Decided on September 26,2014

Pukhraj Bhabhutmal Shah Appellant


- (1.) By this petition under Article 226 of the Constitution of India, the petitioner seeks the following substantive reliefs: "(A) This Hon'ble Court be pleased to call for the records of the proceedings, look into them and be pleased to issue a writ of certiorari or any other appropriate writ, order or direction quashing order under section 254(2D) r.w.s. 254HA(1)(ii) of the Settlement Commission at Exhibit-L. (B) Failing that, this Hon'ble Court be pleased to issue a writ of certiorari or any other appropriate writ, order or direction quashing order of the Tribunal dated 23.01.2001 in ITA 170/Ahd/1997 at Exhibit-I and thereafter, reinstating the appeal of the petitioner with the Tribunal." The petitioner is assessed in the status of an individual under the provisions of the Income-Tax Act, 1961 (hereinafter referred to as "the Act"). Pursuant to a search carried out on 12.12.1995 under section 132(1) of the Act at the residential premises of the petitioner, a notice under section 158BC of the Act came to be served upon the petitioner on 15.4.1996 directing him to file return of income for the block period 1.4.1985 to 12.12.1995. In response to the notice, the petitioner filed return of income on 17.10.1996. In the meanwhile, the petitioner filed a settlement application under section 245C of the Act on 14.10.1996 declaring undisclosed income of Rs. 20 lakhs. Subsequently, by a letter dated 27.12.1996, the petitioner revised the undisclosed income by substituting a lesser income of Rs. 5 lakhs in place of the earlier declared income of Rs. 20 lakhs which was received by the Commission on 30th December, 1996. In the meanwhile, the Assessing Officer proceeded further with the block assessment and by an order dated 22.8.1997 made under section 158BC of the Act assessed the total income of the petitioner at Rs. 4,27,341/- and determined the tax payable at 60% thereof at Rs. 2,56,20,204/-. By way of abundant caution, the petitioner preferred an appeal to the Income Tax Appellate Tribunal being ITA No. 170/Ahd/1997. Thereafter, by an order dated 11.9.1999, the Settlement Commission admitted the settlement application under section 245D(1) of the Act with a direction to the petitioner to pay the additional amount of tax payable on the income disclosed in the application within 35 days of receipt of the order and furnish proof of payment to the Secretary of the Additional Bench and the Assessing Officer assessing them, within 15 days of making the said payment. The Commission further directed that if the applicant/petitioner does not pay the additional amount of income tax payable within the time specified in subsection (2A) of section 245D of the Act, the amount of income tax remaining unpaid together with interest payable thereon under sub-section (2C) of section 245D of the Act shall be recovered by the Assessing Officer in accordance with the provisions of section 245D(2D) of the Act. The Commission further observed that payment of additional tax within 35 days as required will be taken into consideration in evaluating the cooperation of the petitioner in the proceedings before it. Pursuant to the said order, the petitioner filed a statement before the Commission to the effect that the department had with it the cash of Rs. 8,42,500/- seized during the course of the search. That the petitioner had declared undisclosed income of Rs. 5,00,000/- and that 60% thereof would come to Rs. 3,00,000/- and that the tax to the said extent stood covered by the above seized cash of Rs. 8,42,500/-. By a letter dated 3.11.1999, the petitioner requested the Assessing Officer to adjust the payment payable of Rs. 3,00,000/- as per the order of the Settlement Commission under section 245D(1) of the Act against the seized amount of Rs. 8,42,500/-. It appears that no reply was received by the petitioner from the Deputy Commissioner of Income Tax and no recovery proceedings had undertaken in respect of the said payment of Rs. 3,00,000/-. It is the case of the petitioner that he, therefore, understood that the dues payable according to the order of the Settlement Commission were duly paid.
(2.) After the petitioner's case came to be admitted by the Settlement Commission, the appeal preferred by the petitioner before the Tribunal came up for hearing on 16.1.2001. Since the petitioner's case already stood admitted by the Commission, the petitioner addressed a letter dated 12.1.2001 to the Tribunal pointing out that since the Settlement Commission had already admitted its case, the appeal may be adjourned. When the matter came up for hearing on 23.1.2001, the petitioner withdrew the appeal in the light of the fact that the matter was pending before the Commission after admission of the application.
(3.) Later on, the petitioner also made a submission dated 20.2.2008 to the Commission stating that the tax due under section 245D(1) of the Act was Rs. 3,00,000/- and in view of the fact that the department had seized the cash of Rs. 8,42,500/-, the same stood fully paid in time. Even thereafter, there was no communication to the petitioner either from the Assessing Officer or from the office of the Settlement Commission regarding non-payment or short payment of tax payable under section 245D(2A) of the Act. Eventually, the petitioner received a notice of hearing under section 245D(2D) read with section 245HA(1)(ii) of the Act fixing the hearing on 16.9.2013, which came to be adjourned to 25.11.2013.;

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