ORDER :

Ujjal Bhuyan, J.

Heard Mr. J.V. Prasad, learned Standing Counsel, Income Tax Department appearing for the petitioner and Mr. M.Naga Deepak, learned counsel for respondent No.2 – assessee.

2. This writ petition has been filed by the Commissioner of Income Tax (Central), Basheerbagh, Hyderabad, assailing the legality and validity of the order dated 18.03.2008 passed by the Income Tax Settlement Commission, Additional Bench, Chennai (briefly, ‘the Settlement Commission’ hereafter), in Settlement Application No.AP/HD51/06-07/18/IT.

3. Respondent No.2 is an assessee under the Income Tax Act, 1961 (briefly, ‘the Act’ hereinafter) and is engaged in the business of civil construction. It is stated that business activities of respondent No.2 is spread over the then State of Andhra Pradesh, Maharashtra and Goa.

4. On 16.12.2004, a search and seizure operation was carried out in the business and residential premises of respondent No.2 under Section 132 of the Act. That apart, survey was also conducted under Section 133A of the Act. Pursuant to notice under Section 153A of the Act, respondent No.2 filed its returns of income for the assessment years 1999-2000 to 2005-2006 as under:

5. During pendency of the assessment proceeding following the search and seizure, respondent No.2 filed an application before the Settlement Commission under Section 245C of the Act. Respondent No.2 disclosed before the Settlement Commission additional income over and above which was declared under Section 153A of the Act in the returns of income as under:

6. In response to notice issued by the Settlement Commission, petitioner submitted objection under Rule 6 of the Income Tax Settlement Commission (Proceedings) Rules, 1986 (briefly, ‘the Rules’ hereinafter). In the said report, petitioner contended that application filed by respondent No.2 for settlement was not maintainable and should be rejected. However, Settlement Commission admitted the application of respondent No.2, whereafter petitioner had to submit a report under Rule 9 of the Rules disclosing therein as to how concealment of taxable income was detected by the revenue. It was mentioned therein that no new facts were disclosed by respondent No.2 in the application. In all, contention of the petitioner was that conditions for settlement in terms of Section 245C of the Act were absent and therefore, the application of respondent No.2 should be rejected. However, by the impugned order dated 18.03.2008, respondent No.1 i.e., Settlement Commission accepted the additional income offered by respondent No.2 at Rs.44,96,300.00. Consequently, petitioner was directed to issue demand notice to respondent No.2 to pay the income tax as per the order dated 18.03.2008 passed under Section 245D(4) of the Act. As a consequence of the settlement, Settlement Commission granted immunity to respondent No.2 from prosecution as well as from imposition of penalty under the Act.

7. Assailing the aforesaid order dated 18.03.2008, the present writ petition has been filed. By order dated 29.08.2008, a Division Bench of this Court had admitted the writ petition for hearing, but declined to grant any stay.

8. Since stay was declined, the effect of the order dated 18.03.2008 passed by the Settlement Commission had been given effect to. Therefore,