M/S.AYURVEDIC BEACH RESORT PVT.LTD. V. THE COMMISSIONER OF INCOME TAX(CENTRAL)

WA/1171/2017

AI Insights

The case involves Ayurvedic Beach Resort Pvt. Ltd. and others, who are appellants, against the Commissioner of Income Tax (Central), Kochi, the respondent. The appellants had initially filed an application for settlement under Section 245C of the Income Tax Act for the block period from April 1, 1990, to April 25, 2000. The Settlement Commissioner accepted their application and determined the terms for settlement. However, the respondent contested the details of the advances taken by the appellants, amounting to Rs.3,54,59,150. The learned Single Judge set aside the Settlement Commission's order and remitted the matter for fresh consideration, citing that the Commission had accepted the appellants' claims without adequate discussion or verification of the creditors' details and creditworthiness. The appellants challenged this decision, leading to the current appeal.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 751690 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 11-11-2021
• Assessment Year: misc
• Other Referred Cases: CIT v Om Prakash Mittal, Jyotendrasinhji v S.I.Tripathi, Union of India v Ind-Swift Laboratories Ltd., N.Krishnan v Settlement Commission
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: P K R MENON; JOSE JOSEPH
• Assessee Lawyers: JOSEPH KOIDIANTHARA; RAMESH JOHN
• Keywords: Income Tax; Judicial review; Misrepresentation of facts; Settlement commission; Advances from Others
• Section: 245D(4); 245C; 245D(1); 245D; 245D(6)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR.JUSTICE BASANT BALAJI THURSDAY, THE 11TH DAY OF NOVEMBER 2021 / 20TH KARTHIKA, 1943 WA NO. 1171 OF 2017 AGAINST THE JUDGMENT IN WPC 34690/2007 OF HIGH COURT OF KERALA, ERNAKULAM APPELLANTS/RESPONDENTS 2 TO 5: 1 M/S.AYURVEDIC BEACH RESORT PVT.LTD. CHOWARA, BALARAMAPURAM, TRIVANDRUM-695501.REP. BY ITS MANAGING DIRECTOR. 2 MS MANALTHEERAM BEACH RESORT PVT.LTD. CHOWARA, BALARAMAPURAM, TRIVANDRUM-695501.REP. BY ITS MANAGING DIRECTOR. 3 M/s SOMATHEERAM AYURVEDIC HOSPITAL & YOGA CENTRE PVT. LTD.TRIVANDRUM-695501.REP. BY ITS MANAGING DIRECTOR. 4 SHRI BABY MATHEW ARAMBANKUDY HOUSE,SOMATHEERAM, CHOWARA P.O., BALARAMAPURAM 695501. BY ADVS. SRI.JOSEPH KODIANTHARA (SR.) SRI.RAMESH CHERIAN JOHN RESPONDENT/S: 1 THE COMMISSIONER OF INCOME TAX(CENTRAL) OFFICE OF THE COMMISSIONER OF INCOME TAX (CENTRAL)5TH FLOOR, KANDAMKULATHY TOWERS, M.G.ROAD, KOCHI-682011. 2 THE SETTLEMENT COMMISSION (IT & WT) DEPARTMENT OF REVENUE, MINISTRY OF FINANCE,ADDITIONAL BENCH, SATHGURU COMPLEX, 640,ANNA SALAI, CHENNAI 600035. BY ADVS. SRI.P.K.R.MENON SR.COUNSEL GOI TAXES SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 11.11.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.A.No.1171 of 2017 2 JUDGMENT S.V.Bhatti, J. Ayurvedic Beach Resort Pvt.Ltd. and 3 others/respondents in W.P.(C) No.34690/2007 are the appellants. The Commissioner of Income Tax(Central),Kochi/Writ Petitioner is the respondent. The parties are adverted to as arrayed in the appeal. 2. The appellants, on 3.1.2001, filed application for settlement under Section 245C of the Income Tax Act (for short 'the Act') for the block period of 1.4.1990 to 25.4.2000. The applications were admitted and the response of the respondent herein was sought for. The Settlement Commissioner through order dated 22.05.2007 marked as Ext.P1 accepted the application and determined the terms for settlement of issues concerning tax payable by the assessee. In the proceedings before this Court the issue canvassed is in respect of advances taken by the appellants from others amounting to Rs.3,54,59,150/- and the claim of advance received from 3rd parties is legally and in accordance with the provisions of the Act has been decided u/s 245D of the Act. The respondent herein contested the details offered by the appellants for settlement under the head \"advances from others\". The Settlement Commissioner accepted the W.A.No.1171 of 2017 3 case of appellants herein and for appreciating the area of controversy before the learned Single Judge and the point urged before us, the brief portion of consideration by the Settlement Commissioner is excerpted hereunder: Advances from others: Advances from others shown at Rs.3,54,59,150/- in the original CFSs have been revised to Rs.4,13,52,150/-. The AR pointed out that the details of these loans were available in the seized records and that the relevant Promissory Notes were also seized during the course of search. Rate of interest on these loans is also mentioned in the seized records. Further, the confirmation letters from the creditors have also been filed before the Addl.DIT. The applicant pointed out that the relevant details are available at pages 