Gupta Trademart Pvt Ltd vs Deputy Commi Of Income Tax Anr
2021 Latest Caselaw 3964 Raj/2

        HIGH COURT OF JUDICATURE FOR RAJASTHAN
                    BENCH AT JAIPUR

                    S.B. Civil Writ Petition No. 8677/2014

Gupta Trademart Pvt Ltd, C-46, Opp. Laxminarayan Vihar, Ajmer
Road, Madanganj Kishangarh, Distt.- Ajmer. Rajasthan through
its Director Sh. Rajendra Gupta S/o late Shri Babu Lal Gupta,
Aged 49 years R/o Opp. Laxminarayan Vihar, Ajmer Road,
Madanganj Kishangarh, Distt.- Ajmer. Rajasthan
                                                                                  ----Petitioner
                                             Versus
1. Deputy Commissioner of Income Tax, Central Circle-1, Income
Tax Department, Statue Circle, Jaipur.
2.   Commissioner              of     Income           Tax,      Central,         Income           Tax
Department, Statue Circle, Jaipur.
                                                                             ----Respondents
                                      Connected With
                    S.B. Civil Writ Petition No. 8699/2014
Rajendra Gupta S/o late Shri Babu Lal Gupta, Aged 49 years R/o
Opp. Laxminarayan Temple, Ajmer Road, Madanganj-Kishangarh,
Distt.- Ajmer. Rajasthan-305801
                                                                                  ----Petitioner
                                             Versus
1. Deputy Commissioner of Income Tax, Central Circle-1, Jaipur.
2. Commissioner of Income Tax, Central, Jaipur.
                                                                               ----Respondent


For Petitioner(s)                 :     Ms. Sakshi Srivastava, Adv. with
                                        Mr. Bhrigu Sharma, Adv.
For Respondent(s)                 :     Mr. Anil Mehta, AAG with
                                        Mr. Siddharth Bapna



     HON'BLE MR. JUSTICE SANJEEV PRAKASH SHARMA

                                  Judgment / Order

Reserved on 06/08/2021
Pronounced on 25/08/2021



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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:-


       "245C. [(1) An assessee may, at any stage of a case
       relating to him, make an application in such form and
       in such manner as may be prescribed, and containing
       a full and true disclosure of his income which has not
       been disclosed before the [Assessing Officer], the
       manner in which such income has been derived, the
       additional amount of income-tax payable on such
       income and such other particulars as may be
       prescribed, to the Settlement Commission to have
       the case settled and any such application shall be
       disposed of in the manner hereinafter provided:
       [Provided that no such application shall be made
       unless,--

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(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

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business or profession of the specified person or any
director, partner or member of such company, firm,
association or family, or any relative of such director,
partner or member;
(v) a company, firm, association of persons or Hindu
undivided family of which a director, partner or
member, as the case may be, has a substantial
interest in the business or profession of the specified
person; or any director, partner or member of such
company, firm, association or family or any relative
of such director, partner or member;
(vi) any person who carries on a business or
profession,--
(A) where the specified person being an individual, or
any relative of such specified person, has a
substantial interest in the business or profession of
that person; or
(B) where the specified person being a company,
firm, association of persons or Hindu undivided
family, or any director of such company, partner of
such firm or member of the association or family, or
any relative of such director, partner or member, has
a substantial interest in the business or profession of
that person;
(b) a person shall be deemed to have a substantial
interest in a business or profession, if--
(A) in a case where the business or profession is
carried on by a company, such person is, [on the
date of search], the beneficial owner of shares (not
being shares entitled to a fixed rate of dividend,
whether with or without a right to participate in
profits) carrying not less than twenty per cent of the
voting power; and
(B) in any other case, such person is, [on the date of
search], beneficially entitled to not less than twenty
per cent of the profits of such business or
profession.]
(1A) For the purposes of sub-section (1) of this
section 2 [***], the additional amount of income-tax
payable in respect of the income disclosed in an
application made under sub-section (1) of this
section shall be the amount calculated in accordance
with the provisions of sub-sections (1B) to (1D).
[(1B) Where the income disclosed in the application
relates to only one previous year,--
(i) if the applicant has not furnished a return in
respect of the total income of that year, then, tax


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shall be calculated on the income disclosed in the
application as if such income were the total income;
(ii) if the applicant has furnished a return in respect
of the total income of that year, tax shall be
calculated on the aggregate of the total income
returned and the income disclosed in the application
as if such aggregate were the total income.]
[(1C) The additional amount of income-tax payable
in respect of the income disclosed in the application
relating to the previous year referred to in sub-
section (1B) shall be,--
(a) in a case referred to in clause (i) of that sub-
section, the amount of tax calculated under that
clause;
(b) in a case referred to in clause (ii) of that sub-
section, the amount of tax calculated under that
clause as reduced by the amount of tax calculated on
the total income returned for that year;
(c) * * * * *
(1D) Where the income disclosed in the application
relates to more than one previous year, the
additional amount of income-tax payable in respect
of the income disclosed for each of the years shall
first be calculated in accordance with the provisions
of sub-sections (1B) and (1C) and the aggregate of
the amount so arrived at in respect of each of the
years for which the application has been made under
sub-section (1) shall be the additional amount of
income-tax payable in respect of the income
disclosed in the application.
(1E) * * * * *
(2) Every application made under sub-section (1)
shall be accompanied by such fees as may be
prescribed.
(3) An application made under sub-section (1) shall
not be allowed to be withdrawn by the applicant.
[(4) An assessee shall, on the date on which he
makes an application under sub-section (1) to the
Settlement Commission, also intimate the Assessing
Officer in the prescribed manner of having made
such application to the said Commission.]
[(5) No application shall be made under this section
on or after the 1st day of February, 2021]
Procedure on receipt of an application under
section 245C.--
245D.        [(1) On receipt of an application under
section 245C, the Settlement Commission shall,
within seven days from the date of receipt of the

