Admissibility Of Applications u/s 245D(1)
(Allowing Applications To Be Proceeded With)

Shri Harphool Singh vs I T S C

215 ITR 216 (P & H) (1995)

Whether the settlement application filed under section 245 of the Act is to be admitted or not, would depend upon the facts and circumstances of each case.

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M/s Shyam Glass Works vs ITSC & Others

228 ITR 672 (All)

The application of the petitioner was rejected by the ITSC u/s 245C(1) of the Income Tax Act, 1961 after recording the finding that it could not be said that the petitioner had made full and true disclosure of the income which had not been known to the Department. It was also observed by the Commission that after considering the report of the CIT, the complexity of the investigation involved and the nature and circumstances of the case, the application was liable to be rejected. The petitioner filed a writ petition to quash the order of the Settlement Commission on the ground that the investigation would involve consideration of certain complex questions and the ITSC had dealt with the petition in an arbitrary manner by not allowing the application.

It was held while discussing the petition, that there was no material on record to arrive at a finding contrary to the finding arrived at by the Settlement Commission that the petitioner did not make full and true disclosure of the income which was not known to the department. Furthermore whether the application u/s 245C(1) could or could not be allowed was a matter which was to be decided by the Settlement Commission. The High Court, in a Writ Petition, is concerned only with the legality of the procedure followed, i.e., the decision making process and not with the merits of the order passed by the Settlement Commission. In the instant case, there was no evidence to find that the Settlement Commission had not followed the procedure required to be followed.

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Shri Deendayal Didwania
F No 16/1/215/83-IT 

160 ITR 12 (Del)
Order dt. 28.08.1985

An application for settlement may not be admitted if the Commission is of the view that it is not motivated by any desire to pay the due taxes to the Government, but merely to escape the consequences of incriminating acts committed by the applicants. The Commission cannot be allowed to be an escape route for the assessees who have committed incriminating acts.

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M/s Birumal Gaurishankar Jain & Co vs I T S C

ITSC Special Bench
195 ITR 792
65 Taxman 210 (1992)

The applicant had atleast for some of the years for which the present application had been made, made an application earlier and the same had been rejected by the Commission upholding the objection raised by the Commissioner under section 245D(1A). The instant application had been made on or after 27.9.1991. It was contended by the Department that the consideration of an application for the very same year for which it had been earlier rejected upholding the objection taken by the Commissioner under section 245D(1A) would amount to review of the very same order, which the Settlement Commission was not empowered to do. The department also contended that the earlier orders, under section 245D(1) in the very same case acted as resjudicata and, therefore, the present application was not maintainable. The applicant, on the other had, contended that the fresh application was maintainable in view of the omission of section 245D(1A) with effect from 27.9.1991.

Held that rejection of applications prior to 27.9.1991 from which date powers of Commissioner were taken away, on basis of Commissioner's objection, cannot be taken as a finding by the Settlement Commission and principles of res-judicata will not be applicable and an application by same applicant for the very same assessment years can be considered by the settlement Commission on or after 27.9.1991 as valid application, if maintainable.

Thus the revenue's contentions were untenable.

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M/s Bombay Coal Ash Co vs I T S C

ITSC Special Bench
195 ITR 654 (1992)
65 Taxman 372

In view of the amendments in section 245D, the question raised was whether, in a case where the settlement petition made under section 245C before 27.9.1991, was pending as on 27.9.1991, the objections raised by the Commissioner to the admission of the petition under section 245D(1A) had to be considered and disposed of under the proviso to section 245(1A) or the question of admission or rejection of such a petititon had to be decided having regard to only the provisions of section 245D(1) in view of the fact that sub section (1A) of section 245D had been omitted by the Finance (No 2) Act 1991?

Held that the proposition that, as regards matters of procedure the legislature can make changes and those changes apply to all pending actions, was not disputed. The issue arising in the instant case was squarely covered by the ratio of the Supreme Court decision in the case of RB Shreeram Durga Prasad Vs Settlement Commission (1989) 176 ITR 169, and in view of the said decision the amendments made in section 245D by the Finance (No 2) Act 1991, have only changed the procedure to be followed by the Settlement Commission while dealing with settlement applications and the changed procedure would apply not only to applications made to the Settlement Commission on and after 27.9.1991, but also to settlement applications filed before 27.9.1991 which were pending on 27.9.1991. Hence, in a case where the settlement petition made under section 245C before 27.9.1991, was pending as on 27.9.1991 the objections raised by the Commissioner to the admission of the petition under section 245D(1A) had not to be considered and disposed of under the proviso to section 245D(1A) but the question of admission or rejection of such a petition had to be decided having regard only to the provisions of section 245D(1) in view of the fact that sub section (1A) of section 245D had been omitted by the Finance (No 2) Act 1991.

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