39, 70, 80, 308 and 402 of APB. The CIT in Rule-9 report stated that the details of the loan creditors were not furnished. Hence, the creditworthiness of the loan cannot be verified. The learned A/R stated that the details of the loans and repayments were available in various seized records such as AM83, AM85, AM89, BM12, BM23, PQ31, AM4, AM17, AM-46 etc. He also pointed out that seized record of M68 contained a number of discharged promissory notes in rspect of loans taken and repaid. He submitted that the details available in the seized records have been considered to quantify the loan taken and interest paid on the loans has been taken as outflow. We have considered the submissions and we are of the view that no addition is called for on this account.\" 3. The respondent challenged the order in Ext.P1 in WP(C) No.34690/2007. Through the judgment impugned before us, the learned Single Judge set aside the order in Ext.P1 and remitted the matter to Settlement Commissioner for consideration and disposal W.A.No.1171 of 2017 4 afresh. Learned Judge while reviewing the order in Ext.P1 held as follows: \"The advances from other sources originally shown at Rs.3,54,59,150/- in the CFSs were revised to Rs.4,13,52,150/-. It is pertinent that the report of the Commissioner had merely been referred to and the contention with respect to the advances said to have been obtained from others was accepted by the Settlement Commission without any discussion. As is evident from the report no details of the creditors; who are said to have advanced the loans, as per the CFS, was revealed by the petitioner. In this context, the decision of the Hon'ble Supreme Court in CIT v Om Prakash Mittal [(2005) 273 ITR 326] assumes relevance. Om Prakash Mittal was a case in which the assessee claimed to have received an amount of Rs.1.5 crores on 31.3.1985, by way of loans from seven persons, in cash. After the order of the Settlement Commission was passed, in which the contention of advances was accepted, an application was filed by the Commissioner pointed out certain misrepresentations; which was refused to be entertained by the Commission finding that there is no power of reveiw conferred on the Commission. The Hon'ble Supreme Court found that the Commission had missed the true scope and ambit of Section 245D(6) and if the Commissioner was able to establish that the order of the Commission was obtained on misrepresentation of facts, then it was open to the Commission to decide the issue and the same would not lead to any review of the earlier orders. It was also categorically held so: \"Further the conclusions of the Commission regarding the genuineness of the loan transactions were arrived at without indicating reasons. It only referred to the respective stands and the submissions of the assessee's counsel. That was not the proper way to deal with the matter.\" The manner in which the Settlement Commission dealt with the claim of advances is seen at page 5, paragraph 5 of Ext.P1: Advances from others: Advances from others shown at Rs.3,54,59,150/- in the original CFSs have been revised to Rs.4,13,52,150/-. The AR pointed out that the details of these loans were W.A.No.1171 of 2017 5 available in the seized records and that the relevant Promissory Notes were also seized during the course of search. Rate of interest on these loans is also mentioned in the seized records. Further, the confirmation letters from the creditors have also been filed before the Addl.DIT. The applicant pointed out that the relevant details are available at pages 39, 70, 80, 308 and 402 of APB. The CIT in Rule-9 report stated that the details of the loan creditors were not furnished. Hence, the creditworthiness of the loan cannot be verified. The learned A/R stated that the details of the loans and repayments were available in various seized records such as AM83, AM85, AM89, BM12, BM23, PQ31, AM4, AM17, AM-46 etc. He also pointed out that seized record of M68 contained a number of discharged promissory notes in rspect of loans taken and repaid. He submitted that the details available in the seized records have been considered to quantify the loan taken and interest paid on the loans has been taken as outflow. We have considered the submissions and we are of the view that no addition is called for on this account.\" The manner in which additions have been refused to be made is without any reasoning especially when the Commissioner of Income Tax had specifically, in his report, stated that the details of the creditors were not furnished and there was no manner in which the credit-worthiness of the said persons could be verified. The loans if not proved have to be computed as total income and additions made in a normal assessment, which principle regulates the Settlement Commission too. On the above reasoning, it has to be held that the Settlement Commission had not properly considered the issue of addition or the genuineness of claim of advances from others. To that extent, Ext.P1 order would stand set aside and the matter is remanded to the Settlement Commission for consideration of the particular aspect which this Court has interfered with.” Hence the appeal. 