The definition of 'related person' to the 'specified person' within the meaning of Explanation to Section 245C(1) of the Income Tax Act, 1961 does not include a company whose directors have a substantial interest in the business or profession of the specified person, where the shareholding of the directors cannot be clubbed to meet the substantial interest requirement.

JUDGMENT

Ashok Kumar Gaur, J. - The petitioner-Company has filed the instant writ petition challenging the order dated 03.01.2018 passed by the Income Tax Settlement Commission, Principal Bench, New Delhi wherein the application filed by the petitioner-Company under section 245C(1) of the Income Tax Act, 1961 (hereinafter shall be referred to as "the Act, 1961") has been held "invalid" as it has not fulfilled the conditions prescribed under Section 245C(1) of the Act, 1961.

2. The petitioner-Company has prayed for a writ of mandamus to direct the respondents-Income Tax Authorities to entertain the settlement application of the petitioner-Company and further to proceed in accordance with law. The prayer has also been made to quash and set aside the proceedings initiated in pursuance of the impugned order dated 03.01.2018 rejecting the application of the petitioner-Company

3. Brief facts pleaded in the writ petition, are that the petitioner is a company incorporated under the provisions of the Companies Act, 1956 having its registered office at A/34, Landmark City, Bundi Road, Kunhadi, Kota (Rajasthan). The Income Tax authorities carried search and seizure under Section 132 of the Act, 1961 at the premise of the petitioner-Company and its Directors namely Ram Jashandas Bhatia, Deepak Rajwanshi and Arun Mehta and other related Concerns on 03.03.2016.

4. The petitioner-Company has pleaded that on 31.10.2017, the petitioner-Company filed an application under Section 245C(1) of the Act, 1961 seeking settlement with the Income Tax Department for the Assessment Year 2010-11 to 2017-18 declaring additional income of Rs. 30,90,929/-. The petitioner-Company declared tax payable on declared income as Rs. 10,02,952/-. The Directors of the petitioner-Company namely Ram Jashandas Bhatia, Deepak Rajwanshi and Arun Mehta also declared additional income in personal hands on which tax payable was above Rs. 50 Lakhs each and the details, as given in the writ petition, are as follows:-

5. The petitioner-Company has pleaded that as per clause (i) to the proviso to Section 245C(1) of the Act, 1961, it is sine qua non for a valid application before the Settlement Commission that the income tax payable on the additional income disclosed in the application exceeds the amount of Rs. 50 Lakhs and the said applicant is termed as 'specified person' for the other applicants who are related to the 'specified person' for whom the condition of tax payable on additional income disclosed in the application is minimum of Rs. 10 Lakhs.

6. The petitioner-Company has pleaded in the petition that it qualifies the definition of relation with the 'specified person' within the meaning of explanation (a) to Section 245C (1) of the Act, 1961 as covered under clause (v) of explanation (a) to Section 245C of the Act, 1961 and was thus, competent to maintain settlement application declaring tax payable at Rs. 10,02,952/-.

7. The petitioner-Company has given shareholding of its Directors namely Ram Jashandas Bhatia, Deepak Rajwanshi and Arun Mehta, as follows:-

8. The petitioner-Company has pleaded in the petition that the application of the petitioner-Company came to be opposed by the respondent-Department on the ground that it did not qualify the requirement of being related to the 'specified person'.

9. The petitioner-Company has pleaded in the petition that by the impugned order dated 03.01.2018, the Settlemen