Rajasthan High Court - Jaipur
Commissioner Of Income Tax vs Shri Rajendra Prasad Jalan Anr on 27 July, 2017
Bench: K.S. Jhaveri, Inderjeet Singh
HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT
JAIPUR
D.B. Special Appeal Writ No. 1672 / 2011
1. Commissioner Of Income Tax-III, Jaipur.
2. The Income Tax Officer, Ward No. 1, Jhunjhunu (Raj.)
----Appellants
Versus
1. Rajendra Prasad Jalan S/o Shri Chotte Lal, R/O Kedar Mal
Chotte Lal, Cloth Market, Jhunjhunu (Raj.)
2. The Settlement Commission Principal Bench, 4 th Floor, Lok
Nayak Bhawan, Khan Market, New Delhi (through Secretary)
----Respondents
D.B. Special Appeal Writ No. 1673 / 2011
1. Commissioner Of Income Tax-III, Jaipur.
2. The Income Tax Officer, Ward No. 1, Jhunjhunu (Raj.)
----Appellants Versus
1. Shri Nawal Kumar Jalan S/o Shri Rajendra Prasad, R/O Kedar Mal Chotte Lal, Cloth Market, Jhunjhunu (Raj.)
2. The Settlement Commission Principal Bench, 4 th Floor, Lok Nayak Bhawan, Khan Market, New Delhi (through Secretary)
----Respondents D.B. Special Appeal Writ No. 1675 / 2011
1. Commissioner Of Income Tax-III, Jaipur.
2. The Income Tax Officer, Ward No. 1, Jhunjhunu (Raj.)
----Appellanta Versus
1. Prakash Chand Jalan S/o Shri Rajender Prasad Jalan, aged about 41 years, R/O Kedar Mal Chotte Lal, Cloth Market, Jhunjhunu (Raj.)
2. The Settlement Commission Principal Bench, 4 th Floor, Lok Nayak Bhawan, Khan Market, New Delhi (through Secretary)
----Respondents _____________________________________________________ For Appellant(s) : Mr. Sameer Jain _____________________________________________________ (2 of 5) [SAW-1672/2011] HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGH Order 27/07/2017 Delay in filing the appeals is condoned. The applications u/s 5 of the Limitation Act are allowed.
In view of the fact that the same judgment was challenged before the Division Bench in the case of Commissioner of Income Tax vs. Hari Kishan Vijayvergia, 2011 (336) ITR 174 wherein this court held as under:-
"On facts, it is not in dispute at Bar that opportunity of hearing was not afforded by Settlement Commission to either of the parties. Only the assessee submitted the written arguments, not the Revenue. Written submissions were not filed by the revenue. No time was granted by the Settlement Commission even to file the written submissions or for oral hearing due to paucity of time. As 31-3-2008 was the cut off date fixed, hence, it was observed that it was not possible for the Settlement Commission to provide opportunity of hearing to the parties. No doubt about it that in Para 6 of the orders there is reference of certain material and there is statement that additional amount has been paid. However, it is apparent from Para 5 of the order that Settlement Commission has observed that it was not practicable to examine the records which was mandatory to investigate the case meaning thereby, to record the evidence necessary for proper settlement. At the same time, it has also been observed that giving opportunity of hearing to the applicant, assessees and the revenue as envisaged under section 245D(4) was not practicable for the Settlement Commission. In fact, no due opportunity was given, hence reasoning, if any, mentioned would not make order legal and valid. Question is that of legality of the action taken in flagrant violation of the provisions under section 245D(4) of the Act as it is not disputed that opportunity of hearing was not afforded. There was no time to give serious (3 of 5) [SAW-1672/2011] look to the record and much less to record the evidence. No enquiry was made. Thus, in our considered opinion, there is flagrant violation of the provisions of section 245D(4) of the Act. The orders so passed are rendered nullity and liable to be set aside. Merely by mentioning of certain material without actively assessing what were the statement etc., cannot be said to be compliance of the provisions of section 245D(4) of the Act. Any finding so recorded in Para 6 of the order without hearing, without investigating and without deeply looking into the record cannot be said to be legal and binding. The procedural safeguards have not been observed as such findings recorded in Para 6 of the orders of these 25 cases also cannot be permitted to survive.
