Full Judgment Text
2007:BHC-OS:14075-DB
IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.1427 OF 2007 WRIT PETITION NO.1427 OF 2007 WRIT PETITION NO.1427 OF 2007
Haji N. Abdulla, Indian Inhabitant, )
having his address at C/o. M/s. )
Thowfeeq Fisheries, N.H.17, Navunda, )
Kundapura Disrict, Udupi Taluka-576 )
224 and also at C/o. Umesh Naik IIS )
Inditi Ashirvad Building, Building )
No.5, Rama Mandir Road, Gala No.140, )
Goregaon (West), Mumbai. )..Petitioner.
V/s.
1. Income Tax Settlement Commission, )
Additional Bench, having its )
Mahalaxmi Chambers, Mahalaxmi, )
Mumbai - 400 034. )
)
2. The Commissioner of Income-tax, )
Karnataka (Central), having his )
office at Central Revenues )
Building, Queen;’s Road, )
Bangalore - 560 001. )
)
3. The Asstt. Commissioner of )
Income-Tax, Central Circle, )
Income Tax Office, Mangalore. )
)
4. Union of India, Ministry of )
Finance, Govt. of India, )
Aayakar Bhavan, 2nd Floor, )
Maharshi Karve Road, )
Mumbai - 400 020. )..Respondents.
Mr.K.B.Bhujle with G.S.Pikale i/b. M/s.S.V.Pikale &
Co. for petitioner.
Mr.B.M.Chatterji with Mrs.P.P.Bhosale and Mr.
P.S.Sahadevan for respondents.
CORAM : F.I.REBELLO AND CORAM : F.I.REBELLO AND CORAM : F.I.REBELLO AND
J.P.DEVADHAR, JJ.
J.P.DEVADHAR, JJ. J.P.DEVADHAR, JJ.
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DATED : 8TH OCTOBER, 2007. DATED : 8TH OCTOBER, 2007. DATED : 8TH OCTOBER, 2007.
ORAL JUDGMENT (PER F.I.REBELLO, J.) ORAL JUDGMENT (PER F.I.REBELLO, J.) ORAL JUDGMENT (PER F.I.REBELLO, J.)
Rule. Heard forthwith.
2. The petitioner an individual has filed his
returns of income for the assessment year 1995-96 to
2000-01 with the Income Tax Officer, Ward 2, Udupi.
The petitioner also filed regular returns of income for
the assessment year 2001-02 and 2002-03 with the
Assistant Commissioner of Income Tax (Central) Circle,
Mangalore. The petitioner also filed block return for
assessment years 1991-92 to 2001-02 for the block
period 1/4/1990 to 27/2/2001 disclosing undisclosed
income of Rs.22,22,351/-. On 27/2/2001 search
operation under section 132 of the I.T. Act had been
carried out on the business and residential premises of
the petitioner. On 27/2/2003 the block assessment
order was passed determining the undisclosed income at
Rs.82,68,217/-. The petitioner has preferred an appeal
before the Commissioner of Income Tax (A) against the
block assessment order which is pending.
3. The petitioner on 29/10/2003 filed an
application under section 245C(1) before the Settlement
Commission offering Rs.10 lakhs as additional income.
By its order on 26/7/2004 the Settlement Commission
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rejected the application on two grounds (1) At the time
of filing the application under section 245C(1) there
was no valid pendency of any proceeding as the entire
adjudication tax was not paid in the pending appeal;
(2) there is no full and true disclosure as the
Settlement Commission did not agree that the quantum of
undisclosed income declared is justified.
Misc. Application was taken out for
rectification of this order on 17/9/2004. The same was
dismissed by the order of the Settlement Commission on
28/6/2005.
4. The petitioner then filed a fresh
application under section 245C(1) as according to the
petitioner there was a valid proceeding pending. The
petitioner in the application offered Rs.15 lakhs
instead of Rs.10 lakhs as offered in the earlier
application.
According to the petitioner the Settlement
Commission was satisfied as regards pendency of
proceedings, however, rejected the application by an
order dated 31/10/2006 on the ground that making of
full and true disclosure is a one time activity. The
petitioner filed Misc. Application for rectification
of order dated 31/10/2006. The same was dismissed by a
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speaking order dated 15/2/2007. Aggrieved, the
petitioner has preferred the present writ petition.