4. The learned Senior Advocate Joseph Kodianthara argues W.A.No.1171 of 2017 6 that the scope of judicial review under Article 226 against an order made by the Settlement Commissioner under Section 245C of the Income Tax Act is very limited. The Single Judge by appreciating a solitary circumstance noted above as a ground available for judicial review of the order made in Ext.P1 remitted the matter to Settlement Commissioner. Such course is unavailable in the circumstances of the case. He invites our attention to the very annexures stated to have been placed by the appellants before the Settlement Commissioner as materials to the brief filed for settlement. Therefore routine denial in Rule -9 report filed by the respondent is not a ground at all to interdict Ext.P1 order. He argues that the rejection of the addition by the Settlement Commissioner is upon being satisfied with the materials placed by the appellants before the Settlement Commissioner. On the scope of judicial review vis-à-vis the orders made under 245D, he places reliance on the judgments reported in Jyotendrasinhji v S.I.Tripathi and others1, Union of India and others v Ind-Swift Laboratories Ltd.2, Commissioner of Income Tax v Om Prakash Mittal3 and N.Krishnan v Settlement Commission and others4 and finally contends that the remand for re-verification by the Settlement Commissioner of advances, is 1 (1993(201) ITR 611) 2 (2011) 4 SCC 635 3 (2005(273) ITR 326) 4 (1989 (180) 585) W.A.No.1171 of 2017 7 avoidable and prays for setting aside the judgment under appeal. 5. Learned Senior Counsel Mr.Jose Joseph supports the judgment under appeal by briefly arguing that the very judgments relied on by the appellants demonstrate that the writ jurisdiction of this Court is not completely taken away against the orders made under Section 245D of the Act. The scope of judicial review available is clearly laid down by these pronouncements. The case on hand comes within the purview of the available grounds of judicial review and the presence of lackadaisical consideration by the Settlement Commissioner could be demonstrated by appreciating the following circumstances in this chronology viz. the appellants revised the Cash Flow Statement under the head “advances” from 3,54,59,150/- to 4,13,52,150/-. The respondent contested the details of loan or creditors and important objection in this behalf is the creditworthiness of the loan and creditors. The Settlement Commissioner accepted the declaration of the appellants by recording the following finding. “We have considered the submissions and we are of the view that no addition is called for on this account.” Therefore, it is argued, the conclusion is not in accordance with the provisions of the Act, the assessee/appellants are required to demonstrate the creditworthiness, bona fides of the transaction and appropriate effect, both in the accounts and for tax purpose, in the W.A.No.1171 of 2017 8 absence of proof of any one of the factors, the claim can't be admitted. The appellants now invite this Court to examine the details and such review is incorrect and unavailable in an intra court appeal. In as much as the scope of judicial review does not facilitate discharge of function by this Court as an appellate authority on the orders made by the Settlement Commissioner. Supposing the details are in fact available with the appellants and not considered by the Settlement Commissioner, these details could be proved while a fresh order is made, Further these details could be established even after remand by this Court to Settlement Commission. The acceptance of case of the appellants by Commissioner is not in accordance with the provisions of the Act. No ground is made out for warranting interference against an order of remand made by the learned Single Judge. The learned counsel prays for dismissing the appeal. 6. We have heard the learned counsel and perused the record. 