COMMISSIONER OF INCOME TAX Vs. OM PRAKASH MITTAL

JUDGEMENT

(1.) Challenge in this appeal is to the order passed by the Income Tax Settlement Commission, Additional Bench Calcutta (in short the Commission). By the impugned order it was held that the prayer made by the Commissioner of Income Tax, West Bengal-VIII, Calcutta (in short CIT) to declare the settlement order passed by the Commission on 18.9.1990 to be void and for withdrawing the benefits and immunities granted to the respondent-assessee was not acceptable. The order dated 18.9.1990 was passed under Section 245D(4) of the Income Tax Act, 1961 (in short the Act). The application by the CIT for declaration of the said order to be void was made purportedly under Section 245D(6) of the Act.

(2.) The controversy in the present appeal has arisen in the following factual background:

(3.) Certain documents were produced before the Commission to prove the genuineness of the aforesaid loans. The Commission accepted the stand of the assessee and did not cast any doubt on the credibility of sum of Rs. 1.5 crores to have been advanced as loans. It appears that enquiries were conducted by the Central Bureau of Investigation (in short the CBI) at the request of the revenue regarding the aforesaid loans, at Jorthang, Melli and Singtam. In the opinion of the CBI the alleged lenders had no means or financial capacity to advance huge loan to the assessee and were mere name lenders. When the investigating officer contacted the so called lenders, they denied having advanced any loan. Some of the certificates purportedly issued were not authentic. One of the persons i.e. the then Commissioner of Siliguri municipality Mr. Rabin Paul admitted that he had no direct knowledge of the transaction and, therefore, the assessee had obtained the certificate by practising fraud. The further fact is that some of the lenders i.e. S/Shri Gauri Shankar Agarwal, Subhas Ch. Minda and Vinod Kr. Minda had made payment of tax to the Sikkim authorities after the order of settlement. It was projected before the Commission at the first instance as if they were tax payers. Enquiries revealed that Shri Subhas Ch. Minda was not assessed to income tax up to the period 1985-86. Therefore, the submission made before the Commission that he was assessed regularly before the Sikkim authorities was false.