5. In a case where an application is moved
under section 245C, the Settlement Commission under
section 245D has to call a report from the
Commissioner. The further exercise of jurisdiction is
dependent on:-
1) the material as contained in the report
of the Commissioner;
2) having regard to the nature and
circumstances of the case;
3) complexities of the investigation
involved therein;
4) the Settlement Commission then, shall by
an order either reject the application or
allow the application to proceed with in
circumstances set out therein.
. It is the case of the petitioner that when
the first application was rejected as not maintainable,
no proceedings were pending, as in the appeal filed,
the entire self assessment tax was not paid, at the
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time of making that application. It is submitted,
therefore, that the appeal as filed was not properly
constituted. The Settlement Commission thereafter was
right in dismissing the first application on the ground
that there was no proceedings pending. As far as the
second ground of no full and true disclosure, it is
submitted that once an application was dismissed on the
ground that no proceedings were pending, the Settlement
Commission’s subsequent finding that there was no full
and true disclosure is without jurisdiction and
consequently will have to be ignored. It was,
therefore, open to the Settlement Commission to
entertain the second application. The second
application submitted was dismissed on the ground that
in its earlier order dated 31/10/2006 the Commission
had decided that full and true disclosure was not made.
Learned counsel submits that this finding disclosed an
error of law apparent on the face of record and
consequently, is liable to be set aside.
6. On behalf of the respondent, it is firstly
submitted that the petitioner’s income has been
assessed under section 44AE of the I.T. Act and,
therefore, there is no scope for the petitioner to say
that there are complexities. The petition does not
disclose as to what are the complexities of the
accounts. The appeal preferred for the block
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assessment year of 27/2/2003 is still pending. It is
also set out that the C.I.T.(C) Bangalore has given a
report under section 245D(1) in May, 2004 to the effect
that this is not a complex case that requires
consideration of a higher forum like the Settlement
Commission. The assessee, it is submitted, has not
brought out any issue so complex that the CIT (A)
cannot determine it. Determining the ownership of
lorry or income from lorry are not complex issue which
the C.I.T. (A) cannot determine or requires the higher
forum of Settlement Commission for determination. It
is next submitted that the petitioner had offered to
disclose additional income of Rs.15 lakhs including
Rs.10 lakhs offered in the original application. This
would show that the assessee had not made a full and
true disclosure in the first application. The
application becomes a case wherein multiple disclosure
is made.
7. At the hearing of this petition, we had
asked the learned counsel as to how a fresh application
would be maintainable before the Settlement Commission
which is a quasi judicial authority without setting
aside the first order of the Commission. Learned
counsel submitted that the first application was
dismissed on the ground that no proceedings were
pending and consequently, the other reason given that
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there was no full and true disclosure was without
jurisdiction. The first order, it is submitted is a
nullity at law and consequently the second application
was maintainable.
8. In the instant case, it is not the case of
the petitioner that the Settlement Commission did not
have jurisdiction to entertain the application. The
submission is that the Settlement Commission though a
forum of competent jurisdiction failed to exercise
jurisdiction on the ground that there was no pending
proceedings. This, it is submitted, will result in
holding that the order is a nullity at law and can be
so declared in subsequent proceedings and even in
collateral proceedings.
9. We may first examine the power of appeal
which is conferred under section 249. One of the
requirement is that the appeal shall be presented
within 30 days. There is no dispute that the appeal
was not so presented. Even if the appeal was presented
beyond the period prescribed, power has been conferred
upon the Commissioner (A) on showing sufficient cause
to admit the appeal. The other requirement is that no
appeal shall be admitted unless at the time of filing
the appeal, where the returns has been filed by the
assessee, the assessee had paid the tax due on income
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returned by him, or when no return has been filed by
the assessee, the assessee has paid an amount equal to
the amount of advance tax which was payable. The
contention of the petitioner is that on the day the
application was moved before the Settlement Commission
and was disposed off, the tax dues were not paid. The
bar under section 249(4) is that the appeal would not
be admitted unless the tax dues are first paid. It is
not the case of the petitioner that the appeal was
dismissed for failure to pay the tax dues. On the
contrary, according to the petitioner, the tax dues
have subsequently been paid and the appeal is pending.
