IMPORTANT POINT
The Settlement Commission's orders are conclusive and can only be challenged on limited procedural grounds, emphasizing the importance of adherence to statutory provisions.

ORDER :

(S. Sunil Dutt Yadav, J.) :

The present petition is filed by the Revenue seeking for setting aside of the order passed by the Settlement Commission dated 11.03.2020 at Annexure-'D' whereby application of the petitioner for settlement under Section 245C of the Income Tax Act, 1961 for the Assessment Years 2012-2013 to 2019-2020 was accepted and it was ordered that the additional income offered of Rs.2,20,00,000/- was reasonable and fair, immunity

from penalty and prosecution was also ordered, however interest under Section 234A, 234B and 234C was to be levied by applying provision of Section 234B (2A) of the Act.

2. The Revenue being aggrieved by the order of the Settlement Commission and in light of finality to the order of the Settlement Commission in terms of Section 245-I has approached this Court and invoked the writ jurisdiction to assail the order of the Settlement Commission.

3. The petitioner had filed an application under Section 235C of the Act on 18.11.2019 seeking settlement for the Assessment Years 2012-2013 to 2019-2020. In terms of the procedure under Section 245D(1) of the Act, the application was permitted to be proceeded with by order dated 25.11.2019.

4. It is made out from the facts that the applicant is an individual assessee and source of income was from salaries. The Department is stated to have carried out search under Section 132 of the Act on 20.03.2018, during which records/documents and jewellery worth Rs.3,23,02,607/- is stated to have been seized. The statements under Section 132(4) of the Act were also stated to have been recorded and during such search, an undisclosed income of Rs.2,16,00,000/- was stated to have been offered for tax, which statement was retracted subsequently vide letter dated 16.12.2018.

5. The additional income offered before the Settlement Commission was stated to be Rs.2,20,00,000/-, which it is asserted to be an amount constituting cash gifts received from the relatives and well wishers during the Assessment Years 2012-2013 to 2016-2017.

6. It is further asserted that the cash payment made for purchase of jewellery from the vendors of Neerav Modi group was Rs.2,16,00,000/-.

7. The petitioner had filed Affidavit under Rule 8 of the Income Tax Settlement Commission (Procedure) Rules, 1997 and declared that she had not maintained the details of cash gifts.

8. The PCIT also has filed a report under Rule 9 and raised various objections.

9. The Settlement Commission has passed the order dealing with the objections raised by the Department. The Settlement Commission has ruled on the objections as follows:-

(i) The contention of PCIT that the difference of Rs.79,40,086/- on account of valuation of jewellery should be added to the income disclosed of the petitioner was rejected, while observing that no material was found during the search or in post search proceedings to show that the applicant had made cash payment above the consideration shown in the invoices of purchase. It was also observed that the Department had failed to produce any material to demonstrate that actual consideration passed was more than the consideration shown in the invoices of purchase.

(ii) It was the stand of the Department that the petitioners' claim of cash gifts cannot be accepted, as no declaration to that effect was made in the wealth tax returns filed for the relevant years.

10. The Settlement Commission has taken note of the declaration made under Rule 8 of the Income Tax Settlement Commission (Procedure) Rules and has accepted the assertion of cash gifts. It was also observed that if indeed the applicant had disclosed the cash gifts as 'cash in hand' in the wealth tax returns, the alleged unaccounted cash would have stood explained as noticed in the search and there would have been no occasion for disclosure as made before the Settlement Commission. Accordingly, the Commission deemed the additional income offered for tax of Rs.2,20,00,000/- as being fair and reasonable and proceeded to dispose of the