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application, issue a notice to the applicant requiring
him to explain as to why the application made by him
be allowed to be proceeded with, and on hearing the
applicant, the Settlement Commission shall, within a
period of fourteen days from the date of the
application, by an order in writing, reject the
application or allow the application to be proceeded
with:
Provided that where no order has been passed
within the aforesaid period by the Settlement
Commission, the application shall be deemed to have
been allowed to be proceeded with.]
(1A) [Omitted by the Finance (No. 2) Act 1991
(2) A copy of every order under sub-section (1) shall
be sent to the applicant and to the [Principal
Commissioner or Commissioner].
[(2A) Where an application was made under section
245C before the 1st day of June, 2007, but an order
under the provisions of sub-section (1) of this
section, as they stood immediately before their
amendment by the Finance Act, 2007, has not been
made before the 1st day of June, 2007, such
application shall be deemed to have been allowed to
be proceeded with if the additional tax on the income
disclosed in such application and the interest thereon
is paid on or before the 31st day of July, 2007.
Explanation.--In respect of the applications referred
to in this sub-section, the 31st day of July, 2007
shall be deemed to be the date of the order of
rejection or allowing the application to be proceeded
with under sub-section (1).
(2B) The Settlement Commission shall,--
(i) in respect of an application which is allowed to be
proceeded with under sub-section (1), within thirty
days from the date on which the application was
made; or
(ii) in respect of an application referred to in sub-
section (2A) which is deemed to have been allowed
to be proceeded with under that sub-section, on or
before the 7th day of August, 2007,
call for a report from the [Principal Commissioner or
Commissioner], and the [Principal Commissioner or
Commissioner] shall furnish the report within a
period of thirty days of the receipt of communication
from the Settlement Commission.
(2C) Where a report of the [Principal Commissioner
or Commissioner] called for under sub-section (2B)
has been furnished within the period specified

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therein, the Settlement Commission may, on the
basis of the report and within a period of fifteen days
of the receipt of the report, by an order in writing,
declare the application in question as invalid, and
shall send the copy of such order to the applicant
and the [Principal Commissioner or Commissioner]:
Provided that an application shall not be declared
invalid unless an opportunity has been given to the
applicant of being heard:
Provided further that where the [Principal
Commissioner or Commissioner] has not furnished
the report within the aforesaid period, the Settlement
Commission shall proceed further in the matter
without the report of the [Principal Commissioner or
Commissioner].
[Provided alsothat where in respect of an
application, an order, which was required to be
passed under this sub-section on or before the 31st
day of January, 2021, has not been passed on or
before the 31st day of January, 2021, such
application shall deemed to be valid]
(2D) Where an application was made under sub-
section (1) of section 245C before the 1st day of
June, 2007 and an order under the provisions of sub-
section (1) of this section, as they stood immediately
before their amendment by the Finance Act, 2007,
allowing the application to have been proceeded
with, has been passed before the 1st day of June,
2007, but an order under the provisions of sub-
section (4), as they stood immediately before their
amendment by the Finance Act, 2007, was not
passed before the 1st day of June, 2007, such
application shall not be allowed to be further
proceeded with unless the additional tax on the
income disclosed in such application and the interest
thereon, is, notwithstanding any extension of time
already granted by the Settlement Commission, paid
on or before the 31st day of July, 2007.]
[(3) The Settlement Commission, in respect of--
(i) an application which has not been declared invalid
under sub-section (2C); or
(ii) an application referred to in sub-section (2D)
which has been allowed to be further proceeded with
under that sub-section,
may call for the records from the [Principal
Commissioner       or    Commissioner]      and    after
examination of such records, if the Settlement
Commission is of the opinion that any further enquiry

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or investigation in the matter is necessary, it may
direct the [Principal Commissioner or Commissioner]
to make or cause to be made such further enquiry or
investigation and furnish a report on the matters
covered by the application and any other matter
relating to the case, and the [Principal Commissioner
or Commissioner] shall furnish the report within a
period of ninety days of the receipt of communication
from the Settlement Commission:
Provided that where the [Principal Commissioner or
Commissioner] does not furnish the report within the
aforesaid period, the Settlement Commission may
proceed to pass an order under sub-section (4)
without such report.
(4) After examination of the records and the report
of the [Principal Commissioner or Commissioner], if
any, received under--
(i) sub-section (2B) or sub-section (3), or
(ii) the provisions of sub-section (1) as they stood
immediately before their amendment by the Finance
Act, 2007, and after giving an opportunity to the
applicant and to the [Principal Commissioner or
Commissioner] to be heard, either in person or
through a representative duly authorised in this
behalf, and after examining such further evidence as
may be placed before it or obtained by it, the
Settlement Commission may, in accordance with the
provisions of this Act, pass such order as it thinks fit
on the matters covered by the application and any
other matter relating to the case not covered by the
application, but referred to in the report of the
[Principal Commissioner or Commissioner].
(4A) The Settlement Commission shall pass an order
under sub-section (4),--
(i) in respect of an application referred to in sub-
section (2A) or sub-section (2D), on or before the
31st day of March, 2008;
(ii) in respect of an application made on or after the
1st day of June, 2007 [but before the 1st day of
June, 2010], within twelve months from the end of
the month in which the application was made;]
[(iii) in respect of an application made on or after the
1st day of June, 2010, within eighteen months from
the end of the month in which the application was
made.]
[(5) Subject to the provisions of section 245BA, the
materials brought on record before the Settlement
Commission shall be considered by the Members of

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the concerned Bench before passing any order under
sub-section (4) and, in relation to the passing of such
order, the provisions of section 245BD shall apply.]
(6) Every order passed under sub-section (4) shall
provide for the terms of settlement including any
demand by way of [tax, penalty or interest], the
manner in which any sum due under the settlement
shall be paid and all other matters to make the
settlement effective and shall also provide that the
settlement shall be void if it is subsequently found by
the Settlement Commission that it has been obtained
by fraud or misrepresentation of facts.
[(6A) Where any tax payable in pursuance of an
order under sub-section (4) is not paid by the
assessee within thirty-five days of the receipt of a
copy of the order by him, then, whether or not the
Settlement Commission has extended the time for
payment of such tax or has allowed payment thereof
by instalments, the assessee shall be liable to pay
simple interest at [one and one-fourth per cent. for
every month or part of a month] on the amount
remaining unpaid from the date of expiry of the
period of thirty-five days aforesaid.]
[(6B) The Settlement Commission may, with a view
to rectifying any mistake apparent from the record,
amend any order passed [***] under sub-section (4)
--