Preferring an appeal and admission of an appeal are two
distinct requirements. Presenting an appeal and
admission are two different stages. A proceeding can
be said to be pending even on presentation though it
may not be admitted for the Tribunal to dispose of the
appeal on merits. Can it, therefore, be said that the
proceedings were not pending. This has to be
considered in the context that we are called upon to
exercise our extra ordinary jurisdiction in this case.
This, therefore, is not a case of patent lack of
jurisdiction. This is a case were an appeal was
presented but was not admitted at the time when the
Settlement proceedings were disposed of as tax dues had
not been paid. The Settlement Commission may have
recorded that the proceedings were not pending. That
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by itself cannot be a ground to hold that the
proceedings were not pending. At the highest, it would
be a case where the appeal was not admitted. The
Settlement Commission also declined to entertain the
application on the ground that there was no full and
true disclosure. The order of the Settlement
Commission is an order of a quasi judicial authority.
Once there be a order of a quasi judicial authority,
remedy of a person aggrieved is to challenge that order
before the competent forum. It would be open to a
party to present a second application without the first
order being set aside only in a case where an order
can be said to be a nullity at law. In other words,
where the Tribunal had no jurisdiction to assume
jurisdiction. In our opinion, this is not a case of
want of jurisdiction. It is a case of failure to
exercise jurisdiction and when an order was passed by
giving reasons, a second application before the
Settlement Commission would not be available in the
absence of a challenge to that order. There has to be
a finality attained to an order passed by the Court or
a quasi judicial authority. It is only in those rare
cases where the order is a nullity at law and is
patently demonstrable, that Court some times may treat
the order as a nullity at law and non est and enquire
into the matter. As order which is patently a nullity
at law on the face of it, can be called in question
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whereever and whenever it is sought to be relied upon.
10. We then proceed to the consequential issue
that once an application was pending and the Settlement
Commission had recorded a finding that there was no
true disclosure it would then be a finding of fact and
in a subsequent proceeding it would not be open to the
Settlement Commission to review the said finding in the
absence of any power to consider any fresh materials or
cause of action. In the instant case, therefore, the
finding of the Settlement Commission that considering
the finding recorded in the first application, it would
not be open to consider the second application, cannot
be said to be without jurisdiction.
11. The alternative contention on the basis
that the second application was maintainable, can now
be considered. The Commission while recording its
decision noted that the petitioner had filed an
application and not made full and true disclosure and
for that reason the first application was rejected.
The second application was filed for the same period
making incrementally higher disclosure. The Settlement
Commission held that making full and true disclosure is
an one time activity. There cannot be repeated or
hopeful attempts at making full and true disclosure.
Multiple disclosure militates against the very basis of
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settlement, which involves true and full disclosure
being made so as to warrant consideration. The
Settlement Commission relied on the Judgment of this
Court in the case of C.I.T. V/s. ITSC (Bom) & Ors.
(246 I.T.R. 63) where this Court approvingly quoted
the following observations:
" There is no right in the assessee to
invoke the Commission’s jurisdiction even
while he continues with his dishonest
conduct. "
from the Judgment of the Madras High Court in the case
of V.M.Shaikh Mohammed Rowthar (235 I.T.R. 581).
We may now consider the Judgment relied on
behalf of the petitioner. Reference was made to the
Judgment of the Ajay Mahendrakumar Shah V/s. Ajay Mahendrakumar Shah V/s.
Ajay Mahendrakumar Shah V/s.
Commissioner of Income Tax Commissioner of Income Tax reported in (1997) 92 Taxman Commissioner of Income Tax (1997) 92 Taxman (1997) 92 Taxman
116 Gujarat 116 Gujarat. On facts, the settlement application was 116 Gujarat
rejected on the ground that there was no pendency of
the proceedings. Subsequently, notice under section
148 was issued. A fresh application was made and that
also was rejected. The petition was filed in the
Gujarat High Court. From the observation in para 4 of
the Judgment, it is clear that on account of peculiar
facts relief was granted. There is no discussion on
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the issue of maintainability of the second application.