7. The operative portion of Ext.P1 and the consideration in the judgment under appeal are already excerpted. For examining the grounds canvassed by the appellants, we would like to rely on the very judgment relied on by the appellants. In Jyothindra Singhji case, the Supreme Court has held that the scope of the enquiry whether by the High Court under Article 226 or before the Supreme Court in W.A.No.1171 of 2017 9 the appeal under Article 136 remains the same viz. to consider whether the order of the Settlement Commissioner is contrary to the provisions of the Income Tax Act, and if so whether it has prejudiced the petitioner. This is, of course, apart from grounds of lies, fraud and malice which constitute a separate and independent category. A reading of the judgment under appeal discloses that the principle in Jyothindrasinghji is applied by the learned Single Judge in appreciating whether the settlement in Ext.P1 is in accordance with the provisions of the Act or not. Om Prakash Mithal case lays down the object and procedure followed by the Commission in applications arising under Section 245D of the Act. The Supreme Court has summarised the position as follows: A new Chapter XIX-A was introduced by the Taxation Laws (amendment) Act, 1975 (in short the 'Amendment Act') w.e.f. 1.4.1976. The Commission is constituted by the Central Government for the settlement of cases under Chapter XIX-A. The expression \"case\" as appearing in Section 245A(b) refers to any proceeding under the Act for the assessment or re-assessment of income of any person in respect of any year or years or by way of appeal or revision in connection with such assessment or re- assessment which may be pending before any income-tax authority on the date on which an application under sub- section (1) of Section 245C is made. It further provides that where any appeal or application for revision has been preferred after the expiry of the specified period and which has not been admitted then the same shall not be deemed to be a proceeding pending within the meaning of clause (b) of Section 245A. Scheme of Chapter XIX-A shows that the filing of application by the assessee is a unilateral act, and the department may not be aware of the same. It has to be noted that if an application for settlement is filed under Section 245C, it is not automatically admitted. Section 245D deals with procedure on receipt of an application under Section 245C. Under sub-section (1) thereof, the Commission after following the prescribed procedure can allow the W.A.No.1171 of 2017 10 application to be proceeded with or rejected. Only after the Commission allows the petition to be proceeded with, it exercises the power of settlement. One basic feature of Chapter XIXA is that it relates to income which was not disclosed before the income-tax authorities. This is evident from Section 245C which reads as follows: \"Section 245C: Application for settlement of cases. 245C(1): An assessee may, at any stage of a case relating to him, make an application in such form and in such manner as may be prescribed, and containing a full and true disclosure of his income which has not been disclosed before the Assessing Officer, the manner in which such income has been derived, the additional amount of income-tax payable on such income and such other particulars as may be prescribed, to the Settlement Commission to have the case settled and any such application shall be disposed of in the manner hereinafter provided: Provided that no such application shall be made unless, - (a) the assessee has furnished the return of income which he is or was required to furnish under any of the provisions of this Act; and (b) the additional amount of income-tax payable on the income disclosed in the application exceeds one hundred thousand rupees. (1A) For the purposes of sub-section (1) of this section and sub- sections (2A) to (2D) of section 245D, the additional amount of income-tax payable in respect of the income disclosed in an application made under sub-section (1) of this section shall be the amount calculated in accordance with the provisions of sub- sections (1B) to (1D). (1B) Where the income disclosed in the application relates to only one previous year, - (i) if the applicant has not furnished a return in respect of the total income of that year (whether or not an assessment has been made in respect of the total income of that year), then, except in a case covered by clause (iii), tax shall be calculated on the income disclosed in the application as if such income were the total income; (ii) if the applicant has furnished a return in respect of the total income of that year (whether or not an assessment has been made in pursuance of such return), tax shall be calculated on the aggregate of the total income returned and the income disclosed in the application as if such aggregate were the total income; (iii) if the proceeding pending before the income-tax authority is in the nature of a proceeding for reassessment of the applicant under section 147 or by way of appeal or revision in connection with such reassessment, and the applicant has not furnished a return in respect of the total income of that year in the course of W.A.No.1171 of 2017 