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TMI Blog2021 (4) TMI 1045X X X X Extracts X X X X X X X X Extracts X X X X ..... er must be provided with an opportunity to re-adjudicate the issues before the Settlement Commission and to clarify the facts, enabling the Settlement Commission to decide the issues afresh. 3. The learned Senior Standing counsel appearing on behalf of the respondents/Department made a submission that it is a pre-condition that an assessee filing an application under Section 245(C) must come with full and true disclosure and with clean hands. Once it is established that true and full disclosure are not made and the facts are controverted, then the application itself is to be rejected in limini, in view of the pre-requisite condition contemplated under Section 245(C) of the Income Tax Act. 4. The complete facts and circumstances as narrated in the writ petitions become unnecessary, in view of the fact that an assessee filing an application under Section 245(C) of the Income Tax Act must establish at the first instance that true and full disclosure of income is made before the Settlement Commission. In the event of controversy or discrepancy in the matter of true and full disclosure of income, then the Settlement Commission is empowered to reject the application in limini. 5. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, regarding the disclosure made in the SOF, the applicant has failed to give the details of manner in which the income was earned. The learned AR pleaded ignorance of the manner of earning the income on the ground that Late Dr.P.Anand alone could give these details. Hence, the manner in which the income earned is also stands unexplained. 7.4 As the disclosures is not full and true and the manner in which the income derived is not explained, the application is not maintainable. Reliance is placed in the cases of CIT Vs ITSC 310 ITR 10, ACE Investments [2003] 264 ITR 571 (Mad) and Ajmeera Housing [2010] 193 TAXMAN 193(SC). 7.5 Thus, on the grounds that the disclosure is not full and true and that there is deficiency in explaining the facts gathered by the Department from UAE and the manner in which the income earned, the terms of settlement are not provided for. The application is thus rejected. Hence the proceedings before the Settlement Commission shall abate on the specified date as defined in Explanation (ca) to subsection( 1) of Section 245HA of the I.T.Act. The Department may take further course of action in accordance with law." [TN/CN/51/2016-17/2-IT] 7.1 We have co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e disclosure made in the SOF, the applicant has failed to give the details of manner in which the income was earned. The learned AR pleaded ignorance of the manner of earning the income on the ground that Late Dr.P.Anand alone could give these details. 7.4 Accordingly, we find that disclosures is not full and true and the manner in which the income derived was not explained. Hence, the application is not maintainable. Reliance is placed in the cases of CIT Vs ITSC 310 ITR 10, ACE Investments [2003] 264 ITR 571 (Mad) and Ajmeera Housing [2010] 193 TAXMAN 193(SC). 7.5 Thus, on the grounds that the disclosure is not full and true and that there is deficiency in explaining the facts gathered by the Department from UAE and the manner in which the income earned, the terms of settlement are not provided for. The settlement application is thus rejected. Hence the proceedings before the Settlement Commission shall abate on the specified date as defined in Explanation (ca) to sub-section(1) of Section 245HA of the I.T.Act. The Department may take further course of action in accordance with law." TN/CN51/2016-17/44-IT 6.1 When the application of the present applicant was allowed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n with true and full disclosure and such a finding cannot be interfered with, in view of the fact that the scope of Section 245(C) of the Income Tax Act is limited and only in the event of approaching the Settlement Commission with clean hands, the settlement can be arrived and not otherwise. 8. Relying on the categorical findings of the Settlement Commission, the learned Senior Standing counsel appearing on behalf of the respondents cited the judgment of the High Court of Madras in the case of S.V.Shankar Vs. Settlement Commission, reported in [2007] 292 ITR 633 (Madras). The High Court made the following observations: "6. It may be noted that the jurisdiction of this court under article 226 of the Constitution of India is not that of the appellate court. The provision for settlement under Chapter XIX-A is in the nature of a statutory arbitration to which a person may submit himself voluntarily. Hence, the power to review that may be exercised under article 226 of the Constitution of India could only be in cases where there are mistakes apparent on the face of the record, but may not be exercised on the ground that the decision is erroneous on merits. The decisions of the Supre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he final order is passed. On the other hand, if the Commission finds, at any stage of the proceedings under Section 245D that the applicant has not come before the Commission with clean hands and by disclosing true and full income, it is empowered to reject the application, thereby driving the applicant to face the regular assessment proceedings. The applicant cannot, as a matter of right, seek the Commission to carry over the application from one stage to another, notwithstanding the fact as to whether true and full disclosure