This Judgment is no authority for the proposition that
when the first application is dismissed, a second
application is maintainable.
12. It is next submitted that the petitioner in
fact had made full and true disclosure. The
Commission, it is submitted was bound to give reasons
for its conclusion. The Commission has given no such
reasons. Reliance is placed on the Judgment of the
learned Bench of this Court in Centurion Bank of Punjab Centurion Bank of Punjab Centurion Bank of Punjab
Ltd. V/s. Income Tax Settlement Commission & Ors. Ltd. V/s. Income Tax Settlement Commission & Ors. Ltd. V/s. Income Tax Settlement Commission & Ors.
reported in 290 I.T.R. 555 (Bom.) 290 I.T.R. 555 (Bom.). In that case, the 290 I.T.R. 555 (Bom.)
application before the Settlement Commission was
dismissed on the ground that the case does not involve
complexities and that there was no full and true
disclosure by the petitioner. On the issue of full and
true disclosure, it was contended that the petitioner
had disclosed relevant facts in the case and based on
the same the assessment had been completed. It was
contended that the Tribunal has mainly observed that
there is no full and true disclosure without setting
out any particulars. The learned bench placed reliance
on the Judgment of the Supreme Court in Calcutta Calcutta Calcutta
Discount Co. Ltd. V/s. ITO Discount Co. Ltd. V/s. ITO reported in 41 I.T.R. Discount Co. Ltd. V/s. ITO 41 I.T.R. 41 I.T.R.
191 (S.C.) 191 (S.C.). The Supreme Court in that case was 191 (S.C.)
examining the issue of full and true disclosure. The
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Court held that once all the primary facts are before
the assessing authority, it requires no further
assistance by way of disclosure. This Court, on facts
there held that completion of investigation were
involved and that merely stating that there was no full
and true disclosure would not be sufficient.
13. On our finding, there cannot be a fresh
application in respect of the same subject matter, if
the first application is rejected, after assuming
jurisdiction, as the Settlement Commission is a quasi
judicial authority. The petitioner in the first
application had disclosed unescaped income of Rs.10
lakhs which the Settlement Commission in its order
dated 26/7/2004 rejected. It appears from the order
that no reasons were given accept for stating that the
Commission does not agree with the petitioner that the
quantum of the undisclosed income declared before them
is justified. It is true that in the second order, the
Commission relied on its first order. At the same
time, the Commission did take note of the fact that the
income disclosed in the second application is more than
what was disclosed in the first application. Apart
from that in the Misc. Application, the petitioner has
raised the issue that no reasons had been given for
holding that the quantum of undisclosed income was not
correct. Contention was also raised that the
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proceedings are pending. In respect of the first
contention that was disposed of by holding that it
would be appropriate to discuss what the appellate
authority had discussed and hold that the exercise of
discretion cannot be a matter of rectification in such
a case. In respect of the second contention, it was
held that as the appellant had not paid the entire
amount payable, there was no admitted appeal and hence
the proceedings were not pending. Learned counsel
tried to explain the additional amount by contending
that it arose from the same material and only the issue
is, as to what income had escaped assessment. We are
unable to agree with the same. A person who seeks to
invoke the jurisdiction of the Commission must come and
disclose the true facts. Nothing had happened between
the first disclosure and the second disclosure
warranting the petitioner to disclose a larger quantum.
In our opinion, on this count also, the finding arrived
at by the Commission does not not suffer from any error
and consequently, the petition is liable to be
dismissed.
14. In so far as the issue of complexities is
concerned, that issue has not been argued before the
Commission nor has Commission either in its first order
or second order dealt with the same. In our opinion
that question would not arise for our determination.
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Consequently, petition is dismissed. Rule
discharged. There shall be no order as to costs.
(F.I.REBELL0, J.) (F.I.REBELL0, J.) (F.I.REBELL0, J.)
(J.P.DEVADHAR, J.) (J.P.DEVADHAR, J.) (J.P.DEVADHAR, J.)
