HIGH COURT OF
Haji N. Abdulla
v.
Income-tax Settlement Commission
F.I. Rebello and J.P. Devadhar, JJ.
Writ Petition No.
1427 of 2007
October
8, 2007
Section 245C of the Income-tax Act, 1961 -
Settlement Commission - Application for settlement of cases - Block period
1-4-1990 to 27-2-2001 - Whether there cannot be a fresh application in respect
of same subject-matter, if first application is rejected after assuming
jurisdiction, as Settlement Commission is a quasi-judicial authority - Held,
yes - Pursuant to a search, petitioner filed block return disclosing
undisclosed income of Rs. 22,22,351 - Block
assessment order was passed determining petitioner’s undisclosed income at Rs. 82,68,217 - Petitioner filed an appeal against block
assessment order and during pendency of same, he
filed application under section 245C(1) before Settlement Commission offering Rs. 10 lakh as additional income
- Application was rejected on grounds that at time of filing application there
was no valid pendency of any proceeding as entire
adjudication tax was not paid in pending appeal; and that there was no full and
true disclosure of undisclosed income - Petitioner filed second application on
basis that there was valid proceeding pending and offered a higher amount of Rs. 15 lakh as additional income
- Settlement Commission was satisfied as regards pendency
of proceeding, but rejected application on ground that making of full and true
disclosure is a one-time activity - Petitioner filed writ petition challenging
such rejection - Whether when Settlement Commission had recorded a finding that
there was no true disclosure, it would then be a finding of fact and in subsequent
proceeding it would not be open to Settlement Commission to review said finding
in absence of any power to consider any fresh materials or cause of action -
Held, yes - Whether, therefore, holding of Settlement Commission that
considering finding recorded in first application, it would not be open to
consider second application, could not be said to be without jurisdiction -
Held, yes - Whether a person, who seeks to invoke jurisdiction of Commission,
must come and disclose true facts and since nothing had happened between first
disclosure and second disclosure warranting petitioner to disclose a larger
quantum, finding arrived at by Commission that there was no full and true
disclosure did not suffer from any error and, therefore, writ petition was to be
dismissed - Held, yes
Facts
Pursuant to a search at his premises, the
petitioner filed block return disclosing undisclosed income of Rs. 22,22,351. The block
assessment order was passed determining the undisclosed income at Rs. 82,68,217. The petitioner filed
an appeal before the Commissioner (Appeals) against the block assessment order,
which was pending. The petitioner also filed an application under section 245C(1) before the Settlement Commission offering Rs. 10 lakh as additional income.
The Commission rejected the application on two grounds : (1) that 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; and (2) that there was no full and true
disclosure of undisclosed income. The miscellaneous application for
rectification was also dismissed. The petitioner then filed a fresh application
under section 245C(1) as, according to it, there was a
valid proceeding pending. The petitioner, in that application, offered Rs. 15 lakh as additional income
instead of Rs. 10 lakh as
offered in the earlier application. The Settlement Commission was satisfied as
regards the pendency of proceeding, but rejected the
application on the ground that making of full and true disclosure is a one-time
activity. The petitioner’s application for rectification was also dismissed.
On writ petition, the petitioner, although
accepted that the Commission had rightly dismissed first application on the
ground that there was no proceeding pending, but, as regards the second ground
of no full and true disclosure, it was submitted that once an application was
dismissed on the ground that no proceeding was ending, the Settlement
Commission’s subsequent finding that there was no full and true disclosure was
without jurisdiction and, consequently, would have to be ignored. According to
the petitioner, it was, therefore, open to the
Settlement Commission to entertain the second application and the dismissal of
second application on the basis of earlier application was an error of law.
Held
The bar under section 249(4) is that the
appeal would not be admitted unless the tax dues are first paid. It was 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 had
subsequently been paid and the appeal was pending. Preferring an appeal and
admission of an appeal are two distinct requirements and stages. A proceeding
can be said to be pending even on presentation, though it may not be admitted
by the Tribunal to dispose of the appeal on merits. The instant case was not a
case of patent lack of jurisdiction. It was a case where 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 might
have recorded that the proceedings were not pending. That, by itself, could not
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 is 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 has no jurisdication. The instant case was
not a case of want of jurisdiction. It was 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
the Court sometimes may treat the order as a nullity at law and non est
and enquire into the matter. An order, which is patently a nullity at law on
the face of it, can be called in question wherever and whenever it is sought to
be relied upon. [
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, could not be said to be without jurisdiction. [
As regards maintainability of the second
application, 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 a one-time activity.
There cannot be repeated or hopeful attempts at making full and true
disclosure. Multiple disclosure militates against the
very basis of settlement, which involves true and full disclosure being made so
as to warrant consideration. [
There cannot be a fresh application in respect
of 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 undisclosed income of Rs. 10 lakh which the Settlement
Commission in its order rejected. It appeared from the order that no reasons
were given except for stating that the Commission did not agree with the
petitioner that the quantum of the undisclosed income declared before it was
justified. It was true that in the second order, the Commission relied on its
first order, but at the same time, the Commission did take note of the fact
that the income disclosed in the second application was more than what was
disclosed in the second application. The petitioner tried to explain the
additional amount by contending that it arose from the same material and the
only issue was as to what income had escaped assessment. The same could not be
agreed with. 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. On that count also, the finding arrived at by the Commission
did not suffer from any error and, consequently, the petition was liable to be
dismissed. [
Cases referred to
CIT v. ITSC [2000] 112 Taxman 523/246 ITR
63 (Bom.) [
K.B. Bhujle and G.S. Pikale
for the Petitioner.
B.M. Chatterji, Mrs. P.P. Bhosale and P.S. Sahadevan
for the Respondent.
nn