(a) at any time within a period of six months from the end of the month in which the order was passed; or

(b) at any time within the period of six months from the end of the month in which an application for rectification has been made by the Principal Commissioner or the Commissioner or the applicant, as the case may be:

Provided that no application for rectification shall be made by the Principal Commissioner or the Commissioner or the applicant after the expiry of six months from the end of the month in which an order under sub-section (4) is passed by the Settlement Commission:

Provided further that an amendment which has the effect of modifying the liability of the applicant shall not be made under this sub-section unless the Settlement Commission has given notice to the applicant and the Principal Commissioner or Commissioner of its intention to do so and has

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allowed the applicant and the Principal Commissioner or Commissioner an opportunity of being heard.] (7) Where a settlement becomes void as provided under sub-section (6), the proceedings with respect to the matters covered by the settlement shall be deemed to have been revived from the stage at which the application was allowed to be proceeded with by the Settlement Commission and the income- tax authority concerned, may, notwithstanding anything contained in any other provision of this Act, complete such proceedings at any time before the expiry of two years from the end of the financial year in which the settlement became void.

[(8) For the removal of doubts, it is hereby declared that nothing contained in section 153 shall apply to any order passed under sub-section (4) or to any order of assessment, reassessment or recomputation required to be made by the [Assessing Officer] in pursuance of any directions contained in such order passed by the Settlement Commission [and nothing contained in the proviso to sub-section (1) of section 186 shall apply to the cancellation of the registration of a firm required to be made in pursuance of any such directions as aforesaid.]"

6. Brief facts of the case as noticed are that on 09/09/2010, the

petitioner and its director Rajendra Gupta (petitioner in CWP

No.8699/2014) were subjected to search and seizure under

Section 132 of the IT Act and were served with consequential

notices issued under Section 153A of the IT Act for initiating

assessment proceedings in case of search. The petitioner

approached the Settlement Commission and filed application

under Section 245C(1) of the IT Act in the prescribed form

seeking settlement of their cases on 29/06/2012 for the period AY

2007-08 to 2012-13 making true and full disclosure of income not

disclosed before the Assessing Officer alongwith the manner in

which such income has been derived and additional amount of

Income Tax payable thereon for the period specified therein. The

Settlement Commission upon being satisfied that the petitioner

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has fulfilled the condition precedent under Section 245A, 245C

and 245D(1) of the IT Act allowed the Settlement Application to

be proceeded with by passing order under Section 245D(1) of the

IT Act. Further, as per Section 245D(2B) of the IT Act, the

respondent No.2 furnished its report wherein objection as to the

validity of the Settlement Application of the petitioner was made

on the ground of non-making of true and full disclosure of income.

However, the Settlement Commission after considering the report

passed an order under Section 245D(2C) of the IT Act declaring

the application to be valid and accordingly proceeded further with

the application. Subsequent to passing order under Section

245D(2C) of the IT Act, the Settlement Application along with

annexures were forwarded to the respondent no. 2 with the

directions to furnish its report within the prescribed period as per

the procedure prescribed in Rule-9 of the IT Settlement

(Procedure) Rules, 1997 and Rule-9 report was submitted on

16/11/2012 and rejoinder to the same was submitted by the

petitioner.

7. It was contended that in the report submitted by the

respondent no.2 under Rule 9, it was stated that the disclosure of

the additional income of Rs.30,98,140/- made by the petitioner

before the Settlement Commission is incomplete, improper, untrue

and not acceptable and it may at least be assessed at

Rs.40,88,71,231/-. The Settlement Commissioner accordingly vide

order under Section 245D(3) of the IT Act issued on 07/11/2013

instructed the respondent No.2 to get the examination done by

the Forensic Science Laboratory (hereinafter referred to as FSL) in

respect of certain documents seized from the premises of the

Director of the petitioner and Shri Rajesh Jain of Mayura Group.

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The respondent No.2 vide its report dated 06/12/2013 submitted

that the report from FSL was unlikely to be received before the

limitation for passing order under Section 245D(4) in GTPL group

i.e. 31/12/2013.

8. It was further contended that the Settlement Commission by

going beyond its jurisdiction and without appreciating that the

Settlement and adjudication/assessment proceedings are two

alternative modes of dispute resolution and the scope and process

of both are fundamentally different, passed the impugned order

dated 19/12/2013 under Section 245D(4) of the Act in a manner

that the Settlement Applications were disposed of by the

Settlement Commission by assuming role as of an

Assessing/Adjudicating Officer instead of statutory role as a

Settlement Commission.

9. It was further stated that from the findings of the Settlement

Commission, it is prima facie evident that the Commission

disbelieved the true and full disclosure and assumed the role of

Assessing Officer and made an addition which is 155 times of the

disclosed. It is further stated that the petitioner submitted an

application for rectification under Section 164 and by way of an

order dated 18/06/2014 the Settlement Commission partly

accepted the application under Section 245D(6B) of the IT Act.

10. It was further contended that the impugned order dated

19/12/2013 passed by the learned Settlement Commission under

Section 245D(4) of the IT Act is without jurisdiction and suffers

from vice of non-application of mind, arbitrariness and the

Commission exceeded its jurisdiction by proceeding as Assessing

Officer. The Commission completely lost sight of the

maintainability criteria for the Settlement Application prescribed

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under Section 245C(1) of the IT Act wherein the full and true

disclosure of income by an assessee in the Settlement Application

is the condition precedent/eligibility for a valid Settlement

Application. Thus, when the Settlement Commission is of the view

that full and true disclosure of income has not been made then the

Settlement Application itself becomes non-maintainable and the

same is the prerequisite for a valid Application under Section

245C(1) of the IT Act. It is also submitted that the procedure of

settlement is different from the Assessment.

11. In support of his submissions, learned counsel for the

petitioners relied upon the judgments rendered in Kakadia

Builders (P) Ltd. Vs. CIT; (2019) 4 SCC 543; Principal

Commissioner of Income Tax Vs. Rasi Seeds (P) Ltd.: 2021

SCC OnLine Mad 1706; Commissioner of Income Tax Vs.