of income was made or not. In other words, the applicant who approaches the Commission, bypassing the regular assessment proceedings, must provide material facts without any suppression and establish that the disclosure of income in the application is true and full in its strict sense. Otherwise, the applicant cannot find fault with the Commission in showing him the door to face the regular assessment proceedings. The term "true and full disclosure" does not mean that whatever the amount shown by the applicant, which according 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing him to explain about the statements and the documents furnished to him. Such an opportunity of one day provided is insufficient to verify the documents as well as the statements and therefore, further opportunity is to be given to the petitioner, enabling him to clarify certain factual aspects with reference to the report of the Commissioner. 14. The learned counsel for the petitioner is of an opinion that the Settlement Commission made an erroneous finding regarding the facts and circumstances and regarding the involvement of the writ petitioner along with his father, who was maintaining a Bank account in UAE. In this context, the learned counsel for the petitioner solicited the attention of this Court regarding the procedures as contemplated under Section 245 (D) of the Income Tax Act. Relying on the procedures, the learned counsel for the petitioner is of an opinion that an opportunity is mandatory and such a valuable opportunity is to be granted in full, enabling the assessee to clarify or explain such factual matrix. The applications submitted by the petitioner were not made invalid under Section 245(D)(2C) of the Act. While so, under Sub Clause 4 to Section 245(D), an op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , then the Settlement Commission should follow the procedures as contemplated under Section 245(D). Under Section 245(D), various stages are provided. At any stage, if the Settlement Commission formed an opinion that there was no full and true disclosure with reference to the facts narrated in the application, then the Settlement Commission is empowered to reject the application filed under Section 245(C). Thus, the procedural aspects enumerated under Section 245(D) is to conduct the enquiry for the purpose of settlement and such a procedural aspects are to be read along with the spirit of the provision as contemplated under Section 245(C) of the Act. 17. Conjoint reading of these provisions would reveal that the report of the Commissioner of Income Tax, opportunity for the petitioner to convert the materials and all such aspects are provided, enabling the petitioner to establish his cases with reference to the applications filed and not in respect of the other income or other materials. 18. It is to be understood that the procedures as contemplated under Section 245(D) cannot travel beyond the scope of the applications filed under Section 245(C)of the Income Tax Act. If Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;s income-tax case, there should be disclosure of income not earlier disclosed before the Assessing Officer. If the Assessing Officer or the income-tax authority has already discovered it and either has gathered the material to establish the particulars of such income or fraud fully or is at a stage of investigation/enquiries, then the disclosure cannot be said to be voluntary or in good faith and the assessee cannot be allowed to take advantage of the comparatively easy course of settlement. The scope of Section 245C of the Income Tax Act, 1961 was also noticed by this Court in Ace Investments Ltd. vs. Settlement Commission, (2003) 264 I.T.R. 571 (Mad), wherein a learned single Judge of this Court held that full and true disclosure of income by the assessee is a condition precedent for settlement of cases and for grant of immunity from penalty and prosecution. Sections 245C and 245H of the Income Tax Act, 1961 contemplate full and true disclosure by the applicant of income and the manner in which such income has been derived. When once it is held that an application filed for settlement of cases is not maintainable on the ground that the applicant has not made full and true disclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so relied on by the Settlement Commission to arrive a decision regarding true and full disclosure by the petitioner. Such a finding of fact need not be interfered with by the High Court under Article 226 of the Constitution of India, unless such facts are found to be error apparent. When there was an adjudication of facts and the Settlement Commission arrived a finding that factually the petitioner has not established that he filed applications under Section 245(C) with true and full disclosure, then the High Court is expected to exercise restraint in entertaining a writ proceedings under Article 226 of the Constitution of India. 22. In the present cases, the petitioner could not able to establish that he approached the Settlement Commission with clean hands and the element of true and full disclosure as contemplated under Section 245(C) had not been established before the Settlement Commission and therefore, there is no perversity or infirmity as such in respect of the findings arrived. 23. It is brought to the notice of this Court that the Settlement Commission has already been abolished with effect from 01.02.2021. This being the factum established, the writ petitions fail and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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