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2014 Supreme(Del) 1087
High Court of Delhi
S. RAVINDRA BHAT & R.V. EASWAR, JJ.
M/s. Omaxe Ltd. & Another
Versus
Deputy Commissioner of Income Tax & Another
W.P.(C) No. 1451 of 2013
Decided on : 15-04-2014
Important Points
Subject
Taxation Law - Income Tax
Act Referred
INCOME TAX ACT : S.153(c), S.142(1), S.245(d)(2)(c), S.245(f)(2), S.147, S.245(d)(4), S.153(a), S.245(d)(6)(a), S.245(i)
Headnote
Income Tax Act - Notice under Section 153A - Section 153C - Settlement Commission's order - Finality of orders - Jurisdiction of Settlement Commission - Reopening of assessment - Misrepresentation of facts - Exclusive jurisdiction of Settlement Commission
Fact of the Case:
The petitioner, a real estate company, challenged a notice issued by the Revenue under Section 153A of the Income Tax Act. The petitioner had earlier approached the Settlement Commission to settle pending assessments and declared additional income. The AO issued a notice proposing reassessment, which was challenged in a previous writ petition. Subsequently, the Revenue issued notices under Section 153C seeking to reassess the petitioner's income, which was objected to by the petitioner.
Finding of the Court:
The Court held that the impugned notice issued under Section 153C cannot be sustained, and all further proceedings were quashed. The Court allowed the petitioner to move the Settlement Commission for appropriate relief of declaration that its previous order under Section 245D(6) is void, setting out the relevant facts and circumstances.
Issues: The issues involved the finality of orders issued by the Settlement Commission, the jurisdiction of the Settlement Commission, and the reopening of assessment by the Revenue under Section 153C.
Ratio Decidendi: The Court emphasized the finality of orders passed by the Settlement Commission and held that reopening any proceeding in respect of matters covered in the order would be barred. The Court also highlighted the exclusive jurisdiction of the Settlement Commission and the requirement of true and fair disclosure of income for invoking the Commission's jurisdiction.
Final Decision: The writ petition was allowed, and the impugned notice issued under Section 153C was quashed. The Revenue was given the option to move the Settlement Commission for appropriate relief.
For the Petitioners:Ajay Vohra with Kavita Jha, Vaibhav Kulkarni, Advocates.
For the Respondents: Sanjeev Sabharwal, Sr. Standing Counsel with Ruchir Bhatia, Jr. Standing Counsel.
S. Ravindra Bhat, J. (Open Court)
1. In these writ proceedings under Article 226 of the Constitution, the petitioner challenges a notice issued by the respondents (hereafter called “the Revenue”) under Section 153A of the Income Tax Act (“the Act”).
2. The petitioner company is engaged in real estate business. Its premises were searched on 22.9.2005, and other dates. It filed its return on 30.11.2006 declaring a net taxable income of Rs.89,20,76,630/-. The petitioner had earlier been issued separate notice under Section 153-A of the Act, on 19.4.2006. In response to the notice, the petitioner stated that its returns filed for 2000-2006 be treated as reiterated under Section 153A. On 31.5.2007, the petitioner approached the Settlement Commission to settle pending assessments for AY 2000-2001 to 2006-2007 and declared an additional income of Rs.18.75 crores. Initially, after hearing parties, the Commission admitted the application for hearing and disposal. On 17.8.2008, the Commission passed its order under Section 245D(4), finally determining the petitioner’s liability, for 2004-05 to 2006-07.
3. The AO issued notice under Section 148, on 30.6.2010 proposing reopening of assessment for 2006-07. The petitioner objected to this on 30.7.2010; those objections were rejected by the AO on 30.10.2010. In this background, the AO passed the final reassessment order on 08.11.2011. This was challenged in WP(C) 7975/2011 filed by the petitioner.
4. In the meanwhile, consequent to search in the premises of one Mr. Surinder Modi in June, 2009, a satisfaction note was recorded by the AO (of Shri Modi) for initiating proceedings under Section 153C of the Act against the petitioner for 2004-05 to 2009-10. The Revenue, consequent to search (in the case of Mr. Modi), issued notices under Section 153C of the Act seeking to reassess the petitioner’s income, inter alia, for assessment years 2004-05 to 2009- 10. Responding to notice dated 26.12.2011 issued under Section 153C of the Act, the petitioner objected to assessment/ reassessment of income for assessment years 2004-05 to 2006-07 under the said provision since the assessments had already been concluded by the order of the Settlement Commission dated 17.03.2008.
5. This Court by judgment dated 13.07.2012 allowed WP(C) No.7975/2011 and quashed the notice for reassessment under Section 147 of the Act (dated 30.6.2010) for the AY 2006-07.
6. The Revenue rejected the objections of the petitioner preferred against the notice under Section 153C. The petitioner thereafter filed detailed objections to notice dated 26.12.2011 issued under Section 153C of the Act, inter alia, objecting to assessment/ reassessment of income for assessment years 2004-05 to 2006-07, particularly in the light of the judgment of this Court dated 13.07.2012. The Revenue issued the impugned order dismissing the said objections. During the course of proceedings under Section 153C, the Revenue also issued notices under Section 142 (1) inter alia calling for detailed information pertaining to the assessment years in question.
7. It is contended on behalf of the petitioner that by virtue of Section 245I, the finality attached to the Settlement Commission’s order in respect of a particular period – in this case AY 2006-07 cannot be disturbed. It is argued that in the previous judgment of this Court – reported as Omaxe Ltd. & Jai Bhagwan Goel Vs. ACIT & Anr. 254 CTR 370, the applicability of any other provision of law including Section 148 had been ruled out once an order is made by the Settlement Commission.
8. Counsel argues that upon receipt of application, the Commission forwards it to the Commissioner. Under Rule 44CA (1), the Commission calls for a report under Section 245D(1). Once the Settlement Commission admits an application for final decision, all information in the statements and application filed by the assessee are disclosed and reports are furnished by the Commissioner. Thereafter upon assumption of jurisdict