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.1427 OF 2007 WRIT PETITION NO.1427 OF 2007 WRIT PETITION NO.1427 OF 2007
Haji N. Abdulla, Indian Inhabitant, )
having his address at C/o. M/s. )
Thowfeeq Fisheries, N.H.17, Navunda, )
Kundapura Disrict, Udupi Taluka-576 )
224 and also at C/o. Umesh Naik IIS )
Inditi Ashirvad Building, Building )
No.5, Rama Mandir Road, Gala No.140, )
Goregaon (West), Mumbai. )..Petitioner.
V/s.
1. Income Tax Settlement Commission, )
Additional Bench, having its )
Mahalaxmi Chambers, Mahalaxmi, )
Mumbai - 400 034. )
)
2. The Commissioner of Income-tax, )
Karnataka (Central), having his )
office at Central Revenues )
Building, Queen;’s Road, )
Bangalore - 560 001. )
)
3. The Asstt. Commissioner of )
Income-Tax, Central Circle, )
Income Tax Office, Mangalore. )
)
4. Union of India, Ministry of )
Finance, Govt. of India, )
Aayakar Bhavan, 2nd Floor, )
Maharshi Karve Road, )
Mumbai - 400 020. )..Respondents.
Mr.K.B.Bhujle with G.S.Pikale i/b. M/s.S.V.Pikale &
Co. for petitioner.
Mr.B.M.Chatterji with Mrs.P.P.Bhosale and Mr.
P.S.Sahadevan for respondents.
CORAM : F.I.REBELLO AND CORAM : F.I.REBELLO AND CORAM : F.I.REBELLO AND
J.P.DEVADHAR, JJ.
J.P.DEVADHAR, JJ. J.P.DEVADHAR, JJ.
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DATED : 8TH OCTOBER, 2007. DATED : 8TH OCTOBER, 2007. DATED : 8TH OCTOBER, 2007.
ORAL JUDGMENT (PER F.I.REBELLO, J.) ORAL JUDGMENT (PER F.I.REBELLO, J.) ORAL JUDGMENT (PER F.I.REBELLO, J.)
Rule. Heard forthwith.
2. The petitioner an individual has filed his
returns of income for the assessment year 1995-96 to
2000-01 with the Income Tax Officer, Ward 2, Udupi.
The petitioner also filed regular returns of income for
the assessment year 2001-02 and 2002-03 with the
Assistant Commissioner of Income Tax (Central) Circle,
Mangalore. The petitioner also filed block return for
assessment years 1991-92 to 2001-02 for the block
period 1/4/1990 to 27/2/2001 disclosing undisclosed
income of Rs.22,22,351/-. On 27/2/2001 search
operation under section 132 of the I.T. Act had been
carried out on the business and residential premises of
the petitioner. On 27/2/2003 the block assessment
order was passed determining the undisclosed income at
Rs.82,68,217/-. The petitioner has preferred an appeal
before the Commissioner of Income Tax (A) against the
block assessment order which is pending.
3. The petitioner on 29/10/2003 filed an
application under section 245C(1) before the Settlement
Commission offering Rs.10 lakhs as additional income.
By its order on 26/7/2004 the Settlement Commission
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rejected the application on two grounds (1) At the time
of filing the application under section 245C(1) there
was no valid pendency of any proceeding as the entire
adjudication tax was not paid in the pending appeal;
(2) there is no full and true disclosure as the
Settlement Commission did not agree that the quantum of
undisclosed income declared is justified.
Misc. Application was taken out for
rectification of this order on 17/9/2004. The same was
dismissed by the order of the Settlement Commission on
28/6/2005.
4. The petitioner then filed a fresh
application under section 245C(1) as according to the
petitioner there was a valid proceeding pending. The
petitioner in the application offered Rs.15 lakhs
instead of Rs.10 lakhs as offered in the earlier
application.
According to the petitioner the Settlement
Commission was satisfied as regards pendency of
proceedings, however, rejected the application by an
order dated 31/10/2006 on the ground that making of
full and true disclosure is a one time activity. The
petitioner filed Misc. Application for rectification
of order dated 31/10/2006. The same was dismissed by a
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speaking order dated 15/2/2007. Aggrieved, the
petitioner has preferred the present writ petition.
