Miscellaneous

CIT vs. B.M.Battachargee

118 ITR 461 (SC)

As a result of a search an amount of around Rs. 30 lakh was seized from the assessee. His assessments for the assessment years 1962-63 to 1972-73 were reopened and a demand over Rs. 60 lakh was raised. The assessment for the assessment year 1973-74 was also made raising a demand of Rs. 35 lakh. The assessee went in appeal before the AAC who marginally brought down the assessable income by around Rs. 10 lakh. Both the assessee as well as the department filed second appeal against the order of the AAC before the ITAT. The assessee applied to the Tribunal for withdrawal of his appeals so that he could apply for settlement of his case before the Settlement Commission. He also approached the Central Board of Direct Taxes (CBDT) for a direction to the department to withdraw the department's appeal. Receiving a report from the CIT that the departments' appeal was very weak, CBDT issued instructions for withdrawal of the appeal and the CIT informed the assessee that the department's appeals will be withdrawn provided all the appeals filed by the assessee before the Tribunal were withdrawn by him. Both the department as well as the assessee withdrew the appeals from the Tribunal. Thereafter, the assessee applied to the Settlement Commission under section 245C of the Income-tax Act, 1961 for settling its tax liabilities. The Commission called for a report from the CIT on the application of the assessee. The Commissioner objected to the Settlement being proceeded with on the ground that prosecution proceedings for concealment of income and alleged false verifications in the return were pending in the Criminal Court. The Commission passed an order informing the assessee that, as the Commissioner had objected u/s 245D(1), the Commission did not allow the application to be proceeded with without any hearing. The assessee applied for a review of that order on the ground that the principles of natural justice had not been complied with. The matter was heard by the Commission who passed an order holding that since the Commissioner withdrew the department's appeal to enable the respondent who applied for settlement, and no new material was discovered since the withdrawal, the Commissioner was stopped from objecting the application for settlement being proceeded with and that the application should be considered on merits. The department preferred to the Supreme Court by special leave under Article 136 of the Constitution of India. The Court held as under :

i) The Settlement Commission is a Tribunal within the meaning of Article 136, therefore, the appeals by special leave were competent.

ii) In view of the first proviso to section 245D(1), an applicant for settlement was entitled to a hearing before the application was rejected.

iii) If the department filed an appeal which is later dropped to enable an application for settlement being made before the Commission, the proviso to section 245M(1) did not debar the application.

iv) Preferring an appeal means more than formally filing it, but effectively pursuing it ;

v) Where public duties cast by statute are involved, private parties cannot prevent their performances by invoking estoppel.

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Jyotendrasinhji vs. S.I.Tripathi

201 ITR 611(SC)       
68 Taxman 29 (1993)

It is true that finality clause contained in section 245 (1) does not and cannot bar the jurisdiction of the High Court under Article 226 or the jurisdiction of the Supreme Court under Article 32 or under Article 136, as the case may be. But that does not mean that the jurisdiction of Supreme Court in the appeal preferred directly in that Court is any different from what it would be if the assessee had first approached the High Court under Article 226 and then come up in appeal to the Supreme Court under Article 136. A party does not and cannot gain any advantage by approaching the Supreme Court directly under Article 136, instead of approaching the High Court under Article 226. This is not a limitation inherent in Article 136; it is a limitation which the Supreme Court imposes on itself having regard to the nature of the function performed by the Commission and keeping in view the principles of judicial review.

It is open to the Commission to accept an amount of tax by way of settlement and to prescribe the manner in which the said amount shall be paid. It may condone the defaults and lapses on the part of the assessee and waive interest, penalties or prosecution, where it thinks appropriate. Indeed, it would be difficult to predict the reasons and considerations which induce the Commission to make a particular order unless of course, the Commission itself chooses to give reasons for its order. Even it gives reasons in a given case, the scope of enquiry in the appeal remains confined to the extent as to whether it is contrary to any of the provisions of the Act. The principle of natural justice (audi alteram partem) has been incorporated in section 245D itself. The sole overall limitation upon the Commission thus appears to be that it should act in accordance with the provisions of the Act. The scope of enquiry, whether by High Court under Article 226, or by Supreme Court under Article 136 is also the same as to whether the order of the Commission is contrary to any of the provisions of the Act and if so, whether it has prejudiced the petitioner/appellant apart from the ground of malice which of course constitutes a separate category.

Thus, the only ground upon which the Supreme Court can interfere is that the order of Commission is contrary to the provisions of the Act and that such contravention has prejudiced the appellant.

Where appeals related to the interpretation of the settlement deeds, though it was true that some contentions of law, were also raised and Commission had interpreted the trust deed could not be said to be a violation of the provisions of the Income-tax Act. It was equally clear that the interpretation placed upon the said dates by the Commission did not bind the authorities under the Act in proceedings relating to other assessment years.

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