11 such proceeding for reassessment, tax shall be calculated on the aggregate of the total income as assessed in the earlier proceeding for assessment under section 143 or section 144 or section 147 and the income disclosed in the application as if such aggregate were the total income. (1C) The additional amount of income-tax payable in respect of the income disclosed in the application relating to the previous year referred to in sub- section (1B) shall be, - (a) in a case referred to in clause (i) of that sub-section, the amount of tax calculated under that clause; (b) in a case referred to in clause (ii) of that sub-section, the amount of tax calculated under that clause as reduced by the amount of tax calculated on the total income returned for that year; (iii) in a case referred to in clause (iii) of that sub-section, the amount of tax calculated under that clause as reduced by the amount of tax calculated on the total income assessed in the earlier proceeding for assessment under section 143 or section 144 or section 147\". (Underlined for emphasis) Prior to substitution by Finance Act, 1987 w.e.f. 1.6.1987, the proviso to sub-section (1) read as follows: \"provided that no such application shall be made unless the additional amount of income tax payable on the income disclosed in the application exceeds fifty thousand rupees.\" The word \"fifty thousand rupees\" in the earlier proviso has been substituted by the expression \"one hundred thousand rupees\" by the Finance Act, 1995 w.e.f. 1.7.1995. Some changes were introduced by Finance Act, 1987 w.e.f. 1.6.1987 in sub section (1B) and (1C) which do not have much importance for the present appeal. The Commission is not bound to proceed with any application filed under Section 245C as is clear from Section 245D. The special provisions so far as relevant read as follows: Section 245D: Procedure on receipt of an application under section 245C. \"245D(1)- On receipt of an application under section 245C, the Settlement Commission shall call for a report from the Commissioner and on the basis of the materials contained in such report and having regard to the nature and circumstances of the case or the complexity of the investigation involved therein, the Settlement Commission may, by order, allow the application to be proceeded with or reject the application : W.A.No.1171 of 2017 12 Provided that an application shall not be rejected under this sub- section unless an opportunity has been given to the applicant of being heard: Provided further that the Commissioner shall furnish the report within a period of forty-five days of the receipt of communication from the Settlement Commission in case of all applications made under section 245C on or after the 1st day of July, 1995 and if the Commissioner fails to furnish the report within the said period, the Settlement Commission may make the order without such report. (2) x x x x x (2A) Subject to the provisions of sub-section (2B), the assessee shall within thirty-five days of the receipt of a copy of the order under sub-section (1) allowing the application to be proceeded with, pay the additional amount of income-tax payable on the income disclosed in the application and shall furnish proof of such payment to the Settlement Commission. (2B) If the Settlement Commission is satisfied, on an application made in this behalf by the assessee, that he is unable for good and sufficient reasons to pay the additional amount of income-tax referred to in sub-section (2A) within the time specified in that sub- section, it may extend the time for payment of the amount which remains unpaid or allow payment thereof by instalments if the assessee furnishes adequate security for the payment thereof. (2C) Where the additional amount of income-tax is not paid within the time specified under sub-section (2A), then, whether or not the Settlement Commission has extended the time for payment of the amount which remains unpaid or has allowed payment thereof by instalments under sub-section (2B), the assessee shall be liable to pay simple interest at fifteen per cent per annum on the amount remaining unpaid from the date of expiry of the period of thirty-five days referred to in sub-section (2A). (2D) x x x x x (3) Where an application is allowed to be proceeded with under sub-section (1), the Settlement Commission may call for the relevant records from the Commissioner and after examination of such records, if the Settlement Commission is of the opinion that any further enquiry or investigation in the matter is necessary, it may direct the Commissioner to make or cause to be made such further enquiry or investigation and furnish a report on the matters covered by the application and any other matter relating to the case. (4) After examination