5. In a case where an application is moved
under section 245C, the Settlement Commission under
section 245D has to call a report from the
Commissioner. The further exercise of jurisdiction is
dependent on:-
1) the material as contained in the report
of the Commissioner;
2) having regard to the nature and
circumstances of the case;
3) complexities of the investigation
involved therein;
4) the Settlement Commission then, shall by
an order either reject the application or
allow the application to proceed with in
circumstances set out therein.
. It is the case of the petitioner that when
the first application was rejected as not maintainable,
no proceedings were pending, as in the appeal filed,
the entire self assessment tax was not paid, at the
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time of making that application. It is submitted,
therefore, that the appeal as filed was not properly
constituted. The Settlement Commission thereafter was
right in dismissing the first application on the ground
that there was no proceedings pending. As far as the
second ground of no full and true disclosure, it is
submitted that once an application was dismissed on the
ground that no proceedings were pending, the Settlement
Commission’s subsequent finding that there was no full
and true disclosure is without jurisdiction and
consequently will have to be ignored. It was,
therefore, open to the Settlement Commission to
entertain the second application. The second
application submitted was dismissed on the ground that
in its earlier order dated 31/10/2006 the Commission
had decided that full and true disclosure was not made.
Learned counsel submits that this finding disclosed an
error of law apparent on the face of record and
consequently, is liable to be set aside.
6. On behalf of the respondent, it is firstly
submitted that the petitioner’s income has been
assessed under section 44AE of the I.T. Act and,
therefore, there is no scope for the petitioner to say
that there are complexities. The petition does not
disclose as to what are the complexities of the
accounts. The appeal preferred for the block
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assessment year of 27/2/2003 is still pending. It is
also set out that the C.I.T.(C) Bangalore has given a
report under section 245D(1) in May, 2004 to the effect
that this is not a complex case that requires
consideration of a higher forum like the Settlement
Commission. The assessee, it is submitted, has not
brought out any issue so complex that the CIT (A)
cannot determine it. Determining the ownership of
lorry or income from lorry are not complex issue which
the C.I.T. (A) cannot determine or requires the higher
forum of Settlement Commission for determination. It
is next submitted that the petitioner had offered to
disclose additional income of Rs.15 lakhs including
Rs.10 lakhs offered in the original application. This
would show that the assessee had not made a full and
true disclosure in the first application. The
application becomes a case wherein multiple disclosure
is made.
7. At the hearing of this petition, we had
asked the learned counsel as to how a fresh application
would be maintainable before the Settlement Commission
which is a quasi judicial authority without setting
aside the first order of the Commission. Learned
counsel submitted that the first application was
dismissed on the ground that no proceedings were
pending and consequently, the other reason given that
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there was no full and true disclosure was without
jurisdiction. The first order, it is submitted is a
nullity at law and consequently the second application
was maintainable.
8. In the instant case, it is not the case of
the petitioner that the Settlement Commission did not
have jurisdiction to entertain the application. The
submission is that the Settlement Commission though a
forum of competent jurisdiction failed to exercise
jurisdiction on the ground that there was no pending
proceedings. This, it is submitted, will result in
holding that the order is a nullity at law and can be
so declared in subsequent proceedings and even in
collateral proceedings.
9. We may first examine the power of appeal
which is conferred under section 249. One of the
requirement is that the appeal shall be presented
within 30 days. There is no dispute that the appeal
was not so presented. Even if the appeal was presented
beyond the period prescribed, power has been conferred
upon the Commissioner (A) on showing sufficient cause
to admit the appeal. The other requirement is that no
appeal shall be admitted unless at the time of filing
the appeal, where the returns has been filed by the
assessee, the assessee had paid the tax due on income
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returned by him, or when no return has been filed by
the assessee, the assessee has paid an amount equal to
the amount of advance tax which was payable. The
contention of the petitioner is that on the day the
application was moved before the Settlement Commission
and was disposed off, the tax dues were not paid. The
bar under section 249(4) is that the appeal would not
be admitted unless the tax dues are first paid. It is
not the case of the petitioner that the appeal was
dismissed for failure to pay the tax dues. On the
contrary, according to the petitioner, the tax dues
have subsequently been paid and the appeal is pending.
