Facts
A search and seizure action under section 132(1) of the Act was conducted at the premises of M/s Ajmera Housing Corporation and incriminating materials in the form of voluminous books of account, loose papers, files, hard disk, pen drives etc. were found and on that basis the income was assessed. The assessee approached the Settlement Commission by filing an application under section 245C(1) of the Act. The Settlement Commission called for report from the CIT as per the provisions of section 245D(1) of the Act. The CIT in his report alleged that the applicant has not made true and full disclosure of its income. Hence, the application shall not be entertained at all. The Applicant, thereafter, filed revised settlement application declaring higher undisclosed income. The SettlementCommission passed an order under section 245D(1) of the Act and decided to proceed with the application. During the course of hearing the Applicant made further disclosure of undisclosed income before the Settlement Commission. The Settlement Commission passed final order under section 245D(4) of the Act and settled the undisclosed income by observing that the Applicant had cooperated during the course of proceedings before it. The department being aggrieved by the order of the Settlement Commission filed a Writ before the Hon’ble Bombay High Court. The Hon’ble High Court set aside the order of the Settlement Commission holding that it had not given any finding as to whether there was full and true disclosure of income by the Applicant. The Hon’ble High Court further held that as the Settlement Commission has not apprised the department about the revised settlement application, the final order passed by it is against the principles of natural justice. Thus, the Hon’ble Bombay High Court has set aside the order of the Settlement Commission and remitted the entire issue back to it for deciding the same afresh as per the provisions of law. The assessee being aggrieved by the order of the Hon’ble Bombay High Court filed SLP before the Hon’ble Supreme Court. The Hon’ble Supreme Court set aside the order and remitted the issue back to the Bombay High Court on the ground that it had not taken into consideration second report of the Commissioner which approximately coincided with the figures arrived at by the Settlement Commission and accepted by the Applicant. As per the directions of the Hon’ble Supreme Court, Bombay High Court passed a fresh order and once again setaside the order of the Settlement Commission
by holding that the Appellant had failed to make true and full disclosure initially as well as at the time of second disclosure and also for violation of principles of natural justice as proper opportunity was not given to department.
The Applicant being aggrieved by the decision of the Hon’ble Bombay High Court filed the present SLP before the Hon’ble Supreme Court.
Issue
Question arises as to whether disclosure of “full and true” particulars of undisclosed income and “the manner” in which such income had been derived are the pre-requisites for a valid application under section 245C(1) of the Act.
View
In the present case the Hon’ble Bombay High Court has remitted the issue back to the Settlement Commission for determination of total income, penalty etc. However, the Hon’ble Bombay High Court while setting aside the case, has not given any direction to examine the issue of maintainability of application under section 245C(1) of the Act in the absence of full and true disclosure which is sine qua non for deciding the settlement of cases before the Settlement Commission.
Held
Dismissing the petition, the Court held that, on perusal of provisions of section 245C(1) of the Act, it is clear that at the time of filing an application before the Settlement Commission the Applicant has to fulfill three conditions, namely: (i) disclose full and true disclosure of its undisclosed income, (ii) the manner of deriving the undisclosed income and (iii) the amount of additional tax payable on the undisclosed income. Therefore, unless the Settlement Commission records its satisfaction on this aspect, it will not have any jurisdiction to pass any order settling the case. Thus, the Hon’ble Bombay High Court was not justified in setting aside the proceedings before the Settlement Commission even though it was convinced that the Applicant had not made full and true disclosure of their income while making application under section 245C of the Act. Add (AY. 1989-90, 1990-91, 1991-92, 1992-93, 1993-94) (CA Nos.6827, 6848 of 2010
- 20-8-2010)
Editorial : Ratio is explained in PCIT v. Shreyansh Corporation (2020) 421 ITR 153/268 Taxman 334 (Guj) (HC) PCIT v. ITSC (2017) 249 Taxman 54/(2018) 409 ITR 495 (Guj.) (HC)
Editorial : SLP of revenue is dismissed, PCIT v. Shree Aadhyashakti Enterprises (2018) 256 Taxman 70/406 ITR 40 (SC), CIT v. ITSC (2017) 244 Taxman 156 (Guj.) (HC), also refer, (WP No. 2562 of 2016 dt. 12-2-2017) PCIT v. ITSC (2017)
292 CTR 363/79 taxmann.com 186 (Bom) (HC)
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