Income Tax Settlement Commissioner: (2014) 365 ITR 68

Ajmera Housing Corporation Vs. CIT: (2010)8 SCC 739;

Commissioner of Income Tax Vs. Income Tax Settlement

Commission: 2014 SCC OnLine Bom 4726; ACE Investments

Ltd. Vs. Settlement Commission: 2003 SCC OnLine Mad

1100; Canara Jewellers Vs. Settlement Commission: 2009

SCC OnLine Mad 2905; Assistant Commissioner of Income

Tax Vs. Emta Coal Limited: 2017 SCC OnLine Cal 13188; CIT

Vs. Express Newspapers Ltd.: (1994)2 SCC 374; P.L. Tatwal

Vs. State of MP: (2014)11 SCC 431; CBI Vs. Ashok Kumar

Aggarwal: (2014)14 SCC 295; Kan Singh Parihar Vs. State

of Raj. & Ors. (SB Civil Writ Petition No.12983/2017),

decided on 20/07/2021 by this Court; Brij Lal Vs. CIT:

(2011) 1 SCC 1; Abdul Rahim Vs. Income Tax Settlement

Commission & Ors. (WP No.14404/2018), decided by

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Madras High Court vide order dated 24/08/2018 and

Commissioner of Income Tax Central-II Vs. Income Tax

Settlement Commission & Ors..

12. Per-contra, learned counsel for the Revenue supported the

order impugned and submitted that once the petitioners have

surrendered themselves before the Settlement Commission, the

Settlement Commission has complete and full right to additionally

look into the other incomes which may not have been disclosed by

them and it can also proceed to assess itself the income of the

petitioners. The contention, therefore, of the petitioners has been

opposed with the submission that the Settlement Commission has

a jurisdiction much wider.

13. Learned counsel for the Revenue relies on the law laid down

by the Supreme Court in Brij Lal & ors. Vs. Commissioner of

Income Tax, Jalandhar: (2011)1 SCC 1 in support of his

contentions.

14. Learned counsel for the Revenue has also filed written

submissions wherein it has been stated that the writ petitions

should be dismissed also on account of suffering from delay,

latches and acquiescence. It is stated that the writ petition has

been filed on 11/07/2014 against the final order which was passed

on 19/12/2013. It is further stated that the petitioner has acted

upon and deposited the installments as per the directions issued

by the learned Settlement Commission in the order impugned. The

amount was directed to be deposited by the learned Settlement

Commission in 6 installments and the petitioners moved

application praying to deposit the amount in 24 installments

instead. The learned Settlement Commission granted benefit and

increased the installments to 15 which was accepted by the

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petitioner-assessee and he acted upon accordingly. Thus, it is a

case of acquiescence to the order passed by the learned

Settlement Commission and therefore, the petitioner is estopped

from challenging the said order before this Court after accepting

the same without any demur.

15. Learned counsel for the Revenue also pointed out that by the

impugned order, the petitioner was granted immunity from

prosecution and penalty imposable under the Act as provided

under the provisions contained under Section 245H of the Act. The

petitioner and its officers have been enjoying such protection and

benefit and therefore, are now estopped from challenging the

order impugned. The petitioner-assessee has been accorded the

benefit of not going through the regular assessment proceedings

in pursuance to Section 153-A of the Act.

16. Learned counsel for the Revenue also submitted that a

finality is attained to the order passed by the learned Settlement

Commission under Section 245D(4) of the Act. He supports the

submissions in terms of Section 245I of the Act. It is further

submitted that the learned Settlement Commission order can be

considered as void only if it is found that the order was obtained

by fraud or misrepresentation of facts. The terms used in Section

245D(4) of the Act are much wider and even any other

information, which the learned Settlement Commission may

receive, can be taken note of while passing the order. The learned

Settlement Commission has a power of assessment. He also relied

upon a judgment of the Supreme Court rendered in Ajmera

Housing Corporation & Anr. Vs. Commissioner of Income

Tax: (2010) 8 SCC 739.

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17. After hearing learned counsel for the parties, this Court has

gone through the material available on record as well as the

judgments cited at bar.

18. The powers of settlement commission were the subject

matter of examination before two Constitutional Benches of the

Supreme Court in Commissioner of Income Tax, Mumbai Vs.

Anjum M.H. Ghaswala & Ors.: (2002) 1 SCC 633 and Brij Lal

& ors. Vs. Commissioner of Income Tax, Jalandha (supra).

However, the issue raised before this Court in the present writ

petitions has not been examined by the Supreme Court on both

the aforesaid cases. In Commissioner of Income Tax, Mumbai

Vs. Anjum M.H. Ghaswala & Ors. (supra) the question, which

arose for consideration, was "Whether the Settlement Commission

constituted under Section 245B of the Act has the jurisdiction to

reduce or waive the interest chargeable under Section 234A, 234B

and 234C of the Act while passing orders under Section 245D(4)

of the Act". In Brij Lal & ors. Vs. Commissioner of Income

Tax, Jalandhar (supra), the questions re-framed by the

Constitutional Bench were "Whether Section 234B of the Act

applies to the proceedings of Settlement Commission under

Chapter XIX-A of the Act?" and second if yes, "What is the

terminal point for levy of such interest- whether such interest

should be computed up to the date of the order under Section

245D(1) or up to the date of the order of the Commission under

Section 245-D(4)?" and third "Whether the Settlement

Commission could reopen its concluded proceedings by invoking

Section 154 of the said Act so as to levy interest under Section

234-B, though it was not so done in the original proceedings?"

Thus, the judgments were essentially in relation to the interest for

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defaults in payments of advance tax and at what terminal point

the levy of such interest can be imposed and what are the powers

in granting the relief under the CBDT Circulars. The moot

question, which has been essentially raised in the present writ

petitions is "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?" and secondly, "Whether it can proceed to

make assessment after adding the undisclosed income and

thereafter pass orders by including such non-disclosure?."

19. The Madras High Court in Principal Commissioner of

Income Tax Vs. Rasi Seeds (P) Ltd. & Anr. (supra), without

adjudicating the issue, held that "it is not in dispute that for

entertaining an application for settlement under Section 245-C of

the Income Tax Act, the assessee must disclose true and full

income enabling the Commission to settle the issues. If any non-

disclosure is identified, during the course of the proceedings, that

itself is sufficient to reject the application in limine. The

Commission is not empowered to proceed further as in the event

of identifying non-disclosure of income, since the Assessing

Officer is the Authority to proceed with the reassessment.

