Income Tax Settlement Commission Can Accept Tax Amount Via Settlement & Prescribe Manner In Which It Shall Be Paid: Karnataka HC
The Karnataka High Court reiterated that the Commission can accept an amount of income tax by way of settlement and prescribe the manner in which the said amount shall be paid.
The Court observed thus in a writ petition filed by the Revenue seeking setting aside of the order passed by the Settlement Commission.
A Single Bench of Justice S. Sunil Dutt Yadav referred to the judgment of the Apex Court in the case of Jyotendrasinhji v. S.I.Tripathi reported in (1993) 201 ITR 611 (SC) in which it was held -
"Be that as it may, the fact remains that it is open to the Commission to accept an amount of tax by way of settlement and to prescribe the manner in which the said amount shall be paid. It may condone the defaults and lapses on the part of the assessee and may waive interest, penalties or prosecution, where it thinks appropriate. Indeed, it would be difficult to predicate the reasons and considerations which induce the Commission to make a particular order, unless of course the Commission itself chooses to give reasons for its order. Even if it gives reasons in a given case, the scope of enquiry in the appeal remains the same as indicated above viz., whether it is contrary to any of the provisions of the Act. In this context, it is relevant to note that the principle of natural justice (audi alteram partem) has been incorporated in Section 245-D itself. The sole overall limitation upon the Commission thus appears to be that it should act in accordance with the provisions of the Act."
Senior Standing Counsel Ravi Raj Y.V. represented the petitioner while Senior Advocate K.K. Chaithanya represented the respondents.
In this case, the application of the respondent/assessee was accepted by the Settlement Commission under Section 245C of the Income Tax Act, 1961 (ITA) and it was ordered that the additional income offered was reasonable and fair. Immunity from penalty and prosecution was also ordered, however, the interest under Sections 234A, 234B, and 234C was to be levied by applying provision of Section 234B (2A) of ITA. The Revenue/petitioner being aggrieved by the order of the Settlement Commission and in light of finality to the order of the Settlement Commission in terms of Section 245-I had approached the High Court and invoked the writ jurisdiction to assail the order of the Settlement Commission.
The High Court in view of the above facts noted, “It is to be noticed that the special slab of higher rate as specified under Section 115 BBE would be applicable as regards the income referred to in Sections 69, 69, 69A, 69B, 69C or Section 69D. As rightly pointed out, the PCIT has not stated as to which particular provision would be applicable as each provision has distinct scope and applicability. In the facts of the present case, the question of invoking Section 69D does not arise.”
The Court added that if any of the provisions of Sections 69, 69A to 69C are sought to be invoked, in all such provisions the non-acceptance of the explanation would result in such amount “may be deemed to be the income of the assessee for such financial year.”
"It must be noticed that the Settlement Commission while dealing with the contention that genuineness of the declaration of gifts cannot be accepted as the assessee had not shown the cash gifts as closing cash balance in the wealth tax return, has recorded a finding that the question of making such declaration did not arise as, if such declaration was made earlier, the question of disclosure seeking settlement would not have arisen. In fact, the petitioner has filed an affidavit under Rule 8 explaining the receipt of gifts from friends and relatives. Such declaration has not been rebutted by the revenue by placing any additional facts to the contrary", it observed.
The Court said that the conclusion of the Settlement Commission by accepting the explanation "in the spirit of settlement" cannot be faulted calling for interference in exercise of the limited jurisdiction.
“Accordingly, in the present case, the conclusion arrived at by the Settlement Commission while accepting the contents of the affidavit filed under Rule 8 ‘in the spirit of the settlement’ and refusing to accept the contention of having recourse to Section 115BBE cannot be permitted to be interfered with”, it concluded.
Accordingly, the High Court rejected the petition and refused to interfere with the order of the Settlement Commission.
Cause Title- The Pr. Commissioner of Income Tax v. Umah Agarwal & Anr. (Neutral Citation: 2024:KHC:31915)
Appearance:
Petitioner: Senior Standing Counsel Ravi Raj Y.V.
Respondents: Senior Advocate K.K. Chaithanya, Advocate Tata Krishna, and DSGI Shanti Bhushan.
