GANESH BARTAN BHANDAR Vs. INCOME TAX SETTLEMENT COMMISSION

JUDGEMENT

(1.) By means of the present writ petition filed under Article 226 of the Constitution of India, the petitioners seek a writ, order or direction in the nature of certiorari quashing the order dated November 27, 1998, passed by the Income-tax Settlement Commission, New Delhi, filed as annexure 6 to the writ petition. The petitioners further seek a writ, order or direction declaring the provisions of Section 245G of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), as null, void, unconstitutional and inoperative and other consequential reliefs.

(2.) Briefly stated, the facts giving rise to the present writ petition are as follows : Petitioner No. 1 is a registered firm engaged in the business of purchase and sale of utensils. It consists of three partners. Petitioner No. 2 is one of the partners of petitioner No. 1. On August 30/31, 1988, a search was conducted under Section 132 of the Act in the business and residential premises of petitioner No. 1 and its partners. Certain cash, jewellery and stock of utensils were found. Part of the cash found was also seized. Apart from it, 21 loose papers were also found at the residence of one of the partners which were also seized. Thereafter a notice under Section 132(5) of the Act was issued on September 8, 1988, by the Income-tax Officer, Banda. Subsequently, the case was transferred under Section 127 of the Act by the Commissioner of Income-tax to the Assistant Commissioner of Income-tax, Investigation Circle, III(1), Kanpur. The Assistant Commissioner of Income-tax issued a fresh notice on October 4, 1988, under Section 132(5) of the Act, which was replied to by the petitioners. The Assistant Commissioner of Income-tax passed an order on December 26, 1988, creating a tax liability of Rs. 1,35,811 as the petitioners had not filed any return for the assessment year 1989-90. A notice under Section 148 of the Act was issued on February 4, 1991. In compliance therewith, the petitioners filed a return on February 19, 1991, declaring net taxable income at Rs. 18,250. After filing the aforesaid return, a notice under Section 142(1) of the Act was issued on January 11, 1993. Another notice was issued on January 25, 1993, and March 17, 1993, calling upon the petitioner firm to furnish certain information. In response to the said notice, the petitioner submitted the reply in which it was stated that the petitioner had already filed application under Section 245C of the Act before the Settlement Commission and, therefore, the assessment proceeding be stayed till the disposal of the application. It may be mentioned here that the application under Section 245C of the Act was filed on April 9, 1992. The Assistant Commissioner of Income-tax, vide order dated March 16, 1993, had passed an assessment order for the assessment year 1989-90 assessing the net income at Rs. 13,13,830. The status of petitioner No. 1 has been taken as unregistered firm. Against the order dated March 16, 1993, the petitioner has preferred a revision under Section 264 of the Act before the Commissioner of Income-tax, which has been dismissed. The assessing authority has also initiated proceeding for imposition of penalty under Section 271(1)(b) and (c) of the Act to which the reply has been submitted. However, vide order dated September 29, 1993, penalty of Rs. 7 lakhs has been imposed against which an appeal has been filed before the Commissioner of Income-tax (Appeals). The said appeal has been dismissed vide order dated March 15, 1994. According to the petitioners, they have preferred a second appeal before the Tribunal, which is still pending. It has been further stated by the petitioners that the application dated April 9, 1992, filed by the petitioners under Section 245C of the Act has been decided ex parte vide order dated September 27, 1994, which was the subject-matter of challenge before this court in Civil Miscellaneous Writ Petition No. 1009 of 1994 and this court, vide order dated March 26, 1996, had set aside the order passed by the Settlement Commission and directed it to pass a fresh order after giving an opportunity of hearing to the petitioners. Thereafter, the Settlement Commission has passed a fresh order on November 27, 1998, rejecting the petitioners' application. The order dated November 27, 1998, is under challenge in the present writ petition.

(3.) We have heard Sri Rakesh Kumar, learned counsel for the petitioners, and Sri A. N. Mahajan, learned counsel appearing for the Revenue-respondent.