COMMISSIONER OF INCOME TAX, (CENTRAL) GURGAON V. M/S C&C CONSTRUCTIONS AND OTHERS

CWP/9251/2012

AI Insights

The case involves two writ petitions filed by the Commissioner of Income Tax (Central), Gurgaon, challenging interim orders of the Income Tax Settlement Commission. These orders pertain to applications for settlement filed by M/s C & C Constructions and M/s Bhushan Power and Steel Ltd under Section 245(D) of the Income Tax Act, 1961. The main contention by the petitioner was the alleged non-existence of a respondent entity and incomplete disclosure of facts. However, the Settlement Commission decided to proceed with the applications, leading to the filing of these writ petitions. The High Court, referencing a Supreme Court judgment, found the petitions premature and dismissed them, allowing the department to raise its objections during the final hearings.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 718782 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 18-10-2012
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax Vs. K. Jayaprakash Narayanan
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: AJAY VOHRA
• Assessee Lawyers: RAJESH SETHI
• Keywords: Extra-ordinary jurisdiction; Full and True Disclosure; Income tax settlement commission; Interim orders; Settlement of Cases
• Section: 245(D); 245(D)(2C)

Judgement Text

"CWP No.9251 of 2012 - 1 - CWP No.9369 of 2012 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ***** CWP No.9251 of 2012 Date of Decision: 18.10.2012 ***** Commissioner of Income Tax (Central), Gurgaon . . . .Petitioner Versus M/s C & C Constructions and others . . . . Respondents ***** CWP No.9369 of 2012 ***** Commissioner of Income Tax (Central), Gurgaon . . . .Petitioner Versus M/s Bhushan Power and Steel Ltd. . . . . Respondent ***** CORAM: HON’BLE MR.JUSTICE A.K. SIKRI, CHIEF JUSTICE HON’BLE MR.JUSTICE RAKESH KUMAR JAIN ***** Present: Mr.Rajesh Sethi, Advocate, for the petitioner. Mr.Ajay Vohra, Advocate, for the respondents. ***** A.K. SIKRI, CJ. (ORAL) These two writ petitions though challenge two different orders passed by the Income Tax Settlement Commission (hereinafter referred to as ‘the Settlement Commission’) which also pertain to different applicants/assesses, however, the impugned orders are interim orders, vide which the Settlement Commission has decided to proceed with the applications filed by the respondents herein under Section 245(D) of the Income Tax Act, 1961 (for short ‘the Act’) for settlement of their cases. After hearing counsel for the parties, we are of the opinion that these writ petitions need not be entertained at this interim stage for CWP No.9251 of 2012 - 2 - CWP No.9369 of 2012 the reasons recorded hereinafter. For the sake of brevity and convenience, we take up the facts of CWP No.9251 of 2012. This writ petition is filed by the Income Tax Department invoking extra ordinary jurisdiction of this Court under Article 226 of the Constitution of India. By means of this petition, the petitioner challenges order dated 27.1.2012 passed by the Settlement Commission on the applications filed by the respondents under Section 245(D)(2C) of the Act for settlement of their cases. The Settlement Commission had called for the report from the Commission of Income Tax (Central), Gurgaon (herein after referred to ‘the CIT’) vide letter dated 16.11.2011 which was received by the Commission on 13.1.2012. The CIT had raised objections to the admission of the applications filed by the respondents and had submitted that since the respondents had not given the complete and true disclosure of all the facts, such applications were narrated with a outright rejection. The main submission in this behalf was that respondent No.2 herein namely, M/s S.G. Corporation JV AOP, was a non-existence entity. This and other objections of the petitioner have been discussed by the Settlement Commission, but are turned down with the observations that right from the search the existence and disclosure of undisclosed income in the status of AOP was accepted. Accordingly, the objections of the petitioner to the admissibility of the applications are turned down and the Settlement Commission has decided to proceed with the consideration of those applications on merits. The operative part of the directions given in the impugned order runs as under: “The case law of Hasan Ali Khan reported in 299 ITR page 127 relied on the leaned CIT CWP No.9251 of 2012 - 3 - CWP No.9369 of 2012 (DR) is not applicable in the present case as at this stage prima facie nothing adverse is found in respect of full and true disclosure made by the applicants. Further prima facie there is no material on record which may raise any doubt the existence of AOP and the income disclosed by it. However out finding is without prejudice to the final finding to be arrived at the time of passing order u/s which will be sent to the Commission after examining the confidential portion of the application.” It is clear from the above that at this stage only a prima facie view is expressed by the Settlement Commission and rightly so because of the reason that the applications are yet to be considered on their merits. At this stage, it is still open to the Income Tax Department to raise objections, which are available under the law, opposing the said applications. It is only after the applications are considered on merits in the light of submissions made by applicants (respondents herein) and the opposition of the department on the merits of these applications that Settlement Commission would arrive at a final conclusion whether to accept the applications of the respondents or not and even if these are to be accepted on what terms. Having regard to the aforesaid considerations in mind, we are of the opinion that in exercise of extraordinary jurisdiction under Article 226 of the Constitution of India, it is not necessary to go into the validity of the impugned order at this stage. In case the final order passed by the CWP No.9251 of 2012 - 4 - CWP No.9369 of 2012 Settlement Commission is against the department or is not acceptable on the terms on which the same is passed, it would be open to the department to challenge the same by filing appropriate proceedings. At this stage, it would be open to the department to raise all the contentions which are permissible including challenge to the impugned order passed and the observations made in the impugned order. Giving the aforesaid liberty to the department, both the petitions are not entertained at this stage being premature. Hence, the same are hereby dismissed. While taking this view, we are fortified by the judgment of the Supreme Court in “Commissioner of Income Tax Vs. K. Jayaprakash Narayanan” (2009) 184 TAXMAN 85 (SC), wherein the apex Court did not entertain the plea against similar interim order under Section 245D giving following reasons: “We do not wish to interfere at this stage. However, we make it clear that on the point of maintainability of the application, it would be open to the Department to raise the contention before the Settlement Commission who would be entitled to examine that question at the final hearing of the matter.” Copy dasti. (A.K. SIKRI) CHIEF JUSTICE (RAKESH KUMAR JAIN) JUDGE OCTOBER 18, 2012 Vivek "