Order of Settlement Commission passed stating non examining of records upheld. Just an isolated sentence can’t be allowed to defeat object of enactment
ABCAUS Case Law Citation
ABCAUS 3412 (2020) (10) HC
Important case law relied upon by the parties:
Ritesh Tiwari and Anr v. State of Utter Pradesh and Ors (2010) 10 SCC 677, –
The Revenue had filed a Writ Petition seeking quashing of the order passed by the Income Tax Settlement Commission solely on the ground of a single observation made in the order that it was not practicable for the Commission to examine the records and investigate the cases for proper settlement.
The Hon’ble High Court noted that the object and purpose of introducing a separate Chapter as “settlement of cases” was inter alia to provide for a mechanism for putting an end, expeditiously, to the alleged or suspected cases of evasion of tax by an assessee. It was to enable a taxpayer to truthfully come out clean and begin his relationship with the department with a clean slate.
Further the Hon’ble High Court noted that the said Chapter itself provides a mechanism, enabling the Revenue as also the assessee to settle the issues, be it of whatever nature and magnitude, pending before any Income-Tax Authority.
Further, the Settlement Commission is required to adhere to the procedure prescribed thereunder. The powers are immense, inter alia, calling for the reports from the Revenue as defined under the Act; carry out inspection, etc. It also has the power under Section 245H, to grant immunity from prosecution from the imposition of penalty.
The Hon’ble High Court opined that the object sought to be achieved with the legislation was to ensure finality and certainty, both in the order and decision-making process.
Not only this, the Hon’ble High Court noted that the members of the Settlement Commission are the senior-most officers of the department, having sufficient experience, people with immense integrity and outstanding ability, apart from special knowledge and expertise in the subject of direct taxes and business accounts.
The Hon’ble High Court observed that it was not the case of the Revenue that the assessees did not furnish true and correct particulars as required under law.
The Court noted that the Settlement Commission itself recorded that report from the Commission was called and responded to. It was also noticed that the amount disclosed by the assessees was not small but almost 100 times more than what stood initially declared in the returns filed.
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The Hon’ble High Court opined that the only inference drawn from the impugned statement of the Settlement Commissioner in the order was that it was not practicable for the Commission to examine the records further and investigate the case, as the objective of the application stood achieved.
The Hon’ble High Court stated that if the Settlement Commissioner had all records before him, Revenue had duly made its representation, and the Settlement Commission had thereinafter accepted the settlement, the only way of reading the impugned sentence was that the matter was straight forward on the face of the record.
It was also not disputed that the case was time barring and Settlement Commission necessarily was required to pass orders else the proceedings would have been abated.
Further the Revenue had not pointed any finger of misconduct against any one of the members of the Settlement Commission. The integrity and ability of the members of the Settlement Commission were not in doubt.
Further, the Hon’ble High Court stated that as a policy matter, Revenue is not to prolong litigations but bring finality, particularly when the amount of Revenue involved is not more than two crores.
Accordingly, the Hon’ble High Court dismissed the Petition of the Revenue.