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TMI Blog2019 (4) TMI 865X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 245D(1) of the Act. Relevant portion of which reads as under:- 5.3 In view of the foregoing decisions of the High Courts including the jurisdictional High Court, we are of the considered view that the claim of having made the true and full disclosure of additional incomes and the manner of earning such incomes by the applicants stands fulfilled in the present group of cases, in the background of fulfillment of other technical parameters like payment of tax above the threshold limit, giving of intimation to A.O., payment of filing fees and payment of tax and interest and pendency of assessment proceedings for the years under consideration. 6. Accordingly, we do not find any infirmity in the present application in terms of the provisions of Section 245C(1) of the Act. Accordingly, we hold that the application is maintainable and allow the same to be proceeded with further. 2.2 The settlement applications of the assessees thereafter proceeded before the Settlement Commission. The Department opposed the applications for settlement inter alia on the ground of non disclosure of additional income and lack of true and full disclosures. The Settlement Commission thereupon passed an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Pvt Ltd. Kolkata, yet there is no clinching evidence against the applicants, warranting and treating their applications invalid at this stage. Whatever objections have been raised on behalf of the Department could be examined further in detail later when the matter is carried forward to the next stage. 9.5 It is pertinent at this juncture to refer to certain judicial pronouncements including that of the jurisdictional Bombay High Court on the issue of acceptability and advancement of an application to the next stage. The Hon'ble Bombay High Court in CIT vs Settlement Commission in 375 ITR 483 held that, "We are not concerned in this case with the merits of the disclosures. We find that once the majority holds that the conditions regarding the threshold limit for the quantum of tax for additional income, payment of tax and interest thereupon and pendency of proceedings all are fulfilled then the application was not liable to be rejected on any technical ground." In recent judgment dated 8.12.2015 in Principal CIT (Central) Vs. Settlement Commission (2016) Tax Corp. (DT) 05293 (Gujarat) , the Hon'ble High Court held that the question of fulfillment of all material requirem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the assessees. In the context of lack of true and full disclosure, the Commission observed as under:- "14.2 The thrust of the Department's contention emanate from its view that the three applicants, particularly VPPL and VRIL, have not made a clean breast of their affairs in terms of the fullness and trueness of their respective incomes inasmuch as regarding the business activity of aggregation of different parcels of land for launching Mega City projects at Panvel and at Pen, they have tried to weave a complex story of payments to various intermediaries including corporate entities by cheques, receiving back the cheque amounts in cash and then making further payments by cash to landlords, brokers, middle level aggregators, and also persons who claimed false tenancy rights over certain lands, without adducing any cogent evidences in support of such claims. It is the contention of the Department that a major amount of expenditures shown under various heads like purchase of land from various land owners, service charges paid to two companies of the Valuable group, payment for compensation of relinquishment of rights and brokerage and land development charges, have been exce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the entire patch of land purchased for aggregation and development. ......... 14.6 Taking a macro view of the nature of the business activities and the complex issues involved, and having regard to the disclosure of further additional incomes during the proceedings u/s. 245D(4), we are of the considered view that the applicants have been able to satisfy us about the fullness and trueness of their respective incomes, and have also explained the manner of earning the same. However, this disclosure of additional income of Rs. 18 Crores during the present proceedings will not detract from the true and full nature of the income already disclosed in their respective SOFs, and also would not dilute the manner of earning the same. Hence, we hereby settle the cases of the applicants, accordingly." 3. This order of Settlement Commission, it appears that, the Department has challenged mainly on the ground that the Settlement Commission did not pass an order under Section 245D(3) of the Act though repeatedly requested by the Department. The grounds of challenge contained in the petition revolves around this issue. Under this ground, the Department contends that the Settlement Commission o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) of Section 245D of the Act. He further submitted that the Settlement Commission has minutely examined the material produced by both sides before coming to the conclusion that the assessees had made true and full disclosure. The findings of the Settlement Commission are not even challenged in the petition. In any case, the jurisdiction of this Court to interfere with an order of the Settlement Commission passed on merits is extremely limited. He, therefore, submitted that the petition be dismissed. 6. In order to resolve the controversy, we may peruse the statutory provisions contained in Chapter XIX-A of the Act, which pertains to settlement of cases. As is well known, an assessee desirous of having his case settled may, under subsection (1) to Section 245C, apply for the same with necessary information and details prescribed therein. The procedure to be followed once such application is filed, is prescribed under Section 245D of the Act; relevant portion of which reads as under:- "245D. (1) On receipt of an application under section 245C, the Settlement Commission shall, within seven days from the date of receipt of the application, issue a notice to the applicant requiring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [Principal Commissioner or] Commissioner does not furnish the report within the aforesaid period, the Settlement Commission may proceed to pass an order under sub-section (4) without such report. (4) After examination of the records and the report of the Principal Commissioner or Commissioner, if any, received under- (i) sub-section (2B) or sub-section (3), or (ii) the provisions of sub-section (1) as they stood immediately before their amendment by the Finance Act, 2007, and after giving an opportunity to the applicant and to the [Principal Commissioner or] Commissioner to be heard, either in person or through a representative duly authorised in this behalf, and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission may, in accordance with the provisions of this Act, pass such order as it thinks fit on the matters covered by the application 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. From these provisions, one can broadly notice the procedure where once an application for settlement is filed by an assessee under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Commission after calling for and examination of records, to require the Commissioner to make further enquiry / investigation if the Settlement Commission is of the opinion that any further enquiry or investigation in the matter is necessary. First thing, therefore, that can be discerned is that if the Settlement Commission does not intend to exercise such discretion, it is not necessary for the Settlement Commission to pass a formal order under sub-section (3). The order may be necessary if the Settlement Commission desires to have further enquiry or investigation to be carried out by the Commissioner. The insistence of the Department, therefore, for the Settlement Commission to pass a formal order before proceeding further to the stage of Section 245D(4) of the Act was not a valid one. This, however, would not mean that the Department has no stakes in the matter. As a party to the settlement application, it has a right to oppose the application for settlement made by an assessee. It would be within the Department to urge the Settlement Commission, in a given set of circumstances, to exercise the discretion referred to in sub-section (3) and any exercise of discretion by a quas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on whether an enquiry under Section 245D(3) should be ordered having regard to the circumstances of the case. 12. Coming back to the facts of the case, we may recall, the Department had not filed any application before the Settlement Commission setting out grounds and reasons why in facts of the case, such enquiry or investigation as envisaged under Section 245D(3) of the Act was necessary. The Settlement Commission had scrutinized the settlement application at two stages, while passing the order under Section 245D(1) and thereafter under Section 245D(2C) of the Act. The first enquiry, of course, would be summary in nature, considering the time constraint, as well as absence of participation by the Department. The second stage enquiry under Section 245D(2C) would be more incisive. In both the orders, the Settlement Commission had been prima facie satisfied about the correctness of the disclosure made by the assessees. In both such orders, the Settlement Commission had deferred its final opinion on such issue at the time of passing the final order. We have reproduced the relevant portion of the final order. The Settlement Commission has discussed the rival contentions at considerab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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