of the records and the report of the Commissioner, received under sub-section (1), and the report, if any, of the Commissioner received under sub-section (3), and after giving an opportunity to the applicant and to the Commissioner to be heard, either in person or through a representative duly authorized in this behalf, and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission may, in accordance with the provisions of this Act, pass such order as it thinks fit on the matters W.A.No.1171 of 2017 13 covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the Commissioner under sub-section (1) or sub-section (3). (5) x x x x x (6) Every order passed under sub-section (4) shall provide for the terms of settlement including any demand by way of tax, penalty or interest] the manner in which any sum due under the settlement shall be paid and all other matters to make the settlement effective and shall also provide that the settlement shall be void if it is subsequently found by the Settlement Commission that it has been obtained by fraud or misrepresentation of facts.\" (underlined for emphasis) Sub-section (1) of Section 245C makes it clear that at any stage of a case relating to him an assessee may make an application to the Commission disclosing fully and truly his income which has not been disclosed before the Assessing Officer. To put it differently, an assessee cannot approach the Commission for settlement of his case in respect of an income which has already been disclosed before the Assessing Officer. The income disclosed as contemplated is in the nature of voluntary disclosure of concerned income. Section 245F dealing with powers and procedure of Settlement Commission provides that in addition to the powers conferred on the Settlement Commission under Chapter XIX-A, it has all the powers which are vested in the income-tax authority under the Act. Sub-section (2) is of vital importance and provides that where an application made under Section 245C has been allowed to be proceeded with under Section 245D, the Commission shall until an order is passed under sub-section (4) of Section 245D, subject to the provisions of sub-section (3) of that section have exclusive jurisdiction to exercise the powers and perform the functions of the income-tax authority under the Act in relation to the case. In essence, the Commission assumes jurisdiction to deal with the matter after it decides to proceed with the application and continues to have the jurisdiction till it makes an order under Section 245D. Section 245D(4) is the charging section and sub-section (6) prescribes the modalities to be adopted to give effect to the order. It has to be noted that the language used in Section 245D is \"order\" and not \"assessment\". The order is not described as the original assessment or regular assessment or re- assessment. In that sense, the Commission exercises a plenary jurisdiction. The Commission's power of settlement has to be exercised in accordance with the provisions of the Act. Though the Commission has sufficient elbowroom in assessing the income of the applicant and it cannot make any order with a term of settlement which would be in conflict with the mandatory provisions of the Act like in the quantum and payment of tax and the interest. The object of the legislature, in introducing Section 245C is to see that protracted proceedings before the authorities or in Courts are avoided by resorting to settlement of cases. In W.A.No.1171 of 2017 14 this process an assessee cannot expect any reduction in amounts statutorily payable under the Act. A bare reading of Section 245D(6) shows that every order passed under sub-section (4) has to provide the terms of the settlement and also to provide that the settlement shall be void if it is found subsequently by the Commission that it has been obtained by fraud or by misrepresentation of facts. The plea of the assessee that the initiation of proceeding to find out as to whether the order has been obtained by fraud or misrepresentation of facts has to be initiated by the Commission suo motu is not spelt out in the said sub-section. It is a statutory requirement that a condition has to be incorporated in the order passed under sub-section (4) specifying that settlement shall be void if it is subsequently found by the Commission that it has been obtained by fraud or misrepresentation of facts. The decision whether the order has been obtained by fraud or misrepresentation of facts is that of the Commission. But it is not a requirement that the Commission must suo motu initiate the action. If the revenue has material to show that the order was obtained by fraud or misrepresentation of facts it certainly can move the Commission for decision on that issue. Otherwise, even if in a