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TMI Blog2021 (4) TMI 1235X X X X Extracts X X X X X X X X Extracts X X X X ..... it noticed that the first respondent has not disclosed true and full facts which was not done. Thus, the Settlement Commission has committed an error apparent and allowed the application filed by the first respondent which is in violation of the provisions of the Act. Thus, the order impugned passed by the second respondent in proceedings dated 14.09.2015 is quashed and the writ petition stands allowed - W.P.No.10532 of 2017 - - - Dated:- 28-4-2021 - Honourable Mr. Justice S.M.Subramaniam For the Petitioner : Mr.A.P.Srinivasan Senior Standing Counsel For the Respondent : Mr.R.Sivaraman for R1, No-appearance for R2 ORDER The order passed by the Income Tax Settlement Commission Additional Bench in proceeding dated 14.09.2015 is sought to be quashed in the present writ petition. 2. The petitioner is the Principal Commissioner of Income Tax, Central-2, Chennai. 3. The facts in nutshell as narrated in the affidavit filed in support of the writ petition are that the petitioner/Income Tax Department conducted search and seizure operation under Section 132(4) of the Income Tax Act on 10.01.2013 at the registered office premises of the 1st respondent and residen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Moreover, the immunity from prosecution and penalty u/s 245H is available only to the person who has made full and true disclosure but as stated earlier the 1st respondent failed to disclose fully and truly. Accordingly, the petitioner prayed for quasing of the impugned order dated 14.09.2015. 7. The first respondent disputed the contention raised by the petitioner by stating that the writ petition itself is not maintainable. It is an abuse of process of law. Regarding the orders passed by the Settlement Commission under Section 245D of the Income Tax Act, the scope of writ petition under Article 226 of the Constitution of India is limited and the High Court can interfere only in exceptional circumstances. High Court cannot substitute its views in the place of the second respondent/Settlement Commission particularly on the question of true and full disclosure and complexities of the case. It is contended that the interference can only be made if there is fault in the decision making process and not with the decision itself. Thus, the High Court cannot interfere with the conclusion arrived by the Settlement Commission save any procedural irregularity cited by the petitioner. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pak Kumar Agarwal [2017] 86 taxmann.com 3(Bombay) is relied, wherein it is held that an assessment under Section 153A of the Act can be made only on basis of incriminating material found in search u/s 132 of the Act and only income related to incriminating documents found during search can be considered in assessment. In the present case, no incriminating material was found with respect to disallowance under Section 14A of the Act. The petitioner has further elaborated the factual details with reference to disallowance. At the outset, it is contended that the orders passed by the second respondent/Settlement Commission is a consider and speaking order and all the facts and circumstances raised between the parties have been adjudicated elaborately in connection with the documents and evidences. Therefore, the writ petition is to be dismissed. 10. The learned counsel for the respondents reiterated that the writ petition is to be dismissed on the ground of delay and latches. The case involves multiple question of fact and the impugned order of the second respondent is challenged, despite the fact that it is a reasoned 'speaking order' which is not subject to the judicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the pre-condition for entertaining the application under Section 245C was not fulfilled by the first respondent, the learned Senior Standing Counsel appearing for the petitioner referred the findings made by the second respondent/Settlement Commission in the impugned order, wherein paragraph No.9.1 deals with Bogus Purchases which reads as under: 9.1.Bogus Purchases 9.1.1. This relates to a list of grower farmers who are real but whose names and identities have been used by the Company to book bogus purchases/cultivation expenses. In the search action u/s 132 of the I.T Act 1961 conducted in the case of the applicant on 10.01.2013, certain excel sheets were found in the computer terminal used by Shri.Saravanan, Assistant Manager (IT) which contained details of grower farmers. These excel sheets were printed and were seized as loose sheets vide Ann./RS/ASD/LS/S-1, pages 12-31, 37-45 and 46-58 dated 10.01.2013. The amounts found in the excel sheets (bogus purchases) work out as under: S.No. Particulars of seized materials Period to which it relates Amount(Rs.) 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore us. Accordingly, we pointed to the AR that a portion of purchases from farmers having these 694 codes remained doubtful. The AR submitted that the applicant in a spirit of settlement offers additional income of ₹ 6 crores @ one crore for each year from AYs 2007-08 to 2013-14. 9.3.3. Subsequently, at our instance, the applicant filed another letter dated 31.08.2015 furnishing details of the actual amount incurred and claimed by the applicant and also offfering additional income being excess claim u/s 35(2AB) and actual amount allowed by DSIR in which the amount which is required to be disallowed and added to income Asst year wise is as under: AY Capital Expenditure Revenue Expenditure Actual amount incurred claimed Amount allowed by the Authority Excess claim Actual amount incurred claimed Amountallowed by the Authority Excess claim 2012-13 161.11 155.19 11.84 1485.55 1449.62 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation in arriving a conclusion that the first respondent has not approached the second respondent with clean hands and not filed an application with true and full disclosure of the income for the purpose of settling the issues. 19. In this regard, the Hon'ble Supreme Court of India in the case of Ajmera Housing Corporation vs. Commissioner of Income Tax reported in [2010] 193 Taxman 193 (SC) held as follows: 22. It is clear that disclosure of full and true particulars of undisclosed income and the manner in which such income had been derived are the pre-requisites for a valid application under Section 245C(1) of the Act. Additionally, the amount of Income- Tax payable on such undisclosed income is to be computed and mentioned in the application. It needs little emphasis that section 245C(1) of the Act mandates full and true disclosure of the particulars of undisclosed income and the manner in which such income was derived and, therefore, unless the Settlement Commission records its satisfaction on this aspect, it will not have the jurisdiction to pass any order on the matter covered by the application . 20. In the case of Canara Jewellers vs. Settlement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Authority. 21. This Court in W.P.No.16552 of 2004 delivered a judgment in the case of Commissioner of Income Tax vs. Income Tax Settlement Commission dated 09.04.2021 and the relevant paragraphs are extracted hereunder: 17. Thus, let us consider the scope as well as the powers of the Settlement Commission to entertain an application under Section 245(C) of the Income Tax Act. When the Section in unambiguous terms contemplates that the application in such form and in such manner as may be prescribed containing a full and true disclosure alone is entertainable, then it becomes a pre-requisite condition for entertaining an application under Section 245(C). The phraseology 'full and true disclosure of his income' is contemplated in Section 245(C)(1) itself. Thus, it is for the assessee to establish at the first instance that the application contains full and true disclosure of the income. Once the said factum is established, then alone the question of settlement would arise and not otherwise. 29. The very concept of settlement is depending on the mutual consensus and in the absence of element of mutual consensus between the parties, the settlement by the Se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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