order of Settlement Commission is extremely narrow. This Court would not act as an appellate forum. 8. Having thus heard learned counsel for the parties and having perused the documents on record, we may take up the question of disclosures made by the assessee. Chapter XIX-A introduced in the Act w.e.f. 01.04.1976 pertains to settlement of cases. An assessee, at any stage of the case relating to him could make an application for settlement as provided under sub section (1) of Section 245C of the Act containing full and true disclosure of his income which has not been disclosed before the Assessing Officer, the manner in which such income has been derived, the additional amount of income tax payable on such income and such other particulars as may be prescribed. Section 245D lays down the procedure to be followed on receipt of an application under Section 245C. After crossing various stages provided under Section 245D, the Settlement Commission would pass a final order under sub section (4) of Section 245D of the Act which provides that the Settlement Commission, after examination of the records and the report of the Principal Commissioner or Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y Turn over as per books On money estimate d in the SOF Further increase in the on money Total Profit @ 15% before interest & Remune ration (Col 5*15%) Profit before interest + remuner ation as already disclosed Further additional income (6-7) (1) (2) (3) (4) (5) (6) (7) (8) 2011-12 1.31 0.69 0.30 0.20 0.35 0.35 0.35 2012-13 4.27 0.33 0.15 4.75 0.71 0.52 0.19 2013-14 3.74 1.90 0.80 6.44 0.97 0.65 0.32 Total 9.32 2.92 1.25 13.49 2.03 1.47 0.56 12.The Settlement Commission, in the impugned order, noted that keeping in view of the submissions made by the department as well as the discussions made in the course of hearing, the representative of the assessee had come forward with the further offer to bring quietus to the issue in the spirit of settlement. The assessee had thus, voluntarily admitted an additional income of Rs. 56 lacs and requested for grant of immunity from penalty and prosecution as the amounts have been surrendered in the spirit of settlement. 13. The Settlement Commission, in the impugned order, accepted such an offer observing that the Commission would agree with the representative of the applicant's vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to tax. This was done by disclosing a further turnover of on-money receipt by an amount of Rs. 1.25 cores and increase in the profit rate to 15%. Even if we were to discard the fair rate of return on the onmoney receipts, the fact remains that the assessee made a further disclosure of on-money receipt of Rs. 1.25 crores at a belated stage. This effectively resulted into a further income of Rs. 56 lacs being disclosed by the assessee over and above the initial disclosure of Rs. 34 lacs made at the time of filing of the application for settlement. This is not a case where, during the course of the settlement, to put an end to the dispute, the assessee made minor adjustments in the disclosures already made. When we compare the initial disclosure of income with the further disclosures, it would reveal that the further declaration was more than 150% of the initial disclosure. 15.One of the prime requirements for settlement is of filing an application under sub section (1) of Section 245C of the Act by the assessee which would contain a full and true disclosure of his income which has not been disclosed before and the manner, in which, such income has been derived. If the assessee fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court for fresh consideration. Nevertheless, all points raised by the parties, including the plea of the revenue that the application filed by the assessee before the Settlement Commission was not maintainable as the assessee had not made a full and true disclosure of their undisclosed income were kept open. The High Court addressed itself on the said issue and found that the assessee had not made a full and true disclosure of their income while making the application under Section 245C(1) of the Act, yet did not find it proper to set aside the proceedings on that ground. Having recorded the said adverse finding on the very basic requirement of a valid application under Section 245C(1) of the Act, the High Court's opinion that it would not be proper to set aside the proceedings is clearly erroneous. The High Court appears to have not appreciated the object and scope of the scheme of settlement under Chapter XIXA of the Act. At this juncture, it would be appropriate to notice a few illuminating observations in W T Ramsay Ltd. Vs. Inland Revenue Commissioners10, which was considered to be a turning point in the interpretation of tax laws in England and was a significant departure fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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