Maintainability Of Application u/s 245C(1)

CIT vs Express Newspapers Ltd

206 ITR 443 (SC) (1994)
  72 Taxman 438            

An application under section 245C is maintainable only if it discloses income which has not been disclosed before the Assessing Officer. The disclosure contemplated by Section 245C is, thus, in the nature of voluntary disclosure of concealed income. Unless the additional tax so disclosed exceeds Rs 50,000/- the application under section 245C is not maintainable.

To appreciate the meaning of the words "has been established or is likely to be established" by any income tax authority in relation to the case occuring in section 245D(1A), it is necessary to keep in mind the following facts. Even through the assessee has not disclosed a particular income before the Assessing Officer, the later is free to and is empowered to unearth it by making or causing such investigation and enquiries as he thinks appropriate. He may gather and receive information for that purpose. The idea underlying the said words in the main limb of sub section (1A) is self-evident. The disclosure under section 245C must be of an income not disclosed before the Assessing Officer. If the A.O. (or the income tax authority) has already discovered it and has either gathered the material to establish the particulars of such income or fraud fully or is at a stage of investigation enquiries where the material gathered by him is likely to establish the particulars of such income or fraud the assessee cannot be allowed to defeat or forestall, as the case may be, the entire exercise of the income tax authorities just by approaching the Commission. In such a case, it cannot be said that he is acting voluntarily or in good faith.

Chapter XIX is a part of the Act and must be construed consistent with the overall scheme and object. The Chapter is meant for those assessees who want to disclose income not disclosed till then together with the manner in which the said income is derived. It is not meant for those who come after the event, ie after the discovery of the particulars of income and its source or discovery of particulars of fraud perpetrated by the assessee, as the case may be not even for those who come to the Commission to forestall the investigation/enquiries which have reached a stage where the department is in possession of material which, though not sufficient to establish such concealment or fraud is such that it is likely to establish with may be, some more material required to establish it fully. The Commission has to keep all this in mind while deciding whether to allow the application to be proceeded before it or to reject it.

Thus, where the assessee merely offered a part of amount claimed by him as losses towards taxable income and did not disclose any income not disclosed by him before Assessing Officer, application under section 245C(1) was not maintainable.

Sub-section (4) of section 245D provides for passing of final orders by the Commission. It is not necessary to refer to the other provisions in the Chapter except to mention that the Commission is empowered to direct the waiver of penalty as well as interest and to direct the tax payable shall be paid in prescribed instalments. It is further empowered to direct that the assessee whose case has been decided by it shall not be proceeded with or prosecuted under the Act or under the Indian Penal Code 1860 or under any other Central Act for the time being in force with respect to the case covered by the settlement. The orders of the Commission are final, subject of course to constitutional remedies.

The Commission cannot say that any material collected by the Commissioner after the date of filing of the application under section 245C is not relevant for the purposes of section 245D(1). The filing of an application by the assessee is an unilateral Act. The department may not be aware of the same.

The properline ordinarily speaking - is to be drawn with reference to date of submission of the report by the Commission. This does not, however, prevent the Commission from looking into material collected by the Income Tax Authorities even subsequent to the submitting of the report by the Commissioner, if it thinks such a course is called for in the interests of justice.

The proceedings before the Commission are not confined to the income disclosed before it alone. Once the application is allowed to be proceeded with by the Commission, the proceedings pending before any authority under the Act relating to that assessment year have to be transferred to the Commission and the entire case for that assessment year will be dealt with by the Commission itself. The words at any stage of a case relating to him occurring in section 245C made it clear that the pendency of proceedings relating to that assessment year, whether before the Assessing Officer or before the appellate or revisional authority, is no bar to the filing of an application under section 245C so long as the application complies with the requirements of section 245C.

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