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IN THE HIGH COURT OF RAJASTHAN AT JAIPUR BENCH
Sanjeev Prakash Sharma, J.
Gupta Trademart Pvt Ltd. - Appellant
Versus
Deputy Commissioner Of Income Tax & Ors. - Respondents
S.B. Civil writ Petition No. 8677/2014 Connected with S.B. Civil Writ Petition No. 8699/2014
Decided on : 25-08-2021
INCOME TAX - SETTLEMENT OF CASES - [SECTION 245C, 245D] - SETTLEMENT COMMISSION - [SECTION 245D(4)] - JURISDICTION - SCOPE AND EXTENT - FULL AND TRUE DISCLOSURE OF INCOME - ASSESSMENT - POWER OF SETTLEMENT COMMISSION TO MAKE ASSESSMENT - PRINCIPLES OF NATURAL JUSTICE - AUDI ALTERAM PARTEM - ESTOPPEL - ACQUIESCENCE - REMAND - HELD, the Settlement Commission has the authority to itself make assessment. However, the Settlement Commission ought to have examined the matter after giving opportunity of hearing to the petitioner with regard to the true and correct disclosure and the assessment ought to have been done by giving fair opportunity to the petitioner. In this regard, the FSL report also should have been taken into consideration.
Fact of the Case:
The petitioner, who is an assessee, is coming up with the arguments that he has disclosed in his application the income which has not been accepted by the Settlement Commission and therefore, the Settlement Commission ought to have rejected the application and allowed the petitioner to take up his matter before the Assessing Officer under Section 143 or 144 of the IT Act. It is his submission that the Commission ought not to have accepted the report of the Commissioner of Income Tax and proceed further.
Finding of the Court:
The Settlement Commission, which is a quasi-judicial body, is required to adhere to the principles of law in stricto sensu. The contention of learned counsel for the Revenue that the petition deserves to be dismissed on the ground of acquiescence is noticed for rejection. In cases relating to Revenue, the law of acquiescence would have no application because the orders are of mandatory nature where a person is bound to comply with the orders of the AO/Settlement Commission. If the assessee has deposited the revenue as assessed, he cannot be said to have acquiesced to the findings arrived at for computing the amount. A person would always be entitled for seeking a judicial review to such assessment. Neither the Revenue Department nor the assessee can be estopped from challenging the orders of assessment which may be passed by the AO/Commissioner or the Settlement Commission.
Issues: Whether the Settlement Commission can proceed and pass final orders on an application moved by an assessee after finding that the concerned assessee has not truly and fully disclosed the income? Whether it can proceed to make assessment after adding the undisclosed income and thereafter pass orders by including such non-disclosure?
Ratio Decidendi: The Settlement Commission has the authority to itself make assessment. However, the Settlement Commission ought to have examined the matter after giving opportunity of hearing to the petitioner with regard to the true and correct disclosure and the assessment ought to have been done by giving fair opportunity to the petitioner. In this regard, the FSL report also should have been taken into consideration.
Final Decision: Both the writ petition are accordingly partly allowed. All pending application stand disposed of. No costs.
JUDGMENT
1. Both these writ petitions have been preferred by the petitioners assailing the order dated 19/12/2013 passed by the Income Tax Settlement Commission while exercising the powers under Section 245D(4) of the Income Tax Act, 1961 (for short, IT Act) as also the orders dated 18/06/2014 & 21/02/2014 respectively passed under Section 245D(6B) of the IT Act.
2. The petitioner-company which is a private limited company has filed the first writ petition while Mr. Rajendra Gupta, who is Managing Director of the petitioner-company, has also filed separately the second writ petition.
3. Both the petitioners by way of these writ petitions have challenged the legality, validity and propriety of the order dated 19/12/2013 passed by the Income Tax Settlement Commission while exercising the powers under Section 245D(4) of the IT Act whereby the settlement application filed by the petitioners was disposed of.
4. In order to appreciate the controversy raised in the present writ petitions, it would be apposite to quote the relevant provisions relating to settlement of cases as provided under Chapter XIX of the IT Act which are as under:-
(i) in a case where proceedings for assessment or reassessment for any of the assessment years referred to in clause (b) of sub-section (1) of section 153A or clause (b) of sub-section (1) of section 153B in case of a person referred to in section 153A or section 153C have been initiated, the additional amount of income-tax payable on the income disclosed in the application exceeds fifty lakh rupees, [(ia) in a case where-- (A) the applicant is related to the person referred to in clause (i) who has filed an application (hereafter in this sub-section referred to as ―specified person); and (B) the proceedings for assessment or re-assessment for any of the assessment years referred to in clause (b) of sub-section (1) of section 153A or clause (b) of sub-section (1) of section 153B in case of the applicant, being a person referred to in section 153A or section 153C, have been initiated, the additional amount of income-tax payable on the income disclosed in the application exceeds ten lakh rupees,]
(ii) in any other case, the additional amount of income-tax payable on the income disclosed in the application exceeds ten lakh rupees, and such tax and the interest thereon, which would have been paid under the provisions of this Act had the income disclosed in the application been declared in the return of income before the Assessing Officer on the date of application, has been paid on or before the date of making the application and the proof of such payment is attached with the application.]
[Explanation.--For the purposes of clause (ia),--
(a) the applicant, in relation to the specified person referred to in clause (ia), means,--
(i) where the specified person is an individual, any relative of the specified person;
(ii) where the specified person is a company, firm, association of persons or Hindu undivided family, any director of the company, partner of the firm, or member of the association or family, or any relative of such director, partner or member;
(iii) any individual who has a substantial interest in the business or profession of the specified person, or any relative of such individual;
(iv) a company, firm, association of persons or Hindu undivided family having a substantial interest in the business or pr
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