Reasoned order of settlement commission cannot be interfered: Delhi HC

PCIT (Central)-II Vs Trent East West LPG Bottling Ltd (Delhi High Court)

Delhi High Court held that acceptance of settlement and order passed by the Income Tax Settlement Commission (ITSC) based on full and true disclosure not to be interfered under Article 226 of the Constitution. Thus, reasoned order of settlement commission cannot be interfered.

Facts- The Principal Commissioner of Income Tax seeks to invoke our jurisdiction conferred by Article 226 of the Constitution and impugns the order passed by the Income Tax Settlement Commission. Vide the said order, the ITSC has settled the total liabilities payable by the respondent-assessee for the block assessment period of 1995-96 to 25 May 2000. In addition to settling the total tax liability, it has also accorded immunity to the respondent from prosecution and penalties imposable under the Income Tax Act, of 1961.

The principal ground of challenge which was addressed before us flowed from the manner of disclosure made by the respondent and insofar as it related to the purchase of a land parcel admeasuring 20 acres. The petitioner principally asserts that since the respondent had failed to surrender the amount representative for the aforenoted transaction to tax in the statement filed before the ITSC, the acceptance of the settlement is clearly vitiated and the order passed by the ITSC liable to be quashed on this ground alone. It was their contended that the petitioner had struck contradictory stands before the authority undertaking the assessment and before the ITSC insofar as this aspect is concerned and thus having clearly failed to make a “full and true” disclosure of its income. It is on the aforesaid primary ground that the order is impugned before us.

Conclusion- Held that the procedure adopted by the ITSC was either palpably incorrect or manifestly erroneous. The decision ultimately rendered by it also cannot possibly be characterized as being contrary to any provision of the Act. As was noticed by us hereinbefore, this was not a case where the respondent had failed to make a disclosure. Details in respect of the subject transaction were duly disclosed. This was therefore not a case where a “full and true” disclosure had not been made. The dispute essentially was with respect to the character of the receipt. The assessee had contested the position taken by the writ petitioner of the same being an accommodation entry. The ITSC has ultimately and upon due consideration of the rival stands as struck before it, exercised its adjudicatory function bearing in mind the larger purpose and intent of the settlement process. The same consequently merits no interference under Article 226 of the Constitution.

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