INCOME TAX ACT, 1961

Section 245C

Settlement Commission - Maintainability of awards - No fraud and mispresentation of facts -

During search at offices and residential premises of various members of the assessee group cash amounting to Rs. 13,17,00,000 and jewellery weighing 11,339 grams, along with incriminating documents were found and seized. Subsequent to the search, the assessee was issued with notices under sections 153A/153C/142(1). In pursuance of said notices, assessee filed Settlement Application under section 245C before Income Tax Settlement Commission (ITSC) disclosing additional income of Rs. 11 crores for the assessment years 2007-08 to 2011-12. On 7-2-2012, ITSC rejected said application under section 245D(1) for non-payment of taxes on the additional income disclosed in the Settlement Application and did not allow the same to be proceeded with. Thereafter, on 30-4-2012, assessee filed its returns of income for the assessment years 2007-08 to 2011-12. Subsequently, on 26-11-2012, assessee filed another Settlement Application under section 245C before ITSC, disclosing an additional income of Rs. 9 crores for the assessment years 2007-08 to 2011-12. By an Order, dated 10-12-2012, the ITSC allowed Settlement Application to be proceeded with under section 245D(1). The reports under section 245D(2B) were then called for from department and on being satisfied with the conditions stipulated in section 245D(2C), ITSC held that Settlement Application covering assessment years 2005-06 to 2011-12 could not be said to be invalid. Revenue challenged this by way of writ petition on the ground when disclosure of income in the second Settlement Application was less than the income disclosed in the first application and an income of Rs. 47 lakhs was deferred in the second application disclosure of income could not be construed to be a full and true disclosure. Held: It was not the stand of the department that there was fraud and misrepresentation of facts, owing to which, disclosure required to be treated as not true or fair. Rather, disclosure was voluntary and manner in which a major portion of the additional income was derived was also explained. As a matter of fact, department had not raised any objections during the stage of the case under section 245D(1) or 245D(2C). As such, impugned award of ITSC was neither in violation of any statutory provisions of the Income Tax Act nor was there any defect in the decision making process. As such Writ Petitions, challenging the awards of ITSC cannot be maintained.

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