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2007 Supreme(Bom) 201
IN THE HIGH COURT OF BOMBAY
(Dr. S. Radhakrishnan and J. P. Devadhar, JJ.)
CENTURION BANK OF PUNJAB LTD. - Petitioner.
vs.
INCOME TAX SETTLEMENT COMMISSION and others - Respondent.
W. P. No. 1609 of 2006
Decided on 14-2-2007. (O.O.CJ., Bombay)
Advocate Appeared
For petitioner: S. E. Dastur with Rajesh Shah instructed by M/s Rajesh Shah and Co.
For respondents: Ashok Kotangale
.
The main legal point established in the judgment is that the Settlement Commission can entertain applications based on the material contained in the report of the Commissioner, the nature and circumstances of the case, or the complexity of the investigation involved, and that full and true disclosure by the petitioner is crucial in the assessment process.
Headnote:
Income Tax Act - Challenging order of Income Tax Settlement Commission under section 245D(1) - Summary of Acts and Sections: Income Tax Act, 1961, section 245D(1) - The court discussed the provisions of section 245D(1) of the Income Tax Act, which allows the Settlement Commission to entertain applications based on the material contained in the report of the Commissioner, the nature and circumstances of the case, or the complexity of the investigation involved. The court emphasized the importance of complexities of investigation and full and true disclosure in the decision-making process of the Settlement Commission.
Fact of the Case:
The petitioner, a banking company, challenged the order of the Income Tax Settlement Commission under section 245D(1) of the Income Tax Act, 1961, which rejected the settlement applications on the grounds of lack of complexity and full and true disclosure. The petitioner argued that the case involved complexities of investigation and that there was no failure in making full and true disclosure.
Finding of the Court:
The court found that the complexities of investigation were indeed involved in the case, as highlighted by the Commissioner of Income Tax and the respondents. The court also held that there was no failure on the part of the petitioner in making full and true disclosure.
Issues: The issues revolved around the interpretation of section 245D(1) of the Income Tax Act, specifically regarding the criteria for entertaining settlement applications based on the nature and circumstances of the case or the complexity of the investigation involved, and the requirement of full and true disclosure by the petitioner.
Ratio Decidendi: The court emphasized that the Settlement Commission can entertain applications based on the material contained in the report of the Commissioner, the nature and circumstances of the case, or the complexity of the investigation involved. It also highlighted the importance of full and true disclosure by the petitioner in the assessment process.
Final Decision: The court directed the Settlement Commission to proceed with the petitioner's applications and to deal with them in accordance with the law, emphasizing the involvement of complexities of investigation and the absence of any failure in making full and true disclosure.
DR. S. RADHAKRISHNAN, J. :- Heard. Rule. Rule is made returnable forthwith. By consent of parties, petition is taken up for final hearing. The petitioner is a Company engaged in the business of banking and related financial activities including leasing. The petitioner was earlier known as Centurion Bank Limited. The petitioner is also the successor-in-interest of two companies named 20th Century Capital Corporation Limited and 20th Century Finance Corporation Limited who have merged with the petitioner. As of date the petitioner which was formerly known as Centurion Bank Limited is today known as Centurion Bank of Punjab Limited.
2. By this petition, the petitioner is challenging the order dated 27-12-2005 passed by the Income Tax Settlement Commission under section 245D(l) of the Income Tax Act, 1961 (hereinafter referred as "the said Act") whereby the Settlement Commission has taken a view that the settlement applications filed by the petitioner in respect of its own assessments and the assessments of the two merging companies are not fit for admission on the ground that the case does not involve complexity and that there was no full and true disclosure by the petitioner.
3. We have perused the impugned order dated 27th December, 2005 passed by the Settlement Commission. The learned Senior Counsel appearing for the petitioner brought to our notice the provisions of section 245D(l) of the Act, which reads as under:-
"2450(1). On receipt of an application under section 245C, the Settlement Commission shall call for a report from the Commission and on the basis of the materials contained in such report and having regard to the nature and circumstances of the case or the complexity of the investigation involved therein, the Settlement Commission, shall, where it is possible, by order, reject the application or allow the application to be proceeded with within a period of one year from the end of the month in which such application was made under section 245C:
Provided that an application shall not be rejected under this sub-section unless an opportunity has been given to the applicant of being heard:
Provided further that the Commissioner shall furnish the report within a period of forty-five days of the receipt of communication from the Settlement Commission in case of all applications made under section 245C on or after the 1st day of July, 1995 and if the Commissioner fails to furnish the report within the said period, the Settlement Commission may make the order without such report."
4. Mr. Dastur, the learned Senior Counsel has pointed out that the Settlement Commission can entertain the application on the basis of the material contained in the report of the Commissioner, and having regard to the nature and circumstances of the case or the complexity of investigation involved therein. Therefore, it is the submission of Mr. Dastur, the learned Senior Counsel for the petitioner that the Settlement Commission in a given case, even if there were no complexity of investigation, still on the basis of the material contained in the report of the Commissioner, or having regard to the nature and circumstances of the case, the Commission has jurisdiction to entertain the application. In any event, the learned Senior Counsel Mr. Dastur has submitted that, in the instant case, it is the clear case of complexity of investigation. To substantiate the same, Mr. Dastur, the learned Senior Counsel has pointed out that the above matter involves complexity of investigation because of the following :-
(i) It involves approximately 1900 lease transactions; (ii) which are spread over 15 assessment years; (iii) it requires examination and cross examination of multiple parties who are spread out across the length and breadth of the country; (iv) it involves nearly Rs.420 crores in disputed additions and disallowances; (v) it involves two assesses who no longer exist; (vi) where documents are admittedly lost owing to fire; and (vii) it invo
