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TMI Blog2018 (9) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... t matter of the application already filed under section 245C, which was allowed to be proceeded with under sub-section (1) of Section 245D. Section 245K(2) is not imposing total bar on subsequent application, as apprehended by the petitioner in this case. On the other hand, such total bar is applicable only in respect of cases falling under Section 245K(1). As already stated supra, the bar under Section 245K(2) is against an application in respect of the same assessment year, so long as the applicant has not suffered any such disqualifications as stated u/s 245K(1). Thus, find that the apprehension of the petitioner about the anticipated total bar in approaching the commission in future is not well- founded. Settlement Commission, impugned in this writ petition, does not warrant any interference, more particularly, by exercising the discretionary jurisdiction of this Court under Article 226 of the Constitution of India. - W.P.No.14404 of 2018, W.M.P.No.17004 & 17005 of 2018 - - - Dated:- 24-8-2018 - K. Ravichandrabaabu, J. For the Petitioner : Mr.R.Sivaraman For the Respondents : Mr.A.P.Srinivas, Sr.Standing Counsel for R2 ORDER The petitioner is an ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned assessment years 2010-11 to 2016-17 covered in their settlement application. The first respondent, by order dated 02.02.2018 made under section 245D(1) of the said Act, allowed the Settlement Application to be proceeded with further. The 1st respondent, in that proceedings held that there was no material on record to prove that full and true disclosure had not been made by the applicant in the Settlement Application. In pursuant to the said order dated 02.02.2018 and on notice, the Principal Commissioner of Income Tax, filed a report under Section 245D(2B) of the said Act on 05.02.2018. It was the contention of the Department that the undisclosed amount as per the impounded CPU and pen drives is ₹ 9.29 crores whereas the petitioner has only offered additional income of ₹ 32,00,000/- before the 1st respondent; that gold jewelery weighing 1535.6 grams with value of ₹ 37,76,097/- was not explained satisfactorily and therefore, the same was treated as acquired from unaccounted sources and that rental income of ₹ 25,000/- per month from Ernavur property was an undisclosed income from house property. A copy of the said report was furnished to the petitioner. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filing of application before the first respondent, Settlement Commission under Section 245C of the said Act. The Settlement Commission rejected the application on 09.01.2018 under Section 245D(1) on the reason that the Settlement Application in the case of specified person viz., S.Abdul Samad was rejected due to deficiency in payment of tax and interest in his application. Subsequently, by another letter dated 22.01.2018, the assessee filed Form No.34BA once again intimating the filing of application before the first respondent Commission under section 245C dated 22.01.2018. Vide order dated 02.02.2018, the 1st respondent Commission allowed the application to be proceeded with. Report under Section 245D(2B) was called for. The said report was submitted on 07.03.2018 with a request to reject the application of the assessee on the reason that he has not made a true and full disclosure of his undisclosed income. The 1st respondent, thus, rejected the assessee's application by the impugned order dated 21.03.2018. Subsequently, a show cause notice dated 04.05.2018 was issued to the assessee. Thereafter, the present writ petition is filed before this Court. The 1st respondent Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner is full and true disclosure. The 1st respondent had merely relied upon the report of the Principal Commissioner of Income Tax and not taken into consideration the submission made by the petitioner that the impounded material is only a rough or a suspense, which is to be cleared and does not intimate the undisclosed income. The 1st respondent ought to have directed further enquiry or an investigation in respect of the submissions made by the petitioner. The 1st respondent rejected the application under section 245D(2C) without having regard to the provisions of Section 245K(2). When the 1st respondent finds that the petitioner had not fully and truly disclosed the materials, it ought to have rejected the Settlement Application, at the stage of passing an order under Section 245D(1) itself. In view of a specific bar under Section 245K(2), the petitioner is totally prevented in making any further application of any kind on any issue in future before the Settlement Commission and thus, it affects and prejudice the petitioner's right in approaching the Settlement Commission once for all. 5. In support of his contention, the learned counsel relied on the decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution of India. 9. Before answering the above question, it is better to understand the Scheme of various provisions made for Settlement of Cases under Income Tax Act, 1961. Chapter XIX-A of Income Tax, 1961 deals with settlement of cases. Section 245C deals with Application to be filed for settlement of cases before the Settlement Commission. Section 245C(1) contemplates that an assessee may make an application at any stage of the case relating to him containing a 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, to the Settlement Commission to have the case settled. Section 245D deals with the various procedures to be followed on receipt of an application under section 245C. Section 245D(1) stipulates issuance of notice by the Commission to the applicant, within seven days from the date of receipt of such application calling upon him to explain as to why the said application has to be allowed to proceed further. It is further contemplated therein that the Settlement Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of settlement including any demand by way of tax penalty or interest, the manner in which any sum due under the settlement shall be paid and all other matters to make the settlement effective. Section 245(I) stipulates that every order of settlement passed under Section 245D(4) shall be conclusive as to the matters stated therein and no matter covered by such order shall be reopened in any proceedings under the said Act or under any other law for the time being in force. Section 245K deals with bar of subsequent application for Settlement. Under sub-Section 2 of Section 245K , a person is not entitled to make application under Section 245C subsequently, if his earlier application filed under Section 245C has been allowed to be proceeded with under sub-section (1) of Section 245D. Likewise, an application under Section 245C(1) cannot be withdrawn by the applicant as well, as prohibited under Section 245C(3). 