Dhirubhai Naranbhai Patel, J. - (1.) THIS writ petition has been preferred challenging the order passed by the Settlement Commission dated 27th/28th June, 2013 under Section 245D(4) of the Income Tax Act, 1961 (hereinafter referred to as the Act, 1961 for the sake of brevity) which is at Annexure -6 to the memo of this writ petition. By this order additions have been made of Rs. 62,50,000/ - and Rs. 73,50,663/ - in respect of assessment years 2010 -11 and 2011 -12 respectively, over and above income declared by this petitioner in its settlement application preferred for the aforesaid period under Section 245C(1) of the Act, 1961.
(2.) FACTUAL Matrix • Petitioner filed Returns for the assessment years 2010 -11 and 2011 -12 on 23rd September, 2010 and 29th September, 2011, respectively. • Survey under Section 133A of the Act, 1961 was conducted by the Income Tax Department on 21st/22nd October, 2011. • This petitioner preferred settlement application under Section 245(C)(1) of the Act, 1961 before the Settlement Commission. Alongwith this application this petitioner is also paying income tax with interest at Rs. 38,45,471/ - on disclosure of additional income of Rs. 1,04,00,000/ -. • The Settlement Commission passed an order under Section (preferred by the assessee under Section 245C) 245D(2C) of the Act, 1961 has allowed an application to proceed with. This order is dated 27th March, 2012/3rd April, 2012 (Annexure -4 to the memo of this petition). This order was passed after calling for report from the Commissioner of Income Tax. The report given by the Commissioner of Income Tax is at Annexure -3 and 5 of this writ petition. Thereafter adequate opportunity of being heard was given to the petitioner and ultimately, final hearing was fixed by the Settlement Commission and vide order dated 27/28th June, 2013 final order was passed by the Settlement Commission under Section 245D(4) which is at Annexure -6 to the memo of this petition which is the impugned order passed by the Settlement Commission. By virtue of this order Settlement Commission has made additions of Rs. 62,50,000/ - and Rs. 73,50,663/ - totaling Rs. 1,36,00,663/ - for the assessment years 2010 -11 and 2011 -12 respectively over and above the declared income of this petitioner. This is being reflected from para 11 of the order passed by the Settlement Commission. This order has been passed under Section 245D(4) of the Act, 1961. • A recall/rectification petition was preferred by this petitioner before the Settlement Commission under Section 245D(6B) of the Act, 1961. This application was dismissed by the Settlement Commission vide order dated 24th September, 2013. This is at Annexure -7 to the memo of this petition. • Thereafter, the department of the Income Tax has passed an order and served demand notices for the assessment years 2010 -11 and 2011 -12 on 24th July, 2013, to give effect to the order passed by the Settlement Commission. • Two garnishee notices both dated 27th January, 2015 were issued by the respondents -Income Tax Department under Section 226(3) of the Act, 1961 for attaching the bank account of this petitioner. • Thus, being aggrieved by the order passed by the Settlement Commission dated 27/28th June, 2013 as well as against the order passed by the Settlement Commission dated 24th September, 2013 and also being aggrieved by the notices issued by the respondents, the present writ petition alongwith I.A. No. 835 of 2015 has been preferred by this petitioner. Arguments canvassed by the counsel for the petitioner: • It is submitted by the counsel for the petitioner that the Settlement Commission has exceeded its jurisdiction, by additions of Rs. 62,50,000/ - and Rs. 73,50,663/ - for the assessment years 2010 -11 and 2011 -12 respectively, over and above the income declared by the petitioner, while passing an order dated 27/28th of June, 2013 which is at Annexure -6 to the memo of this petition. • Looking to the order passed by the Settlement Commission dated 27th/28th June, 2013 the whole calculation arrived at by the Settlement Commission is on the basis of the presumptions and surmises and in absence of any evidence on record. Much has been argued out by the counsel for the petitioner upon paragraph Nos. 6, 7, 8 and 9 of the impugned order at Annexure -6, passed by the Settlement Commission. • It is submitted by the counsel for the petitioner that if the Settlement Commission is of the opinion that there is no true and full disclosure of the income by the assessee in its application under Section 245C(1) of the Act, 1961, after looking to the report given by the Commissioner of Income Tax which are at Annexure -3 and 5 the Settlement Commission should have rejected the application of this petitioner and nothing beyond that. • The Settlement Commission in the facts of the present case has played the role of Assessing Officer. No power under Section 245F permits the Settlement Commission for additions of any amount of income over and above the declared income. Powers under Section 245F never permits Settlement Commission to wear the rob of Assessing Officer. Annexure -3 report given by the Commissioner of Income Tax is under sub section 1 of Section 245D and another report given by the Commissioner of Income Tax at Annexure -5 is under Rule of the Income Tax Settlement Commission (Procedure) Rules, 1997. One more chance was given to the Settlement Commission to reject the application preferred by this petitioner after the perusal of report given by the Commissioner of Income Tax and after admission of the application before the Settlement Commission. In the facts of the present case initially an order was passed by the Settlement Commission dated 27th March, 2012/3rd April, 2012 (Annexure -4) that the application preferred by this petitioner cannot be considered as "not full and true disclosure of his income". This is a language used in para -8 of the said order by the Commission, but, on 2nd occasion the chance which was given to the Settlement Commission to reject the application preferred by this petitioner has not been properly appreciated by the Settlement Commission and Settlement Commission has wrongly exercised the powers of the Assessing Officer in the garb of powers under Section 245F of the Act, 1961 to be read with Section 44AD of the Act, 1961. • It is further submitted by the counsel for the petitioner that addition of income totaling at Rs. 1,36,00,663/ - for the assessment years 2010 -11 and 2011 -12, over and above the income declared by the petitioner and that too on the basis of the presumptions and surmises and in absence of any cogent and convincing evidence on record tantamounts that Settlement Commission is of the opinion that there is "not full and true" to the income by the applicant -petitioner and therefore, instead of wear a rob of Assessing Officer Settlement Commission should have rejected the application preferred by this petitioner for settlement and thereafter, the matter will be upon for the Assessing Officer for assessing the income of the petitioner for the assessment years 2010 -11 and 2011 -12. • Counsel appearing for the petitioner is relied upon the decision rendered by the Madras High Court reported in : [2009] 315 ITR 328 (Madras). On the basis of this judgment it is submitted by the counsel for the petitioner that the Settlement Commission cannot play the role of the Assessing Officer. Power under Section 245F is given to the Settlement Commission only for adopting the procedural powers vested in the Income Tax Authorities and not the substantive powers which are vested in the Income Tax Authorities can be grabbed by the Settlement Commission. Counsel for the petitioner has read over this judgment in detail and has matched the facts of the present case and submitted that on the basis of this decision also the order passed by the Settlement Commission dated 27th/28th June, 2013 (Annexure -6) may be quashed and set aside and therefore, the consequential order at Annexure -7 dated 24th September, 2013 may also be quashed by this Court and consequential notices issued by the Income Tax Department and two garnishee notices dated 27th June, 2013 may also be quashed and set aside as per the prayers made in Interlocutory Application No. 835 of 2015.
(3.) ARGUMENTS canvassed by the counsel for the respondents: • Counsel for the Income Tax Department submitted that no error has been committed by the Settlement Commission while passing the order dated 27th/28th June, 2013 whereby there is an additions of income, over and above the income declared by this petitioner, totaling at Rs. 1,36,00,663/ - for assessment years, 2010 -2011 and 2011 -12. • It further appears by the counsel for the respondents that once the order is passed by the Settlement Commission it cannot be challenged in the court of law. As per Section 245(A) of the Act, 1961 every order of the Settlement Commission passed under Section 245D(4) shall be conclusive. • Counsel for the respondents submitted that the Settlement Commission is not a silent spectator. Once it is brought to the notice of the Settlement Commission by virtue of the report given by the Commissioner of Income Tax either under sub section 1 of Section 245C or under Rule 9 of the Income Tax Settlement Commission (Procedure) Rules, 1997, the Settlement Commission can always make additions, over and above the income declared by the petitioner in exercise of powers under Section 245F of the Act, 1961. This is a discretion vested in the Settlement Commission. • It is submitted by the counsel for the respondents that huge turnover was kept outside the books of accounts and therefore, as per paragraph 6, 7, 8 and 9 of the order passed by the Settlement Commission there are additions, over and above the income declared by the petitioner. The additions which are made are absolutely in consonance with the provisions of the Act, 1961, including in consonance with Section 145 read with 144 of the Act, 1961 and also to be read with Section 44AD of the Act and hence, this Court may not interfere with the order passed by the Settlement Commission dated 27th/28th June, 2013 and rest of the consequential orders passed by the department in the form of notice under Section 3 of Section 226 of the Act, 1961 and therefore, neither this petition nor the I.A. may be allowed by this Court. Both deserves to be dismissed. Counsel for the respondents is heavily relied upon paragraph No. 16 of the counter affidavit filed by the respondents Income Tax Department and has submitted that once the order is passed by the Settlement Commission, this type of writ petitions are not tenable at law. Reasons:;