20. In Ajmera Housing Corporation & Anr. Vs.

Commissioner of Income Tax (supra), the Supreme Court held

as under:-

"27. It is clear that disclosure of "full and true" particulars of undisclosed income and "the manner" in which such income had been derived are the pre-

requisites for a valid application under Section 245C(1) of the Act. Additionally, the amount of income tax payable on such undisclosed income is to be computed and mentioned in the application. It needs

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little emphasis that Section 245C(1) of the Act mandates "full and true" disclosure of the particulars of undisclosed income and "the manner" in which such income was derived and, therefore, unless the Settlement Commission records its satisfaction on this aspect, it will not have the jurisdiction to pass any order on the matter covered by the application.

29. Since Rules 6 and 8 of the 1987 Rules have some bearing on the issues involved, for the sake of ready reference, these are extracted below:

6. Commissioner's report etc., under Section 245C(1).-- On receipt of a settlement application, a copy of the said application (other than the Annexure and the statements and other documents accompanying such Annexure) shall be forwarded by the Commission to the Commissioner with the direction to furnish his report under Sub-section (1) of section 245D within thirty days of the receipt of the said copy of the application by him or within such further period as the Commission may specify.

8. Commissioner's further report.--Where an order is passed by the Commission under Sub-section (1) of section 245D allowing the settlement application to be proceeded with, copy of the Annexure to the said application, together with a copy of each of the statements and other documents accompanying such annexure, shall be forwarded to the Commissioner along with a copy of the said order with the direction that the Commissioner shall furnish a further report within ninety days of the receipt of the said Annexure (including the statements and other documents accompanying it or within such further period as the Commission may specify.

30. It will also be useful to extract the relevant portions of Form (No. 34B), prescribed for making an application under Section 245C(1) of the Act:

[Form No. 34B] [See rules 44C and 44CA] Form of application for settlement of cases under section 245C(1) of the Income-tax Act, 1961

10. Particulars of the issues to be settled, nature and circumstances of the case and complexities of the investigation involved [See Note 7]

11. Full and true disclosure of income which has not been disclosed before the Assessing Officer, the manner in which such income has been derived and

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the additional amount of income-tax payable on such income [See Notes 9 and 10] ....

Signed (Applicant) Notes:

....

7. Full details of issues for which application for settlement is made, the nature and circumstances of the case and complexities of the investigation involved must be indicated against item 10. Where the application relates to more than one assessment year, these details should be furnished for each assessment year.

....

9. The additional amount of income-tax payable on the income referred to in item 11 should be calculated in the manner laid down in Sub-sections (1A) to (1D) of Section245C.

10. The details referred to in item 11 shall be given in the Annexure to this application.

(Emphasis supplied by us)

34. In our opinion even when the Settlement Commission decides to proceed with the application, it will not be denuded of its power to examine as to whether in his application under Section 245C(1) of the Act, the assessee has made a full and true disclosure of his undisclosed income. We feel that the report(s) of the Commissioner and other documents coming on record at different stages of the consideration of the case, before or after the Settlement Commission has decided to proceed with the application would be most germane to determination of the said question.

35. It is plain from the language of Sub-section (4) of Section 245D of the Act that the jurisdiction of the Settlement Commission to pass such orders as it may think fit is confined to the matters covered by the application and it can extend only to such matters which are referred to in the report of the Commissioner under Sub-section (1) or Sub-section (3) of the said Section. A "full and true" disclosure of income, which had not been previously disclosed by the assessee, being a pre-condition for a valid application under Section 245C(1) of the Act, the scheme of Chapter XIX-A does not contemplate revision of the income so disclosed in the application against item No. 11 of the form. Moreover, if an

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assessee is permitted to revise his disclosure, in essence, he would be making a fresh application in relation to the same case by withdrawing the earlier application. In this regard, Section245C(3) of the Act which prohibits the withdrawal of an application once made under Sub-section (1) of the said Section is instructive in as much as it manifests that an assessee cannot be permitted to resile from his stand at any stage during the proceedings. Therefore, by revising the application, the applicant would be achieving something indirectly what he cannot otherwise achieve directly and in the process rendering the provision of Sub-section (3) of Section245C of the Act otiose and meaningless. In our opinion, the scheme of said Chapter is clear and admits no ambiguity.

36. It is trite law that a taxing statute is to be construed strictly. In a taxing Act one has to look merely at what is said in the relevant provision. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. There is no room for any intendment. There is no equity about a tax. (See:Cape Brandy Syndicate v. Inland Revenue Commissioners (1921) 1 KB 64 and Federation of A.P. Chambers of Commerce and Industry and Ors. v. State of A.P. and Ors.: (2000) 6 SCC 550. In interpreting a taxing statute, the Court must look squarely at the words of the statute and interpret them. Considerations of hardship, injustice and equity are entirely out of place in interpreting a taxing statute. (Also see:CST v. Modi Sugar Mills Ltd.: 1961 (2) SCR 189.)

39. Before addressing the other issues, at the outset, we record our disapproval with the view of the High Court that it would not be proper to set aside the proceedings before the Settlement Commission even though it was convinced that the assessee had not made full and true disclosure of their income while making application under Section 245C of the Act. As stated above, in its earlier order Dated 28th July, 2000 while declaring order Dated 17th November, 1994, as ab initio void and setting aside order Dated 29th January, 1999, the High Court had remitted the case to the Settlement Commission to decide the entire matter afresh, including the question of maintainability of the application under Section 245C(1) of the Act. The said order of the High Court was put in issue before this Court and was set aside vide order Dated 11th July, 2006 and the case was remanded back to

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the High Court for fresh consideration. Nevertheless, all points raised by the parties, including the plea of the revenue that the application filed by the assessee before the Settlement Commission was not maintainable as the assessee had not made a full and true disclosure of their undisclosed income were kept open. The High Court addressed itself on the said issue and found that the assessee had not made a full and true disclosure of their income while making the application under Section 245C(1) of the Act, yet did not find it proper to set aside the proceedings on that ground. Having recorded the said adverse finding on the very basic requirement of a valid application under Section 245C(1) of the Act, the High Court's opinion that it would not be proper to set aside the proceedings is clearly erroneous. The High Court appears to have not appreciated the object and scope of the scheme of settlement under Chapter XIX- A of the Act."

