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TMI Blog2024 (12) TMI 825X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Settlement Commission, is only to see whether the order of the Commission complies with the statutory provisions of Chapter XIX-A of the I.T. Act. Power of judicial review is not to be exercised to decide the issue on facts or on an interpretation of the documents available before the Court. In the instant case, therefore, the enquiry by this Court can only be with regard to whether or not the Settlement Commission exercised a jurisdiction that it did not have or, alternatively, if it did have the jurisdiction, whether it erred in the exercise of that jurisdiction. A defect that vitiates a settlement must be one that vitiates the whole and not merely any part of the settlement. In the spirit of settlement, and more so when the assessee does not choose to contest the rest of the terms of the settlement, the assessee cannot be permitted to contend so. A settlement partakes the nature of a negotiated contract, and there is always a certain give and take in every settlement. The test is to see whether on an overall assessment the parties to the settlement are satisfied. The settlement, must fail or succeed as a whole. A partial acceptance of a settlement is not envisaged under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of Rule 9 of the Income Tax Settlement Commission (Procedure) Rules from the Principal Commissioner of Income Tax, Kochi. In the report that was submitted before the IBS, the Principal Commissioner opined that the appellant had not disclosed an additional income to the extent of Rs. 10,52,12,443/- for the assessment years 2012-13 to 2018-19. Although the appellant preferred a detailed objection to the said report, the proceedings before the IBS ultimately culminated in the final order which was impugned in the writ petition. By the said order of the IBS, the total income of the appellant was settled at Rs. 35,36,42,238/- together with applicable interest thereon. The appellant was also granted immunity from prosecution and from imposition of penalty under various provisions of the I.T. Act. The plea of the appellant for capitalisation of the amount offered as additional income was also allowed. 5. In the writ petition, the challenge of the appellant to the impugned order of the IBS was essentially confined to the finding of the IBS on the issue of deemed dividend, which the IBS found had to be treated as undisclosed income of the appellant. The appellant, as the majority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner or Commissioner to be heard, either in person or through a representative duly authorized 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 Principal Commissioner or Commissioner. (emphasis supplied) 8.1 Section 245E empowers the Commission to re-open the completed proceedings in appropriate cases, while 245F confers all the powers of an Income Tax authority upon the Commission. Section 245H empowers the Commission to grant immunity from penalty and prosecution, with or without conditions, in cases where it is satisfied that the assessee has fully disclosed his income and its sources. 8.2 Where a proceeding before the Settlement Commission abates, the Assessing Officer or any other Income Tax Authority before whom the proceedings at the time of making the application were pending are required to dispose of the case in accordance with the provisions of the Act as if no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be exercised in accordance with the provisions of the Act. However, the Commission has sufficient elbow room to assess the applicant's income. The Settlement Commission cannot make an order which would conflict with the mandatory provisions of the Act like in the quantum and payment of tax and interest, as is held in Commissioner of Income Tax v. Hindustan Bulk Carriers [(2003) 3 SCC 57]. 10.2 Therefore, what is contemplated under clause (4) of Section 245D is that the Commission has to pass the order in accordance with the provisions of the Act, but the Commission is not precluded from considering the other evidence and material which was not before the Assessing Officer if same is brought before the Commissioner to determine the true and correct undisclosed income of the applicant and this is amply clear from the language employed in sub-section (4) of Section 245D of the Act. Therefore, I find no substance in the submission of the learned Counsel for the petitioner that the Commission was barred from considering the material evidence which was not discovered during the search and seizure operation. 11. The settlement procedure commenced by filing the application by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 As mentioned above, the full and true particulars and disclosure of undisclosed income and the manner in which such income had been derived are the prerequisites for valid application under Section 245C (1) of the Act. From the plain reading of section 245D (4) of the Act, the jurisdiction of the Settlement Commission to pass such orders as it may think fit is confined to the matters covered by the application. It can extend to such matters which are referred to in the report of the Commissioner of Income Tax under Section 245D (1) or Section 245D (3). A full and true disclosure of the income which has not been previously disclosed by the assessee, being a precondition for a valid application under Section 245C (1) of the Act, the scheme of Chapter XIXA does not contemplate non-revision of the income so disclosed in the application against item no.11 of the Form. It is well settled that under the power of judicial review of the High Court, the High Court cannot interfere with the finding of facts recorded by the Settlement Commission. As seen from the aforesaid extracted portion of the impugned judgment, the learned Judge dismissed the writ petition essentially on finding that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction that is to be exercised by this Court while dealing with challenges to orders passed by the Income Tax Settlement Commission. It is trite that this Court, in exercise of its jurisdiction under Article 226 of the Constitution of India, does not assume the role of an appellate authority to conduct a merit review of orders passed by the Settlement Commission. Its role is confined to one of judicial review, of the orders of the Settlement Commission, by applying the well-settled principles that inform the exercise of such a jurisdiction. Accordingly, this court would be concerned with the decision making process, adopted by the Commission, and not the decision itself. The scope of enquiry of this Court, in matters involving a challenge to orders passed by the Settlement Commission, is only to see whether the order of the Commission complies with the statutory provisions of Chapter XIX-A of the I.T. Act. The Supreme Court in the case of Jyotendrasinhji v. S. I. Tripathi and Others - [1993 (201) ITR 611 (SC)], observed as follows at page 623: .....Be that as it may, the fact remains that it is open to the Commission to accept an amount of tax by way of settlement and to pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rved as follows at page 643: An order passed by the Settlement Commission could be interfered with only if the said order is found to be contrary to any provisions of the Act. So far as the findings of fact recorded by the Commission or question of facts are concerned, the same is not open for examination either by the High Court or by the Supreme Court. In the present case the order of the Settlement Commission clearly indicates that the said order, particularly, with regard to imposition of simple interest @ 10% per annum was passed in accordance with the provisions of Rule 14 but the High Court wrongly interpreted the said Rule and thereby arrived at an erroneous finding. So far as the second issue with respect to interest on Rs.50 lakhs is concerned, the same being a factual issue should not have been gone into by the High Court exercising the writ jurisdiction and the High Court should not have substituted its own opinion against the opinion of the Settlement Commission when the same was not challenged on merits. It is clear, therefore, that the power of judicial review is not to be exercised to decide the issue on facts or on an interpretation of the documents available befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commission, in relation to one of many issues that arose in a case for settlement before it, would not suffice for setting aside the order of the Settlement Commission that settles a case. This is because, as rightly found by the learned Single Judge, the settlement envisaged under the settlement provisions under the I.T. Act is of a case as a whole and not in parts. A defect that vitiates a settlement must be one that vitiates the whole and not merely any part of the settlement. It follows, therefore, that if the defect pointed out by a person who challenges an order of settlement is merely that the Settlement Commission has chosen to take one of two possible views that can be legally taken in respect of an issue, then this Court would not be justified in interfering with that order of settlement passed by the Settlement Commission. In the spirit of settlement, and more so when the assessee does not choose to contest the rest of the terms of the settlement, the assessee cannot be permitted to contend so. A settlement partakes the nature of a negotiated contract, and there is always a certain give and take in every settlement. The test is to see whether on an overall assessment the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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