Preferring an appeal and admission of an appeal are two
distinct requirements. Presenting an appeal and
admission are two different stages. A proceeding can
be said to be pending even on presentation though it
may not be admitted for the Tribunal to dispose of the
appeal on merits. Can it, therefore, be said that the
proceedings were not pending. This has to be
considered in the context that we are called upon to
exercise our extra ordinary jurisdiction in this case.
This, therefore, is not a case of patent lack of
jurisdiction. This is a case were an appeal was
presented but was not admitted at the time when the
Settlement proceedings were disposed of as tax dues had
not been paid. The Settlement Commission may have
recorded that the proceedings were not pending. That
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by itself cannot be a ground to hold that the
proceedings were not pending. At the highest, it would
be a case where the appeal was not admitted. The
Settlement Commission also declined to entertain the
application on the ground that there was no full and
true disclosure. The order of the Settlement
Commission is an order of a quasi judicial authority.
Once there be a order of a quasi judicial authority,
remedy of a person aggrieved is to challenge that order
before the competent forum. It would be open to a
party to present a second application without the first
order being set aside only in a case where an order
can be said to be a nullity at law. In other words,
where the Tribunal had no jurisdiction to assume
jurisdiction. In our opinion, this is not a case of
want of jurisdiction. It is a case of failure to
exercise jurisdiction and when an order was passed by
giving reasons, a second application before the
Settlement Commission would not be available in the
absence of a challenge to that order. There has to be
a finality attained to an order passed by the Court or
a quasi judicial authority. It is only in those rare
cases where the order is a nullity at law and is
patently demonstrable, that Court some times may treat
the order as a nullity at law and non est and enquire
into the matter. As order which is patently a nullity
at law on the face of it, can be called in question
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whereever and whenever it is sought to be relied upon.
10. We then proceed to the consequential issue
that once an application was pending and the Settlement
Commission had recorded a finding that there was no
true disclosure it would then be a finding of fact and
in a subsequent proceeding it would not be open to the
Settlement Commission to review the said finding in the
absence of any power to consider any fresh materials or
cause of action. In the instant case, therefore, the
finding of the Settlement Commission that considering
the finding recorded in the first application, it would
not be open to consider the second application, cannot
be said to be without jurisdiction.
11. The alternative contention on the basis
that the second application was maintainable, can now
be considered. The Commission while recording its
decision noted that the petitioner had filed an
application and not made full and true disclosure and
for that reason the first application was rejected.
The second application was filed for the same period
making incrementally higher disclosure. The Settlement
Commission held that making full and true disclosure is
an one time activity. There cannot be repeated or
hopeful attempts at making full and true disclosure.
Multiple disclosure militates against the very basis of
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settlement, which involves true and full disclosure
being made so as to warrant consideration. The
Settlement Commission relied on the Judgment of this
Court in the case of C.I.T. V/s. ITSC (Bom) & Ors.
(246 I.T.R. 63) where this Court approvingly quoted
the following observations:
" There is no right in the assessee to
invoke the Commission’s jurisdiction even
while he continues with his dishonest
conduct. "
from the Judgment of the Madras High Court in the case
of V.M.Shaikh Mohammed Rowthar (235 I.T.R. 581).
We may now consider the Judgment relied on
behalf of the petitioner. Reference was made to the
Judgment of the Ajay Mahendrakumar Shah V/s. Ajay Mahendrakumar Shah V/s.
Ajay Mahendrakumar Shah V/s.
Commissioner of Income Tax Commissioner of Income Tax reported in (1997) 92 Taxman Commissioner of Income Tax (1997) 92 Taxman (1997) 92 Taxman
116 Gujarat 116 Gujarat. On facts, the settlement application was 116 Gujarat
rejected on the ground that there was no pendency of
the proceedings. Subsequently, notice under section
148 was issued. A fresh application was made and that
also was rejected. The petition was filed in the
Gujarat High Court. From the observation in para 4 of
the Judgment, it is clear that on account of peculiar
facts relief was granted. There is no discussion on
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the issue of maintainability of the second application.
