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TMI Blog2022 (6) TMI 845X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Single Judge in appreciating whether the settlement in Ext.P1 is in accordance with the provisions of the Act or not. Om Prakash Mithal case [ 2005 (2) TMI 16 - SUPREME COURT ] lays down the object and procedure followed by the Commission in applications arising under Section 245D The procedure followed by the Settlement Commission in the case on hand in appreciating the advances, CFS etc. definitely desires a sort of consideration in accordance with the provisions of the Act. Ext.P1 tested on the principles enunciated by the Supreme Court in the case of Om Prakash Mithal the deficiency noted by the judgment under appeal is correct. The judgment of the Karnataka High Court in N.Krishnan case [ 1989 (3) TMI 77 - KARNATAKA HIGH COURT ] has stated that the scope of the judicial review is available where there is no nexus between the reasons given and the decision taken. In the case on hand, Ext.P1 could be held to be as not assigning reasons or reflecting the mind of the Settlement Commission for accepting the case of the appellants. The remand is justified in the circumstances of the case. We are also of the view that the scope of judicial review is relatable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before us, the brief portion of consideration by the Settlement Commissioner is excerpted hereunder: Advances from others: Advances from others shown at Rs.3,54,59,150/- in the original CFSs have been revised to Rs.4,13,52,150/-. The AR pointed out that the details of these loans were available in the seized records and that the relevant Promissory Notes were also seized during the course of search. Rate of interest on these loans is also mentioned in the seized records. Further, the confirmation letters from the creditors have also been filed before the Addl.DIT. The applicant pointed out that the relevant details are available at pages 39, 70, 80, 308 and 402 of APB. The CIT in Rule-9 report stated that the details of the loan creditors were not furnished. Hence, the creditworthiness of the loan cannot be verified. The learned A/R stated that the details of the loans and repayments were available in various seized records such as AM83, AM85, AM89, BM12, BM23, PQ31, AM4, AM17, AM-46 etc. He also pointed out that seized record of M68 contained a number of discharged promissory notes in rspect of loans taken and repaid. He submitted that the details available in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the claim of advances is seen at page 5, paragraph 5 of Ext.P1: Advances from others: Advances from others shown at Rs.3,54,59,150/- in the original CFSs have been revised to Rs.4,13,52,150/-. The AR pointed out that the details of these loans were available in the seized records and that the relevant Promissory Notes were also seized during the course of search. Rate of interest on these loans is also mentioned in the seized records. Further, the confirmation letters from the creditors have also been filed before the Addl.DIT. The applicant pointed out that the relevant details are available at pages 39, 70, 80, 308 and 402 of APB. The CIT in Rule-9 report stated that the details of the loan creditors were not furnished. Hence, the creditworthiness of the loan cannot be verified. The learned A/R stated that the details of the loans and repayments were available in various seized records such as AM83, AM85, AM89, BM12, BM23, PQ31, AM4, AM17, AM-46 etc. He also pointed out that seized record of M68 contained a number of discharged promissory notes in rspect of loans taken and repaid. He submitted that the details available in the seized records have been considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 89 (180) 585) and finally contends that the remand for re-verification by the Settlement Commissioner of advances, is avoidable and prays for setting aside the judgment under appeal. 5. Learned Senior Counsel Mr.Jose Joseph supports the judgment under appeal by briefly arguing that the very judgments relied on by the appellants demonstrate that the writ jurisdiction of this Court is not completely taken away against the orders made under Section 245D of the Act. The scope of judicial review available is clearly laid down by these pronouncements. The case on hand comes within the purview of the available grounds of judicial review and the presence of lackadaisical consideration by the Settlement Commissioner could be demonstrated by appreciating the following circumstances in this chronology viz. the appellants revised the Cash Flow Statement under the head advances from 3,54,59,150/- to 4,13,52,150/-. The respondent contested the details of loan or creditors and important objection in this behalf is the creditworthiness of the loan and creditors. The Settlement Commissioner accepted the declaration of the appellants by recording the following finding. We have considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Commission in applications arising under Section 245D of the Act. The Supreme Court has summarised the position as follows: A new Chapter XIX-A was introduced by the Taxation Laws (amendment) Act, 1975 (in short the 'Amendment Act') w.e.f. 1.4.1976. The Commission is constituted by the Central Government for the settlement of cases under Chapter XIX-A. The expression case as appearing in Section 245A(b) refers to any proceeding under the Act for the assessment or re-assessment of income of any person in respect of any year or years or by way of appeal or revision in connection with such assessment or re-assessment which may be pending before any income-tax authority on the date on which an application under sub- section (1) of Section 245C is made. It further provides that where any appeal or application for revision has been preferred after the expiry of the specified period and which has not been admitted then the same shall not be deemed to be a proceeding pending within the meaning of clause (b) of Section 245A. Scheme of Chapter XIX-A shows that the filing of application by the assessee is a unilateral act, and the department may not be aware of the same. