Case Note & Summary
The Principal Commissioner of Income Tax (Central)-3, Mumbai filed a writ petition under Article 226 of the Constitution of India challenging an order dated 27th September 2018 passed by the Income Tax Settlement Commission (ITSC) under Section 245D(4) of the Income Tax Act, 1961. The background of the case involves a search and seizure action under Section 132 of the Act conducted on 16th October 2013 on the Wadhwa Group of cases. The respondent-assessees, M/s Wadhwa Group Holding Pvt Ltd and others, filed a settlement application before the ITSC. The ITSC passed an order under Section 245D(4) on 27th September 2018, which was impugned by the PCIT. The legal issue was whether the ITSC's order was liable to be set aside on grounds of jurisdictional error or perversity. The petitioner argued that the ITSC had no jurisdiction to pass the order and that the order was perverse. The respondents contended that the ITSC had wide powers under Section 245D(4) and that the order was within its jurisdiction. The court analyzed the provisions of Section 245D(4) and held that the Settlement Commission has the power to pass such orders as it thinks fit on the matters covered by the application. The court found that the ITSC had acted within its jurisdiction and that there was no jurisdictional error or perversity in the order. The court also noted that the PCIT was not an aggrieved party and that the writ petition was not maintainable. The court dismissed the petition with no order as to costs.
Headnote
A) Income Tax - Settlement Commission - Section 245D(4) of the Income Tax Act, 1961 - Jurisdictional Error - The petitioner, Principal Commissioner of Income Tax, challenged the order of the Income Tax Settlement Commission under Section 245D(4) on the ground that the Commission had no jurisdiction to pass the order. The court held that the Settlement Commission has wide powers under Section 245D(4) to pass such orders as it thinks fit on the matters covered by the application and that the order was within its jurisdiction. (Paras 1-10) B) Income Tax - Settlement Commission - Section 245D(4) of the Income Tax Act, 1961 - Writ Jurisdiction - The court held that the Settlement Commission's order under Section 245D(4) is a quasi-judicial order and can be challenged only on limited grounds such as jurisdictional error, violation of natural justice, or perversity. The court found no such error in the impugned order and dismissed the petition. (Paras 11-17)
Issue of Consideration
Whether the Income Tax Settlement Commission's order under Section 245D(4) of the Income Tax Act, 1961 is liable to be set aside in writ jurisdiction on the grounds of jurisdictional error or perversity
Final Decision
The High Court dismissed the writ petition with no order as to costs, holding that the Settlement Commission's order under Section 245D(4) was within its jurisdiction and not perverse.
Law Points
- Settlement Commission's powers under Section 245D(4) are quasi-judicial
- not subject to writ jurisdiction unless there is jurisdictional error or violation of natural justice
- Settlement Commission can accept additional income and grant immunity from penalty and prosecution
- PCIT cannot challenge settlement order on merits as it is not an aggrieved party under Article 226