21. The aforesaid judgments clearly show the intent of the Apex

Court to mean that this Court would have to set aside the

proceedings before the Settlement Commission if it reaches to a

conclusion that the assessee had not made full and true disclosure

of its income.

However, in Ajmera Housing Corporation & Anr. Vs.

Commissioner of Income Tax (supra), the case was different

to the facts of the present case. In that case, while the assessee

in his application moved under Section 245C of the Act disclosed

the income which was made a basis for the decision of the

Settlement Commission, in the present case, the assessee had

disclosed the income which was not found to be full and true

disclosure of income by the Settlement Commission and the

Settlement Commission on the basis of the report submitted by

the Commissioner of Income Tax, proceeded to make assessment

and passed orders. Thus, the disclosure made by the petitioners

was not accepted by the Settlement Commission. The petitioners,

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therefore being aggrieved, submitted that if the Settlement

Commission had not accepted the disclosure as full and true

disclosure of income, it could not have proceeded further and it is

their submission that the order passed by the Settlement

Commission is ab-initio, void.

22. In the facts of the present case, it would be apposite to

notice the observations made by the Apex Court in Brij Lal & ors.

Vs. Commissioner of Income Tax, Jalandhar (supra) which

read as under:-

"20. Under Section 245D(2A) the applicant is required to pay the additional amount of income tax payable on the income disclosed in the application within 35 days of the receipt of the copy of the order passed by the Settlement Commission under Section 245D(1) allowing such application to be proceeded with. Under Section 245D(2A) the applicant shall, within 35 days of the receipt of the order under Section 245D(1) allowing the application to be proceeded with, pay the additional amount of income tax payable on the income disclosed. Under Section 245D(4) on compliance of Sections 245D(2A) and (2C) and on examination of relevant records and reports, the Settlement Commission may pass such orders as it thinks fit on the matters covered by the application and any other matter relating to the "case" referred to in the report of the Commissioner of Income Tax.

21. If one carefully analyses the provisions of Sections 245D(1) and 245D(4), one finds two distinct stages - one allowing the application to be proceeded with (or rejected) and the other of disposal of the application by appropriate orders being passed by the Settlement Commission. In between the two stages, we have provisions which require the applicant to pay the additional income tax and interest. Even under Section 245D(7) it is provided that where the settlement becomes void under Section 245D(6) the proceedings with respect to the matters covered by the settlement shall be deemed to have revived from the stage at which the application was allowed to be proceeded with by the Settlement Commission and

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the income tax authority may complete the proceedings within the period mentioned therein. Thus, Section 245D(7) brings out the difference between Section 245D(1) stage and Section 245D(4) stage. Under Section 245D(6), it is laid down that every order under Section 245D(4) shall provide for the Terms of Settlement including any demand by way of tax, penalty or interest.

23. Descriptively, it can be stated that assessment in law is different from assessment by way of settlement. If one reads Section 245D(6) with Section 245I, it becomes clear that every order of settlement passed under Section 245D(4) shall be final and conclusive as to the matters contained therein and that the same shall not be re-opened except in the case of fraud and misrepresentation. Under Section 245F(1), in addition to the powers conferred on the Settlement Commission under Chapter XIX-A, it shall also have all the powers which are vested in the income tax authority under the Act. In this connection, however, we need to keep in mind the difference between "procedure for assessment" under Chapter XIV and "procedure for settlement" under Chapter XIX-A (see Section 245D). Under Section 245F(4), it is clarified that nothing in Chapter XIX-A shall affect the operation of any other provision of the Act requiring the applicant to pay tax on the basis of self-assessment in relation to matters before the Settlement Commission.

25. Our detailed analysis shows that though Chapter XIX- A is a self-contained Code, the procedure to be followed by the Settlement Commission under Sections 245C and 245D in the matter of computation of undisclosed income; in the matter of computation of additional income tax payable on such income with interest thereon; the filing of settlement application indicating the amount of income returned in the return of income and the additional income tax payable on the undisclosed income to be aggregated as total income shows that Chapter XIX-A indicates aggregation of incomes so as to constitute total income which indicates that the special procedure under Chapter XIX-A has inbuilt mechanism of computing total income which is nothing but assessment (computation of total income).

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26.To elaborate, under Section 245C(1B), if the applicant has furnished a return in respect of his total income, tax shall be calculated on the aggregate of total income returned and the income disclosed in the settlement application as if such aggregate were total income. Under the Act, tax is payable on the total income as computed in accordance with the provisions of the Act. Thus, Section 143(3) provision is sought to be incorporated in Section 245C. When Parliament uses the words "as if such aggregate would constitute total income", it presupposes that under the special procedure the aggregation of the returned income plus income disclosed would result in computation of total income which is the basis for the levy of tax on the undisclosed income which is nothing but "assessment". Similarly, Section 245C(1C) provides for deductions from the total income computed in terms of Section 245C(1B).

27. Thus, the special procedure under Sections 245C and 245D in Chapter XIX-A shows that a special type of computation of total income is engrafted in the said provisions which is nothing but assessment which takes place at Section 245D(1) stage. However, in that computation, one finds that provisions dealing with a regular assessment, self-assessment and levy and computation of interest for default in payment of advance tax, etc. are engrafted. [See Sections 245C(1B), 245C(1C), 245D(6), 245F(3) in addition to Sections 215(3), 234A(4) and 234B(4)] (II) Terminal point for the levy of interest - Whether interest is payable under Chapter XIX-A up to the date of the order under Section 245D(1) or up to the date of the order under Section 245D(4)?