given case there is material in abundance to establish that the order was obtained by fraud or misrepresentation of facts, yet the void order would continue to be operative because of the fortuitous circumstance that the Commission does not suo motu initiate the proceeding. Merely because Section 245I provides that the order of Settlement is conclusive it does not take away the power of the Commission to decide whether the settlement order had been obtained by fraud or misrepresentation of facts. Any other interpretation would render sub-section (6) otiose. The Commission had really missed the true scope and ambit of Section 245D(6). If the CIT was able to establish that the earlier decision was void because of misrepresentation of the facts, certainly it was open to the Commission to decide that issue. It cannot be called by any stretch of imagination to be review of the earlier judgment or the subsequent Bench sitting in appeal over the earlier Bench's decision. Further the conclusions of the Commission regarding the genuineness of the loan transactions were arrived at without indicating reasons. It only referred to the respective stands and the submissions of the assessee's counsel. That was not the proper way to deal with the matter. The foundation for settlement is an application which assessee can file at any stage of a case relating to him in such form and in such manner as is prescribed. The statutory mandate is that the application shall contain \"full and true disclosure\" of the income which has not been disclosed before the assessing officer, the manner in which such income has been derived. The fundamental requirement of the application under Section 245C is that full and true disclosure of the income has to be made, along with the W.A.No.1171 of 2017 15 manner in which such income was derived. On receipt of the application, the Commission calls for report from the Commissioner and on the basis of the material contained in the report and having regard to the nature and circumstances of the case or complexity of the investigation involved therein, it can either reject the application or allow the application to be proceeded with as provided in Section 245D(1). It has to be noted that the Commission exercises power in respect of income which was not disclosed before the authorities in any proceeding, but are disclosed in the petition under Section 245C. It is not that any amount of undisclosed income can be brought to the notice of the Commission in the said petition. Commission exercises jurisdiction if the additional amount of tax on such undisclosed income is more than a particular figure (which at different points of time exceeded rupees fifty thousand or rupees one hundred thousand, as the case may be). The assessee must have in addition furnished the return of income which he is or was required to furnish under any of the provisions of the Act. In essence the requirement is that there must be an income disclosed in a return furnished and undisclosed income disclosed to the Commission by a petition under Section 245C. 8. The procedure followed by the Settlement Commission in the case on hand in appreciating the advances, CFS etc. definitely desires a sort of consideration in accordance with the provisions of the Act. Ext.P1 tested on the principles enunciated by the Supreme Court in the case of Om Prakash Mithal the deficiency noted by the judgment under appeal is correct. The judgment of the Karnataka High Court in N.Krishnan case has stated that the scope of the judicial review is available where there is no nexus between the reasons given and the decision taken. In the case on hand, Ext.P1 could be held to be as not assigning reasons or reflecting the mind of the Settlement Commission for accepting the case of the appellants. The remand is justified in the circumstances of the case. W.A.No.1171 of 2017 16 9. We are also of the view that the scope of judicial review is relatable to the issues on hand both in fact and law in matters arising under Secs.245C & 245D. It is not safe or suggested to convert the scope of judicial review into an abstract application of mathematical principle on abstract reasons and decide a core issue in the matter. The scope of judicial review is certainly a dynamic jurisdiction dependant on the circumstances of each case. In the case on hand the learned Single Judge has objectively and within the scope of review available under Article 226 against the orders made by the Settlement Commission, rightly interdicted and remitted the matter to the Settlement Commission. In the instant intra court appeal, we see no error of jurisdiction in the judgment under appeal. The appeal fails and dismissed. No order as to costs. Sd/- S.V.BHATTI, Judge Sd/- BASANT BALAJI, Judge css/ "