This Judgment is no authority for the proposition that
when the first application is dismissed, a second
application is maintainable.
12. It is next submitted that the petitioner in
fact had made full and true disclosure. The
Commission, it is submitted was bound to give reasons
for its conclusion. The Commission has given no such
reasons. Reliance is placed on the Judgment of the
learned Bench of this Court in Centurion Bank of Punjab Centurion Bank of Punjab Centurion Bank of Punjab
Ltd. V/s. Income Tax Settlement Commission & Ors. Ltd. V/s. Income Tax Settlement Commission & Ors. Ltd. V/s. Income Tax Settlement Commission & Ors.
reported in 290 I.T.R. 555 (Bom.) 290 I.T.R. 555 (Bom.). In that case, the 290 I.T.R. 555 (Bom.)
application before the Settlement Commission was
dismissed on the ground that the case does not involve
complexities and that there was no full and true
disclosure by the petitioner. On the issue of full and
true disclosure, it was contended that the petitioner
had disclosed relevant facts in the case and based on
the same the assessment had been completed. It was
contended that the Tribunal has mainly observed that
there is no full and true disclosure without setting
out any particulars. The learned bench placed reliance
on the Judgment of the Supreme Court in Calcutta Calcutta Calcutta
Discount Co. Ltd. V/s. ITO Discount Co. Ltd. V/s. ITO reported in 41 I.T.R. Discount Co. Ltd. V/s. ITO 41 I.T.R. 41 I.T.R.
191 (S.C.) 191 (S.C.). The Supreme Court in that case was 191 (S.C.)
examining the issue of full and true disclosure. The
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Court held that once all the primary facts are before
the assessing authority, it requires no further
assistance by way of disclosure. This Court, on facts
there held that completion of investigation were
involved and that merely stating that there was no full
and true disclosure would not be sufficient.
13. On our finding, there cannot be a fresh
application in respect of the same subject matter, if
the first application is rejected, after assuming
jurisdiction, as the Settlement Commission is a quasi
judicial authority. The petitioner in the first
application had disclosed unescaped income of Rs.10
lakhs which the Settlement Commission in its order
dated 26/7/2004 rejected. It appears from the order
that no reasons were given accept for stating that the
Commission does not agree with the petitioner that the
quantum of the undisclosed income declared before them
is justified. It is true that in the second order, the
Commission relied on its first order. At the same
time, the Commission did take note of the fact that the
income disclosed in the second application is more than
what was disclosed in the first application. Apart
from that in the Misc. Application, the petitioner has
raised the issue that no reasons had been given for
holding that the quantum of undisclosed income was not
correct. Contention was also raised that the
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proceedings are pending. In respect of the first
contention that was disposed of by holding that it
would be appropriate to discuss what the appellate
authority had discussed and hold that the exercise of
discretion cannot be a matter of rectification in such
a case. In respect of the second contention, it was
held that as the appellant had not paid the entire
amount payable, there was no admitted appeal and hence
the proceedings were not pending. Learned counsel
tried to explain the additional amount by contending
that it arose from the same material and only the issue
is, as to what income had escaped assessment. We are
unable to agree with the same. A person who seeks to
invoke the jurisdiction of the Commission must come and
disclose the true facts. Nothing had happened between
the first disclosure and the second disclosure
warranting the petitioner to disclose a larger quantum.
In our opinion, on this count also, the finding arrived
at by the Commission does not not suffer from any error
and consequently, the petition is liable to be
dismissed.
14. In so far as the issue of complexities is
concerned, that issue has not been argued before the
Commission nor has Commission either in its first order
or second order dealt with the same. In our opinion
that question would not arise for our determination.
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Consequently, petition is dismissed. Rule
discharged. There shall be no order as to costs.
(F.I.REBELL0, J.) (F.I.REBELL0, J.) (F.I.REBELL0, J.)
(J.P.DEVADHAR, J.) (J.P.DEVADHAR, J.) (J.P.DEVADHAR, J.)
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