39. Moreover, as stated above, under the Act, there is a difference between assessment in law [regular assessment or assessment under Section 143(1)] and assessment by settlement under Chapter XIX-A. The order under Section 245D(4) is not an order of regular assessment. It is neither an order under Section 143(1) or 143(3) or 144. Under Sections 139 to 158, the process of assessment involves the filing of the return under Section 139 or under Section 142; inquiry by the A.O. under Sections 142 and 143 and making of the order of assessment by the A.O. under Section 143(3) or under Section 144 and issuing of

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notice of demand under Section 156 on the basis of the assessment order. The making of the order of assessment is an integral part of the process of assessment. No such steps are required to be followed in the case of proceedings under Chapter XIX-A. The said Chapter contemplates the taxability determined with respect to undisclosed income only by the process of settlement/ arbitration. Thus, the nature of the orders under Sections 143(1), 143(3) and 144 is different from the orders of the Settlement Commission under Section 245D(4).

40. Even in Commissioner of Income Tax v. Anjum M.H. Ghaswala and Ors. MANU/SC/0662/2001 : 252 ITR 1 there is no finding by this Court that the order of Settlement Commission under Section 245D(4) is an order of assessment under Section 143(3) or under Section 144. In Ghaswala's case the only question decided by this Court is that the interest under Section 234B is mandatory in nature and that Settlement Commission, therefore, had no authority to waive it.

41. Further, as stated above, the jurisdiction of the A.O. is not fettered merely because the applicant has filed the Settlement Application. The Act does not contemplate stay of the proceedings during that period, i.e., when the Settlement Commission is deciding whether to proceed or reject the settlement application. The jurisdiction of the Settlement Commission to proceed commences only after an order is passed under Section 245D(1). That, after making an application for settlement the applicant is not allowed to withdraw it [see Section 245C(3)]. Once the case stands admitted, the Settlement Commission shall have exclusive jurisdiction to exercise the powers of the Income Tax Authority.

42. The order of Settlement Commission under Section 245D(4) shall be final and conclusive under Section 245I subject to two qualifications under which it can be recalled, viz., fraud and misrepresentation but even here it is important to note that under Section 245D(7) where the settlement becomes void on account of fraud and misrepresentation the proceedings with respect to the matters covered by the settlement shall be deemed to have been revived from the stage at which the application was allowed

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to be proceeded with by the Settlement Commission. This further supports our view that there are two distinct stages under Chapter XIX- A and that the Legislature has not contemplated the levy of interest between order under Section 245D(1) stage and Section 245D(4) stage. Thus, interest under Section 234B will be chargeable till the order of the Settlement Commission under Section 245D(1), i.e., admission of the case.

44. As stated, proceedings before Settlement Commission are similar to arbitration proceedings. It contemplates assessment by settlement and not by way of regular assessment or assessment under Section 143(1) or under Section 143(3) or under Section 144 of the Act. In that sense, it is a Code by itself. It does not begin with the filing of the return but by filing the application for settlement. As stated above, under the Act, procedure for assessment falls in Chapter XIV (in which Section 154 falls) which is different from procedure for settlement in Chapter XIX-A in which Sections 245C and 245D fall. Provision for levy of interest for default in payment of advance tax under Section 234B falls in Chapter XVII [Section F] which deals with collection and recovery of tax which as stated above is incidental to the liability to pay advance tax under Section 207 (which is also in Chapter XVII) and to the computation of total income in the manner indicated under Chapter XIX-A vide Sections 245C(1B) and 245C(1C) read with the provisos to Section 245C(1) on the additional income tax payable on the undisclosed income.

45. Further, if one examines the provisions of Sections 245C(1B) and 245C(1C), one finds that various situations are taken into account while computing the additional amount of tax payable, viz., if the applicant has not filed his returns, if he has filed but orders of assessment are not passed or if the proceedings are pending for re-assessment under Section 147 (again in Chapter XIV) or by way of appeal or revision in connection with such re- assessment and the applicant has not furnished his return of total income in which case tax has to be calculated on the aggregate of total income as assessed in the earlier proceedings for assessment under Section 143 or under Section 144 or under Section 147 [see Section 245C(1B)]. The point to be

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noted is that in computation of additional income tax payable by the assessee, there is no mention of Section 154. On the contrary, under Section 245I the order of the Settlement Commission is made final and conclusive on matters mentioned in the application for settlement except in the two cases of fraud and misrepresentation in which case the matter could be re- opened by way of review or recall. Like ITAT, the Settlement Commission is a quasi-judicial body. Under Section 254(2), the ITAT is given the power to rectify but no such power is given to the Settlement Commission. Thus, we hold that Settlement Commission cannot reopen its concluded proceedings by invoking Section 154 of the Act."

23. The High Court of Bombay, in Commissioner of Income

Tax Vs. Income Tax Settlement Commission & Anr. (supra),

examined the issue. In the said case also, the Commissioner

(Revenue) had submitted a report that the assessee had failed to

submit true and full disclosure of income in the application moved

before the Settlement Commission and actually the income was

much more and it was held as under:-

"11. Sub-section 1 of Section 245C mandates that an application to the Commission to have a case settled must contain:

(i) a full disclosure of the income which has not been disclosed before the assessing officer;

(ii) the manner in which such income has been derived; and

(iii) the additional amount of income tax payable on such income, besides such other particulars as may be prescribed. The application has to be disposed of by the Commission in the manner which is provided thereafter. The course of the proceedings which the Commission must follow, is hence provided for in the succeeding provisions. The Settlement Commission is a creature of the statute. The course of its proceedings must follow the path which the provisions of Chapter XIX A charts out. The Commission has its role and jurisdiction defined by the statute. The cases which can be brought for settlement, the jurisdiction

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of the Commission and the manner in which the Commission must proceed in carriage of the cases brought before it are circumscribed by statutory provisions. All these provisions have been enacted in order to subserve the object which Parliament intended to fulfill in enacting the provisions which are conceived in the public interest. The Commission must scrupulously adhere to the statute: a body which traces its origin and jurisdiction to the statute must not transcend the limits subject to which the statute confers jurisdiction.

13. Hence, on considering the report of the Commissioner in pursuance of a direction under sub- section 2B of Section 245D, the Commission is empowered to reject an application as invalid after giving an opportunity of being heard to the applicant. Where an application has not been declared to be invalid under sub-section 2C, sub-Section 3 of Section 245D empowers the Commission to call for the records from the Commissioner.

