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2008 Supreme(Mad) 1297
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE K. RAVIRAJA PANDIAN & THE HONOURABLE MR. JUSTICE P.P.S. JANARTHANA RAJA
Dr. C.M.K. Reddy
Versus
The Settlement Commission (IT/WT), Nandanam, Chennai & Others
Writ Petition No.13725 of 2004
Decided on : 17-04-2008
For the Petitioner:C. Natarajan, Senior Counsel for K.A. Mariappan, Advocate.
For the Respondents: Pushya Sitaraman, Senior Standing Counsel for Income Tax Department.
Full and true disclosure of income is a mandatory requirement for maintaining an application under section 245C of the Income Tax Act.
Headnote:
Income Tax - Settlement Commission - Section 245C, Section 245D
Fact of the Case:
The petitioner, a doctor, filed a writ petition to quash the order of the Settlement Commission rejecting the application for settlement of disputes under section 245C(1) of the Income Tax Act for the assessment years 1990-91 to 2000-01.
Finding of the Court:
The court found that the petitioner did not make full and true disclosure of income and its source, which is a mandatory requirement for maintaining an application under section 245C. The court also noted that the complexity of the investigation involved was not the sole criteria for settlement.
Issues: The main issue was whether the order of the Settlement Commission was legally sustainable.
Ratio Decidendi: The court emphasized the mandatory requirement of full and true disclosure of income for maintaining an application under section 245C. It also clarified that complexity of the investigation was not the sole criteria for settlement.
Final Decision: The court dismissed the writ petition, stating that the order of the Settlement Commission non-suiting the petitioner for admission of the case for settlement required no interference.
K. Raviraja Pandian, J.
This writ petition is filed for the issue of writ of certiorarified mandamus to quash the order of the Settlement Commission dated 21.01.2004 and consequently direct the first respondent to take up the application filed by the petitioner under section 245C(1) for the assessment years 1990-91 to 2000-01 and proceed further for settlement of disputes.
2. The petitioner is a doctor. On a survey conducted on 06.02.2001 under section 133-A of the Income Tax Act, it was noticed that the petitioner had not filed return of income for the assessment years 1990-91 and 1994-95 during which period he had made huge investments in the construction of hospital cum hotel complex. Notice under section 148 of the Act was served on the petitioner on 29.03.2001 for the assessment years 198990 to 2000-01. The writ petitioner filed returns for the assessment years 1990-91 to 1995-96 on 15.03.2002 and for the assessment years 1996-97 to 2000-01 on 08.03.2002. The assessments for the years 1990-91 to 2000-01 except the assessment year 1997-98 was completed under section 143(3) read with 147 of the Act on 28.03.2002. The assessment for the year 1997-98 was completed under section 144 read with 147 of the Act on 05.03.2002 in the absence of return as the same was filed only on 08.03.2002. After the assessment was completed, the petitioner filed appeals before the Commissioner of Income Tax (appeals) for all the assessment years except the assessment year 1997-98 on 30.04.2002 and for the assessment years 1997-98 on 02.04.2002. When the appeals were so pending before the Commissioner of Income Tax (Appeals) the petitioner filed an application for settlement of disputes under section 245C(1) of the Act before the first respondent.
3. The first respondent after taking note of the statutory requirements to maintain the said application under section 245C of the Act, ultimately rejected the application under section 245D(1) of the Act on the grounds that --
1. The applicant has not made "full and true" disclosure of his income and therefore, does not satisfy the conditions for admission of an application filed under section 245C
(1) for all the assessment years;
2. That no complexity of investigation is involved in the present case; and
3. There was no case within the meaning of section 245A(B) of the Act for the assessment year 1990-91 and therefore, the application under section 245C is not maintainable for this reason and also for the reasons stated in serial Nos.1 and 2 stated above.
4. Application under section 245C is not maintainable for assessment year 1997-98 as it does not fulfill the condition as laid down under proviso (a) to section 245C(1) as also for the reasons given at Sl. Nos.1 and 2 above stated.
The said order is assailed by the assessee in this writ petition.
4. Mr.C.Natarajan, senior counsel arguing on behalf of the petitioner contended that the order of the Settlement Commission is liable to be quashed as vitiated in its decision making process as well as suffering from "decisive error", that the lacking of complexity of investigation cannot be regarded as a conclusive requirement. The Settlement Commission proceeded as if under section 245D(1) the alleged "complexity of the investigation" is the sole criteria. The Tribunal overlooked the import of the expression "having regard to" the nature and circumstances of the case. The Settlement Commission erred in misconstruing the provision empowering it to settle the disputes. The order of the Settlement Commission is liable to be quashed on the ground that even the rejection order under section 245-D(1) has not been made on the basis of the materials contained in the report of the Commissioner and having regard to the nature and circumstances of the case. The word and is conjunctive that in the order impugned, no report of the Commissioner of Income Tax has been referred to.
5. Per contra, the learned Senior Standing Counsel for the revenue contended t
