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2016 Supreme(Mad) 2615
IN THE HIGH COURT OF JUDICATURE AT MADRAS
T.S. SIVAGNANAM, J.
Dix Francis Tharakan House – Petitioner
Vs.
The Income Tax Settlement Commission, Additional Bench – Respondent
W.P. Nos. 21757, 21758, 23697, 23698, 21997 to 21999, 22041 to 22043 of 2005
Decided On : 12-08-2016
For the Petitioner: Mr. T.N. Seetharaman.
For the Respondents: Mr. T. Pramod Kumar Chopda and Mr. Raj Kumar Jhabakar.
The complexity of investigation and non-cooperation by the petitioners are factors to be considered by the Settlement Commission under Section 245D(1) in deciding the admissibility of Settlement Applications.
Headnote:
Income Tax Act - Settlement Commission - Section 245D(1)
Fact of the Case:
The petitioners challenged the common order passed by the Income Tax Settlement Commission, Chennai, rejecting their Settlement Applications under Section 245D(1) of the Income Tax Act, 1961. The petitioners, engaged in various business activities, filed NIL returns before the Assessing Officer and subsequently filed Settlement Applications offering undisclosed income. The Commission rejected the applications citing lack of complexity of investigation and non-cooperation by the petitioners.
Finding of the Court:
The Court upheld the Commission's decision, stating that the complexity of investigation is to be decided by the Commission based on the materials and circumstances of the case. The Court refused to interfere with the Commission's findings, as there were no procedural defects or violation of natural justice.
Issues: The issues revolved around the rejection of Settlement Applications under Section 245D(1) based on the lack of complexity of investigation and non-cooperation by the petitioners.
Ratio Decidendi: The Court held that the Commission's determination of complexity of investigation and non-cooperation by the petitioners is within its jurisdiction, and the Court should not interfere unless there are procedural defects or violation of natural justice.
Final Decision: The Writ Petitions were dismissed, and the Court upheld the Commission's rejection of the Settlement Applications.
1. In all these Writ Petitions, the petitioners have challenged the common order passed by the Additional Bench of the Income Tax Settlement Commission, Chennai, dated 26.04.2005, under Section 245D(1) of the Income Tax Act, 1961 (Act). Since the contentions raised by all the petitioners are identical and they are aggrieved by the common order, these Writ Petitions were heard together and are disposed of by this common order.
2. For the purpose of disposal of these Writ Petitions, the Writ Petition filed by M/s. Tharakan's Royal Jewellery in W.P. No. 21758 of 2005, is taken up as the lead case. The petitioner filed a Settlement Application under Section 245C(1) of the Act on 30.07.2004 for settlement of its case for the block period 01.04.1996 to 13.08.2002. The Settlement Application was numbered and after hearing the petitioner, the Commission passed an order under Section 245D(1) of the Act, dated 26.04.2005, rejecting the Settlement Application. Similarly, the Settlement Applications filed by the other petitioners were also rejected and challenging the same, these Writ Petitions have been filed.
3. Before I go into the contentions raised by the parties, it would be necessary to take note of the following facts:-
The petitioner M/s. Tharakan's Royal Jewellery is a partnership firm engaged in the manufacture and sale of gold and silver ornaments at Kunamkulam Trichur District, Kerala State. It is stated that the firm consists of about 13 partners, who admittedly, belong to the same family i.e., they are brothers and their respective spouses. It is stated that the business activities of the brothers and their spouses are manufacture and sale of gold and silver ornaments under the names of Tharakan's Royal Jewellery, Kunnamkulam, (Petitioner) Tharakan's Royal Jewellery, Trichur, Fashion Jewellery, Chavakkad, Royal Jewellery, Chavakkad, and Wilson Jewellery Chavakkad; money lending individually and in partnership in the name and style Kottappadi Kshemodayam Co., Chavakkad, M/s. Royal Financing Company, Chavakkad and Wilson Trading Company, Chavakkad; manufacture and sale of furniture under the trade name Tharakan's Fashion Furniture, Chavakkad; Chit business under the name M/s. Bhakta Priya Kuries Pvt. Ltd. Chavakkad. According to the petitioner, there is intermingling of funds between the family members and business concerns mentioned above. A search was conducted under Section 132 of the Act on 13.08.2002, in all the business establishment workshops, residential premises etc., in which about 12kgs of gold were seized apart from that fixed deposit receipts, cash certificates, books of accounts, etc. Pursuant to the search and seizure operation, notices were issued under Section 158BC of the Act, calling upon the petitioners and others to furnish returns setting forth total income including undisclosed income for the said block period. Uniformly all the petitioners filed NIL returns in Form-2B on 09.07.2004, before the Assessing Officer and after about a month, filed Settlement Application before the Settlement Commission, offering undisclosed income as additional income. The petitioners through their authorised representative appeared before the Commission and submitted regarding the nature and circumstances of the case and the complexity of the investigation involved. They submitted that in view of multiple business activities carried on by the group and intermingling of funds between the individuals as well as the firms, in which they are partners, the determination of undisclosed income involves complexity of investigation. The Settlement Commission did not agree with this submission and by the impugned order has rejected the applications.
4. Mr. T.N. Seetharaman, learned counsel appearing for the petitioner would contend that the findings rendered by the Settlement commission stating that the case does not present any complexity of investigation, is erroneous and invited the attention of this Court to paragraphs 5 and 6
