ANIRUDDHA BOSE, J.

(1.) THE petitioners are a residuary non-banking company, and claims to be engaged in the business of offering small saving schemes to the public at large. In this writ petition, the petitioners challenge an order passed by the Settlement commission constituted under the provisions of Section 245b of the Income Tax act, 1961 rejecting the petitioners application for settlement. I sha, henceforth refer to this statute as "the Act". This order has been passed on 31st May 2007 but the petitioners claim to have received the order on 14th June 2007.

(2.) THE settlement application relates to three assessment years being 200405, 2005-06 and 2006-07. The petitioners had filed their return on income under the relevant provisions of the Act for the aforesaid three assessment years before the Assistant Commissioner of Income Tax Circle 3, Calcutta, who is impleaded as the respondent no. 3 in this writ petition. The said respondent had issued notices under Section 142 (1) and 143 (2) of the Act to the petitioners, with a questionnaire as enclosure to such notice pertaining to the assessment year 2004-05. It appears that the petitioners had been filing replies in parts to such questionnaire, which was issued on 7th August 2006.

(3.) THE petitioners decided to submit a settlement application for the said three assessment years in terms of Section 245c (1) of the Act in the prescribed form on 11th December 2006 in the office of the Income Tax Settlement commission, additional bench, being the first respondent in this writ petition. In the Settlement Application, certain additional incomes were disclosed in respect of the said three assessment years. Thereafter, the petitioners had submitted another letter on 1st May 2007 for the purpose of rectifying certain discrepancies in the case relating to the assessment year 2006-07, but this communication is not of much relevance for the purpose of adjudication of the present writ petition.

(4.) AS required under the provisions of Section 245d of the Act, the Settlement commission called for a report on the settlement application filed by the petitioner from the Commissioner of Income Tax, Calcutta-1, being the respondent no. 2 in the present writ petition. The Commissioner of Income Tax furnished the report in terms of Rule 6 of the Income Tax Settlement Commission (Procedure) Rules 1997. I shall refer to this report in the later part of this judgment as "rule 6 report. " In this report a copy of which has been made annexure "p4" to the writ petition, the Commissioner observed: "the application is suitable for settlement. It was proposed to conduct special audit u/s 142 (2a) in the case of the applicant due to nature and complexity of the case and in the meantime before special audit u/s 142 (2a) could be ordered, applicant moved application u/s 245c (1) before Honble Settlement Commission. AOs detailed report bearing No. ACIT/CIR-32006-07/854 dated 06.03.07 endorsed by addl. CIT/r-3/settlement/06-07/2142 dated 20.03.2007 (Annexures b and c) are enclosed and may be treated as part of my report to the extent consistent with my observations supra. "

(5.) THEREAFTER, on 30th April 2007 a notice was issued to the petitioners informing them that the petitioners were being given an opportunity of being heard by the Settlement Commission on 7th May 2007. In the said communication, it was also stipulated: "if the APPLICANT/commissioner OF INCOME TAX WISHES TO RELY ANY evidence/papers ETC. BEFORE THE COMMISSION DURING THE COURSE OF hearing THE SAME SHOULD BE FURNISHED IN THE FORM OF PAPER BOOK IN six

(6) COPIES DULY INDEXED AND PAGE NUMBERED." The said communication was addressed to the petitioners but the copy of the same was forwarded for "information and necessary action" to the Commissioner of Income Tax, Kolkata and the Commissioner of Income Tax (DR), ITSC, Kolkata. The hearing had taken place on the appointed date and at it appears that the Settlement commission in course