COMMISSIONER OF INCOME TAX Vs. INCOME TAX SETTLEMENT

JUDGEMENT

(1.) This writ petition is directed against the order dated 24.01.2013 passed by the Income Tax Settlement Commission, Principal Bench, New Delhi under Section 245D(2C) of the Income Tax Act, 1961 (hereinafter referred to as 'the said Act'). By virtue of the impugned order dated 24.01.2013, the Income Tax Settlement Commission (hereinafter referred to as 'the Settlement Commission') held the settlement applications of the Respondent Nos. 2 to 5 to be "not invalid" and were therefore allowed to be proceeded with inasmuch as the said settlement applications had, in the view of the Settlement Commission, prima facie, fulfilled all the conditions prescribed under Section 245C(1) and 245D(2C) of the said Act. The petitioner (Commissioner of Income-tax) is aggrieved by the said order dated 24.01.2013 inasmuch as according to the petitioner, the settlement applications filed on behalf of the respondents 2 to 5 ought not to have been proceeded with and ought to have been held as "invalid" because the settlement applications failed to satisfy the pre-requisites stipulated in Section 245C of the said Act. Those pre-requisites being, full and true disclosure, the manner in which the undisclosed income had been derived and the additional amount of income tax payable.

(2.) On behalf of the petitioner, it was sought to be contended that as there was no true and full disclosure by the respondents 2 to 5 in their applications for settlement, the Settlement Commission ought not to have proceeded with their applications and ought to have passed an order under Section 245D(2C) holding the applications to be invalid. It was also contended that the manner of deriving the undisclosed income had not been indicated by the respondents 2 to 5 and, therefore, on this ground also, the order under Section 245D(2C) passed by the Settlement Commission ought to have been one holding the settlement applications to be invalid. Strong reliance was placed by the learned counsel appearing for the petitioner on the Supreme Court decision in the case of Ajmera Housing Corporation v. Commissioner of Income Tax, 2010 326 ITR 642 to contend that where there was an established case of absence of full and true disclosure on the part of the applicant, the settlement application ought to be rejected at the threshold by the Settlement Commission.

(3.) In this backdrop, the learned counsel for the petitioner sought to argue on the merits of the matter and to establish that there was in fact substance in his contention that the respondents 2 to 5 had not made a full and true disclosure and that they had also not indicated the manner in which the undisclosed income had been derived. At the threshold itself, the learned counsel appearing on behalf of the respondents 2 to 5 took serious objection to the maintainability of the present petition. It was contended on behalf of the respondents 2 to 5 that the writ petition challenging the order dated 24.01.2013 passed under Section 245D(2C) of the said Act as also the earlier orders dated 30.11.2012 and 28.12.2012 passed under Section 245D(1) of the said Act was not maintainable inasmuch as those orders were merely orders of 'admission'. Reliance was placed by the learned counsel for the respondents 2 to 5 on a decision of the Supreme Court in the case of Commissioner of Income Tax v. K. Jayaprakash Narayanan, 2009 184 Taxman 85. Reliance was also placed on a decision of a Division Bench of this Court in the case of Commissioner of Central Excise, Vishakapatnam v. True Woods Private Ltd., 2006 199 ELT 388 as also on a decision of the Bombay High Court in the case of Union of India v. Customs and Central Excise Settlement Commission, Mumbai, 2009 234 ELT 634. The learned counsel for the respondents 2 to 5 emphasized that the impugned orders were only orders of admission and only indicated a prima facie view. It was open for the Settlement Commission to alter that view in the course of further proceedings till the final order was passed under Section 245D(4) of the said Act. It was therefore contended that there is no cause for concern on the part of the Department at this stage as the matter is still under examination by the Settlement Commission and a final decision has not been taken by it. It was also contended that the writ petition would not be maintainable as this Court, in judicial review, is not concerned with the merits of the matter, as it would be, had it been exercising an appellate jurisdiction. It is only the decision making process which can be challenged and can be the subject matter of judicial review in a writ petition. Since there is no allegation of any procedural violation or lack of jurisdiction, the present writ petition which is essentially aimed at a look into the merits of the matter, would not be maintainable. It was also contended that the impugned order dated 24.01.2013 itself records that the issues raised by the Commissioner of Income Tax would be open during the course of proceedings under Section 245D(4) of the said Act and that the settlement applications were held to be not invalid only upon a prima facie view that the respondents 2 to 5 had fulfilled the conditions prescribed under Section 245C(1) and 245D(2C) of the said Act. It was submitted that an order of admission, such as the order impugned herein, does not foreclose any argument or any contention of the Department even with regard to the "true and full disclosure" and "the manner in which the income has been derived". As such, there is no occasion, according to the learned counsel for the respondents 2 to 5, to interfere with the proceedings pending before the Settlement Commission.