PRINCIPAL COMMISSIONER OF INCOME TAX Vs. SETTLEMENT COMMISSION

JUDGEMENT

(1.) Petition is filed by the Income Tax Department challenging two separate orders passed by the Settlement Commission dated 28.01.2015 and 23.03.2015. The respondent-assessee, having applied for settlement of the income for the Assessment Year 2013-14, the Settlement Commission passed its first order dated 28.01.2015 under Section 245D(1) of the Act and allowed the application to proceed further with.

(2.) The case of the Department is that both the orders of the Settlement Commission suffer from material irregularities. Application for settlement was irregular and that therefore, ought not to have been proceeded further beyond the stage of Section 245D(1) of the Act. In any case, assessee had not made true disclosure of his income previously before the Assessing Officer and the manner in which the said income has been derived. In absence of such important disclosures, the Settlement Commission ought to have declared the application as invalid as provided under Section 245D(2C) of the Act. The Settlement Commission therefore committed a serious error in allowing the application to proceed further.

(3.) On the other hand, the respondent-assessee contends before us that both the stages are tentative and none of the observations made by the Settlement Commission in the impugned orders would act as res judicata. Learned Counsel Shri Bandish Soparkar for the assessee drew our attention to judgment of Division Bench of this Court in case of Vishnubhai Mafatlal Patel v. Assistant Commissioner of Income Tax, reported in (2013) 31 taxmann.com 99 (Gujarat), in which it was observed that order allowing settlement application to proceed beyond the stage of sub-section (1) of Section 245D of the Act would be tentative in nature and it would still be open for the Commission, if grounds are so available, to declare such an application invalid after obtaining report from Commissioner and giving an opportunity of being heard to the applicant. Counsel also drew our attention to a judgment of Division Bench of Delhi High Court in case of Commissioner of Income Tax v. Income Tax Settlement Commission, reported in (2013) 35 taxmann.com 56 (Delhi), in which, in the context of the order passed by the Settlement Commission under Section 245D(2C) of the Act, it was observed that such order is not final and is subject to the final orders that may be passed by the Settlement Commission under Section 245D(4) of the Act.