The Senior Counsel has referred to the objective of the establishment of the Settlement Commission by referring to the decision in CIT vs. B.N. Bhattachargees (1979) 118 ITR 461 (SC) in which the Apex Court has laid down that the purpose of substituting the method of investigative negotiation, just settlement and early eligibility by a high-powered Commission for a tier-upon-tier of long protracted litigation, where victory may be pyrrhic and futile, is ill- served by keeping out cases solely for the reason that departmental appeals have been filed. It is not for the court to explore the intendment of the legislation beyond the language in which the section is couched. The Apex Court has also laid down that Settlement Commission is a Tribunal. Its powers are considerable; its determination affects the rights of parties; its obligations are quasi-judicial; the orders it makes at every stage have tremendous impact on the rights and liabilities of parties. The Apex Court has also observed that it is not inappropriate to state that the policy of the law as disclosed in Chapter-XIX-A is not to provide a rescue shelter for big tax- dodgers who indulge in criminal activities by approaching the Settlement Commission. The Settlement Commission will certainly take due note of the gravity of economic offences on the wealth of the nation which the Wanchoo Committee had emphasised and will exercise its power of immunisation against criminal prosecutions by using its power only sparingly and in deserving cases; otherwise such orders may become vulnerable if properly challenged. Learned counsel has also relied upon the decision in CIT v. Om Prakash Mittal (2005) 273 ITR 326 (SC) to contend that the Settlement Commissions power of settlement has to be exercised in (4 of 5) [SAW-1672/2011] accordance with the provisions of the Income-tax Act. Though the Settlement Commission has sufficient elbow room in assessing the income of the applicant, it cannot make any order with a term of settlement which would be in conflict with the mandatory provisions of the Act like the quantum and payment of tax and interest. The object of the Legislature in introducing section 254C is to see that protracted proceedings before the authorities or in courts are avoided by resorting to settlement of cases. In this process an assessee cannot expect any reduction in amounts statutorily payable under the Act.
Reliance has also been placed upon the decision of the High Court of Bombay in Star Television News Ltd. (2009) 317 ITR 66 (Bom) in which Wanchoo Committees recommendations have been quoted in Para 2.33 in which it has been observed that settlement is fair, prompt and independent. Suggestion was made that there should be a high level machinery in administrating the provisions. In our opinion, there is no doubt about it that the Settlement Commission has been established with the aforesaid objectives. At the same time as observed by the Apex Court in Om Prakash MittalCIT v. Om Prakash Mittal (2005) 273 ITR 326 (SC) the Commission was bound to comply with the provisions of statute. No doubt about it that there should not be protraction of the settlement proceedings but at the same time the mandatory provisions are also required to be complied with. Merely under the banner of no protraction of the case, illegality or flagrant violation of the provisions of the Act cannot be permitted to survive. It was incumbent upon the Settlement Commission to act in accordance with the provisions under section 245D(4) of the Act. There has been blatant violation of the said provision in the instant case. Even as per the findings which are recorded in the form of confession, violation of the provision has been made as it was mandatory to comply with the order of the High Court. Orders were passed in due haste. However, the High Court order never meant the Settlement Commission to violate the mandate of the provisions of the Act, it was incumbent upon the Settlement Commission to pass appropriate order in accordance with law. It was incumbent upon the Settlement Commission to follow strictly provisions enumerated in section 245D(4) and other provisions. Consequently, we find that these 25 cases of the assessees are also required to be heard afresh by the Settlement Commission and decided in accordance with law (5 of 5) [SAW-1672/2011] after duly following the mandate of section 245D(4) of the Act.
18. We are of the opinion that no case is made out to interfere in the appeals. Consequently, intra-court appeals, cross objections and stay applications are hereby dismissed. Let the Settlement Commission make an endeavour to decide the cases in accordance with law as far as possible within a period of six months from the date of appearance of the parties. No costs.
In view of the above, the appeals stand dismissed.
(INDERJEET SINGH),J. (K.S. JHAVERI),J.
A.Sharma/32