Case Note & Summary
The Income Tax Department filed a writ petition challenging an order dated 30.5.2017 passed by the Income Tax Settlement Commission under Section 245D(4) of the Income Tax Act, 1961. The assessees, private limited companies engaged in real estate development, had applied to the Settlement Commission on 18.3.2016 to settle their cases for assessment years 2008-09 to 2015-16. The Settlement Commission passed an order under Section 245D(1) on 29.3.2016, allowing the application after being prima facie satisfied that the assessees had made true and full disclosure of their income. The Revenue challenged this order, arguing that the assessees had not disclosed their full income. The High Court held that the Settlement Commission's satisfaction under Section 245D(1) is only prima facie and not final. The Revenue cannot challenge such an order at the stage of allowing the application, as the Commission has exclusive jurisdiction and the Revenue is not a party to the proceedings. The proper stage for the Revenue to raise objections is after the Commission passes a final order under Section 245D(4). The court dismissed the petition, upholding the Settlement Commission's order.
Headnote
A) Income Tax - Settlement Commission - Section 245D(1) of the Income Tax Act, 1961 - Prima Facie Satisfaction - The Settlement Commission's satisfaction under Section 245D(1) regarding true and full disclosure of income is only prima facie and not final. The Revenue cannot challenge such an order at the stage of allowing the application, as the Commission has exclusive jurisdiction and the Revenue is not a party to the proceedings. (Paras 1-6)
B) Income Tax - Writ Jurisdiction - Challenge to Settlement Commission Order - The High Court, in its writ jurisdiction, cannot interfere with an order under Section 245D(1) allowing the settlement application, as the Revenue has no locus standi to challenge such an order. The proper stage for the Revenue to raise objections is after the Commission passes a final order under Section 245D(4). (Paras 7-10)
Issue of Consideration
Whether the Income Tax Department can challenge an order passed by the Income Tax Settlement Commission under Section 245D(1) of the Income Tax Act, 1961, allowing the settlement application, on the ground that the assessee had not made true and full disclosure of its income.
Final Decision
The High Court dismissed the writ petition, holding that the Settlement Commission's order under Section 245D(1) allowing the settlement application cannot be challenged by the Revenue at that stage, as the satisfaction is only prima facie and the Revenue is not a party to the proceedings.
Law Points
- Settlement Commission's satisfaction under Section 245D(1) is prima facie
- not final
- and cannot be challenged by Revenue at the stage of allowing application
- Revenue cannot challenge order under Section 245D(1) as it is not a party to the proceedings
- Settlement Commission has exclusive jurisdiction to decide on settlement applications
- High Court's writ jurisdiction is limited in such matters
Case Details
WRIT PETITION NO. 1788 OF 2018
Akil Kureshi, Sarang V. Kotwal
Charanjeet Chanderpal, Pragya Chandra, J.D. Mistri, Madhur Agrawal, Atul Jasani
Pr. Commissioner of Income Tax (Central), Pune
Income Tax Settlement Commission & Ors.
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Nature of Litigation
Writ petition by Income Tax Department challenging order of Income Tax Settlement Commission under Section 245D(4) of the Income Tax Act, 1961.
Remedy Sought
The Revenue sought to quash the order dated 30.5.2017 passed by the Settlement Commission under Section 245D(4) allowing the settlement application of the assessees.
Filing Reason
The Revenue contended that the assessees had not made true and full disclosure of their income, and therefore the Settlement Commission should not have allowed the application under Section 245D(1).
Previous Decisions
The Settlement Commission passed an order under Section 245D(1) on 29.3.2016 allowing the application, and subsequently passed the impugned order under Section 245D(4) on 30.5.2017.
Issues
Whether the Income Tax Department can challenge an order under Section 245D(1) of the Income Tax Act, 1961, allowing a settlement application, on the ground of non-disclosure of full income.
Whether the Settlement Commission's satisfaction under Section 245D(1) is final or prima facie.
Submissions/Arguments
The Revenue argued that the assessees had not made true and full disclosure of their income, and therefore the Settlement Commission erred in allowing the application under Section 245D(1).
The assessees contended that the Settlement Commission's satisfaction under Section 245D(1) is only prima facie and not final, and the Revenue cannot challenge such an order at this stage.
Ratio Decidendi
The Settlement Commission's satisfaction under Section 245D(1) of the Income Tax Act, 1961 regarding true and full disclosure of income is only prima facie and not final. The Revenue cannot challenge such an order at the stage of allowing the application, as the Commission has exclusive jurisdiction and the Revenue is not a party to the proceedings. The proper stage for the Revenue to raise objections is after the Commission passes a final order under Section 245D(4).
Judgment Excerpts
In view of the foregoing decisions of the High Courts including the jurisdictional High Court, we are of the considered view that the claim of having made the true and full disclosure of additional incomes and the manner of earning such incomes by the applicants stands fulfilled in the present group of cases...
Accordingly, we proceed to allow the application under Section 245D(1) of the Act.
Procedural History
The assessees applied to the Settlement Commission on 18.3.2016. The Commission passed an order under Section 245D(1) on 29.3.2016 allowing the application. Subsequently, the Commission passed the impugned order under Section 245D(4) on 30.5.2017. The Revenue filed the present writ petition challenging the order under Section 245D(4).
Acts & Sections
- Income Tax Act, 1961: 245D(1), 245D(4)