12. The relevant provisions under Section 245D (1), (2C), (3), (4) (6) are extracted hereunder. (1) On receipt of an application under section 245C, the Settlement Commission shall, within seven days from the dte of receipt of the application, issue a notice to the appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and any other matter relating to the case not covered by the application, but referred to in the report of the Principal Commissioner or Commissioner. (6) Every order passed under sub-section (4) shall provide for the terms of settlement including any demand by way of tax penalty or interest, the manner in which any sum due under the settlement shall be paid and all other matters to make the settlement effective and shall also provide that the settlement shall be void if it is subsequently found by the Settlement Commission that it has been obtained by fraud or misrepresentation of facts. 13. Keeping these statutory position of law in mind regarding Settlement of Cases before the Settlement Commission, let me now consider the merits of the present case. 14. The facts and circumstances which warranted the petitioner to approach the Settlement Commission, have been narrated in detail supra and therefore, I am not reiterating the same once again hereunder. The petitioner earlier filed Settlement Application on 28.12.2017 and the same was rejected on 09.01.2018 itself on the reason that the requirements of section 245(C) were not satisfied i.e., the application of the specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. Perusal of the above provisions would show that an application, though allowed to be proceeded with under Section 245D(1), can still be rejected under Section 245D(2C), after perusal of the report filed by the Principal Commissioner or Commissioner of Income tax. It is to be noted that once the Commission has chosen to proceed further with the application by passing an order under section 245D(1), a report is called for by the Commission from the Principal Commissioner or Commissioner, as the case may be, under section 245D(2B). Thus, it is apparent that only when a report is filed under Section 245D(2B), the Commission will be in a position to find out as to whether the prima facie view taken by the Commission under section 245D(1), for allowing the application to be proceeded with further solely based on the details furnished by the applicant, is right or wrong. In other words, the Commission is entitled to change its view, based on the report submitted by the Principal Commissioner or Commissioner with regard to the full and true disclosure of the material details furnished in the Settlement Application. Therefore, the report filed under Section 245D(2B) is a crucial docum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion with regard to the deficiency in the disclosure of contents in pen drive/ hard disc which contained accurate figures, would certainly show that the Commission is fully justified in holding against the petitioner regarding full and true disclosure. Hence, the petitioner, undoubtedly, is not entitled to seek for carrying over the proceedings to the next stage under section 245D(2D)(3), as a matter of right. Evidently, the petitioner has failed to cross the stage of Section 245(2C) successfully. Therefore, there is no question of asking the Commission to proceed further under section 245 D(2D)(3). As already stated supra, when the Commission is fully satisfied that there is suppression of materials and that there is no valid and true disclosure of income, even while hearing the matter at the stage of 245D(2C), it has ample power to reject the application at that stage itself. Therefore, the petitioner is not entitled to question such order, merely because such rejection would bar the petitioner from approaching the Commission as contemplated under Section 245K(2). Needless to say that settlement procedures under Chapter XIX-A of the Income Tax Act are intended only for such of tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccording to him is undisclosed income, is in fact, the true and full disclosure. It may be the disclosure of undisclosed income in the view of the applicant. But whether such disclosure is true and full , in its strict sense, is a question that should fetch an answer in favour of the petitioner/applicant at all stages even after hearing the revenue. In other words, such disclosure should not give room for deduction of concealed fact with regard to any other income either after getting a report from the Revenue or conducting an investigation or enquiry at the instance of the Commission. 17. Learned counsel for the petitioner relied on the decision of the Delhi High Court reported in (2013) 35 taxman.com 56 (Commissioner of Income-tax vs. Income Tax Settlement Commission). A careful perusal of the said decision, more particularly, the facts and circumstances referred to therein, would disclose that the said decision is not applicable to the present facts and circumstances. In that case, the Settlement Commission passed an order under Section 245D(2C) by holding that the Settlement Applications are not invalid and therefore, they were allowed to be proceeded with, since the Settle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejection order passed under Section 245D(2C). In other words, it is contended that Section 245K(2) bars all subsequent applications for settlement, if an application made under Section 245C has been allowed to be proceeded with under Section 245D(1). Therefore, it is contended that the Commission, instead of rejecting the application under Section 245D(2C), ought to have proceeded further to order further enquiry or investigation in the matter so as to arrive at a final conclusion on the issue of full and true disclosure. 19. I have given my careful consideration to the above said submission. I have also perused the relevant provision made under Section 245K(1) (2) which read as follows: 245K. (1) Where- (i) an order of settlement passed under sub-section (4) of section 245D provides for the imposition of a penalty on the person who made the application under section 245C for settlement, on the ground of concealment of particulars of his income; or (ii) after the passing of an order of settlement under the said sub-section (4) in relation to a case, such person is convicted of any offence under Chapter XXII in relation to that case; or (iii) the case of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... back to the Assessing Officer by the Commission on or before the 1st day of June,2002. In respect of those three cases which form first category under Section 245K, neither the applicant nor any person relating to such person shall be entitled to apply further for settlement under section 245C in relation to any other matter . Therefore, it is evident that a total bar or prohibition is imposed against the said person or any person related to such person in making any application in future for settlement under section 245C not only in relation to the subject matter case but also in respect of any other matter. 21. On the other hand, the bar imposed under sub-clause 2 of Section 245K stands on a different footing. Under this category, a person or related person is barred from making an application under Section 245C, if his earlier application filed under the said provision has been allowed to be proceeded with under section 245D(1). Here, the phrase any other matter as contemplated under section 245K(1) is conspicuously absent or omitted. Thus, the bar stipulated under section 245K(2) is to be read along with Section 245C in order to find out whether such bar is against another a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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