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the total income of that year (whether or not an assessment has been made in pursuance of such return), tax shall be calculated on the aggregate of the total income returned and the income disclosed in the application as if such aggregate were the total income; (iii) if the proceeding pending before the income-tax authority is in the nature of a proceeding for reassessment of the applicant under section 147 or by way of appeal or revision in connection with such reassessment, and the applicant has not furnished a return in respect of the total income of that year in the course of such proceeding for reassessment, tax shall be calculated on the aggregate of the total income as assessed in the earlier proceeding for assessment under section 143 or section 144 or section 147 and the income disclosed in the application as if such aggregate were the total income. (1C) The additional amount of income-tax payable in respect of the income disclosed in the application relating to the previous year referred to in sub- section (1B) shall be, - (a) in a case referred to in clause (i) of that sub-section, the amount of tax calculated under that clause; (b) in a case referred to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y-five days of the receipt of a copy of the order under sub-section (1) allowing the application to be proceeded with, pay the additional amount of income-tax payable on the income disclosed in the application and shall furnish proof of such payment to the Settlement Commission. (2B) If the Settlement Commission is satisfied, on an application made in this behalf by the assessee, that he is unable for good and sufficient reasons to pay the additional amount of income-tax referred to in sub-section (2A) within the time specified in that subsection, it may extend the time for payment of the amount which remains unpaid or allow payment thereof by instalments if the assessee furnishes adequate security for the payment thereof. (2C) Where the additional amount of income-tax is not paid within the time specified under sub-section (2A), then, whether or not the Settlement Commission has extended the time for payment of the amount which remains unpaid or has allowed payment thereof by instalments under sub-section (2B), the assessee shall be liable to pay simple interest at fifteen per cent per annum on the amount remaining unpaid from the date of expiry of the period of thirty-five ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement Commission provides that in addition to the powers conferred on the Settlement Commission under Chapter XIX-A, it has all the powers which are vested in the income-tax authority under the Act. Sub-section (2) is of vital importance and provides that where an application made under Section 245C has been allowed to be proceeded with under Section 245D, the Commission shall until an order is passed under sub-section (4) of Section 245D, subject to the provisions of sub-section (3) of that section have exclusive jurisdiction to exercise the powers and perform the functions of the income-tax authority under the Act in relation to the case. In essence, the Commission assumes jurisdiction to deal with the matter after it decides to proceed with the application and continues to have the jurisdiction till it makes an order under Section 245D. Section 245D(4) is the charging section and sub-section (6) prescribes the modalities to be adopted to give effect to the order. It has to be noted that the language used in Section 245D is order and not assessment . The order is not described as the original assessment or regular assessment or re-assessment. In that sense, the Commission exer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interpretation would render sub-section (6) otiose. The Commission had really missed the true scope and ambit of Section 245D(6). If the CIT was able to establish that the earlier decision was void because of misrepresentation of the facts, certainly it was open to the Commission to decide that issue. It cannot be called by any stretch of imagination to be review of the earlier judgment or the subsequent Bench sitting in appeal over the earlier Bench's decision. Further the conclusions of the Commission regarding the genuineness of the loan transactions were arrived at without indicating reasons. It only referred to the respective stands and the submissions of the assessee's counsel. That was not the proper way to deal with the matter. The foundation for settlement is an application which assessee can file at any stage of a case relating to him in such form and in such manner as is prescribed. The statutory mandate is that the application shall contain full and true disclosure of the income which has not been disclosed before the assessing officer, the manner in which such income has been derived. The fundamental requirement of the application under Section 245C is th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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