After examination of the records, if the Commission is of the opinion that any further inquiry or investigation in the matter is necessary, it may direct the Commissioner to make or cause to be made a further inquiry or investigation and to furnish a report on the matters covered by the application and any other matter relating to the case. Such a report has to be furnished by the Commissioner within ninety days of the receipt of a communication from the Commission. Next, sub-sections 4 and 6 of Section 245D are of relevance and they provide as follows:

(4) After examination of the records and the report of the Commissioner, if any, received under-

(i) sub-section (2B) or sub-section (3), or

(ii) the provisions of sub-section (1) as they stood immediately before their amendment by the Finance Act, 2007, and after giving an opportunity to the applicant and to the Commissioner to be heard, either in person or through a representative duly authorised in this behalf, and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission may, in accordance with the provisions of this Act, pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the commissioner.

(5)...

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(6) Every order passed under sub-section (4) shall provide for the terms of settlement including any demand by way of tax, penalty or interest, the manner in which any sum due under the settlement shall be paid and all other matters to make the settlement effective and shall also provide that the settlement shall be void if it is subsequently found by the Settlement Commission that it has been obtained by fraud or misrepresentation of facts.

14. Hence, upon examining the report which was submitted by the Commissioner under sub-section 2B or sub-section 3, the Commission may in accordance with the provisions of the Act, pass such order as it thinks fit on the matters covered by the application and upon any other matter relating to the case not covered by the application, referred to in the report of the Commissioner. Subsection 6 stipulates that every order passed under sub-section 4 shall provide for the terms of the settlement. The terms of settlement include any demand by way of tax, penalty or interest, the manner in which any amount due under the settlement shall be paid and all other matters to make the settlement effective. The order under Sub- section 4 must provide that the settlement would be void if it is subsequently found to have been obtained by fraud or misrepresentation."

24. Keeping in view above, if this Court examines facts of the

present 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 have accepted the

report of the Commissioner of Income Tax and proceed further.

The second submission of the petitioner is that once the

Settlement Commission had sent the documents for verification to

the FSL, it should have waited for result of the FSL and proceed

thereafter.

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25. As regards the first contention, this Court finds that the

petitioner himself submitted an application stating therein true

and full disclosure of his income which was found to be incorrect.

A person, who himself has not come out with clean hands, cannot

take the benefit of the law for his own purposes. It is noticed that

the Settlement Commission, after having taken note of the report

of the Commissioner of Income Tax, proceeded to assess the total

income of the petitioner and has thereafter settled the income. On

an application moved by the petitioner, installments were also

increased from 6 to 15. The payments have already been made

accordingly.

26. Brij Lal & ors. Vs. Commissioner of Income Tax,

Jalandhar (supra), the Settlement Commission passes the order

which is a complete code in itself. It is a quasi-judicial authority

and there is no provision for the Settlement Commission to

remand the matter back to the Assessing Officer. In view thereof,

the contention of the petitioner solely based on the observations

made in different context by the Supreme Court and the High

Court of Madras and Bombay that the Settlement Commission

should have rejected his application cannot be sustained once the

Settlement Commission has reached to the conclusion that there

is no full and true disclosure of income. The stage is no more

available for the petitioner.

27. As observed by the Supreme Court in Brij Lal & ors. Vs.

Commissioner of Income Tax, Jalandhar (supra), the

Settlement Commission has the authority to itself make

assessment (Para 27 of judgment in Brij Lal & Ors. (supra)).

This type of computation of total income, on a conjoint reading of

Section 245C(1B), 245C(1C), 245D(6), 245F(3) in addition to

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Section 215(3) and 234A(4) and 234B(4), is a special method of

assessment. In other words, once the Settlement Commission has

ceased with the matter and has proceeded to take on record the

reports and has reached to the conclusion that additional income

is required to be added to the income as purportedly submitted to

be the full and true undisclosed income, the option is not available

for the applicant-petitioner, who has approached the Settlement

Commission, to withdraw his application and ask for assessment

to be done by the regular Assessing Officer.

28. However, this Court finds that the Settlement Commission

had, in-fact, directed for getting the FSL report relating to the

documents, which were made a basis for adding of income to the

disclosed income as submitted by the petitioner, without waiting

for the result of the FSL report and without giving an opportunity

to the petitioner to contest the report submitted by the

Commissioner of Income Tax regarding full and true disclosure and

the Settlement Commission has proceeded further with the matter

and passed the impugned order. The petitioner was also not given

opportunity of hearing.

29. Thus, the principles of Audi-alteram-partem, which are

imbibed and inherent in the entire procedure relating to

Settlement Commission which is akin to arbitration proceedings,

have been violated. This Court is not convinced with the

submission of learned counsel for the Revenue that the petitioner

is estopped to challenge the decision of the Settlement

Commission after having made the requisite payments in 15

installments. There is no estoppel against the law. The Settlement

Commission, which is a quasi-judicial body, is required to adhere

to the principles of law in stricto sensu.

(D.B. SAW/122/2015 has been filed in this matter. Please refer the same for further orders)

(32 of 33) [CW-8677/2014]

30. 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.

31. Thus at the stage when the Settlement Commission did not

accept the true and correct disclosure made by the petitioner, it

ought to have given an opportunity to the petitioner and further, it

ought to have also waited for the FSL report and should have

called upon the FSL to submit its report at the earliest if the time

frame for disposing of the application was expiring. Nothing

prevented the Settlement Commission to do so.

32. Keeping in view above, while this Court does not accept the

contention of the petitioner regarding the Settlement Commission

not being empowered to make assessment, it accepts the second

submission of learned counsel for the petitioner that 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

(D.B. SAW/122/2015 has been filed in this matter. Please refer the same for further orders)

(33 of 33) [CW-8677/2014]

regard, the FSL report also should have been taken into

consideration.

33. In view thereof, as the entire amount of tax as directed by

the Settlement Commission has already been deposited, it would

be appropriate to remand the matter back to the learned

Settlement Commission to reconsider the case of the petitioner

afresh after giving fair and proper opportunity to the petitioner

relating to the assessment and make reassessment accordingly

after obtaining the FSL report relating to the documents.

34. Both the writ petition are accordingly partly allowed. All

pending application stand disposed of. No costs.

(SANJEEV PRAKASH SHARMA),J

RAGHU/

(D.B. SAW/122/2015 has been filed in this matter. Please refer the same for further orders)

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