ORDER
S.K. Gangele, J.
1. This order shall govern disposal of (1) Writ Petn. No. 3358 of 2008, Ashok Kumar Goyal v. ITSC and Ors.; (2) Writ Petn. No. 3356 of 2008, Harishankar Goyal v. ITSC and Ors.; (3) Writ Petn. No. 3361 of 2008, Yash Kumar Goyal v. ITSC and Ors.; (4) Writ Petn. No. 3364 of 2008, Tarun Kumar v. ITSC and Ors.; (5) Writ Petn. No. 3360 of 2008, Smt. Pretti Goyal v. ITSC and Ors.; (6) Writ Petn. No. 3363 of 2008, Smt. Renu Goyal v. ITSC and Ors.; (7) Writ Petn. No. 3357 of 2008, Smt. Nirupam Kaur v. ITSC and Ors.; and (8) Writ Petri. No. 3359 of 2008, Gulzar Singh v. ITSC and Ors.
2. For the purpose of decision in all these writ petitions the facts stated in Writ Petn. No. 3358 of 2008, Ashok Kumar Goyal v. Income-Tax, Settlement Commission and Ors., have been taken into consideration.
3. Heard on the question of admission and grant of interim relief.
4. All the writ petitions have been filed against certain directions issued, vide order dt. 31st March, 2008 by respondent No. 1, Income-Tax Settlement Commission under Section 245D(4) of the IT Act.
5. IT Department carried out a search under Section 132 of the IT Act on 4th Aug., 2006 at the residence of the petitioner(s). It was concluded on 6th Aug., 2006. The Department seized several documents and papers and also seized assets mentioned in para 2 of the impugned order. From the petitioner the Department seized cash of Rs. 16,36,500. On the basis of the aforesaid search and seizure of the assets and documents seized by the Department the Department reached on primary finding that the petitioner(s) had not paid income-tax correctly from the asst. yrs. 2001-02 upto 2006-07. Thereafter, the petitioner and other petitioners in connected petitions filed applications for settlement under Section 245C(1) of the IT Act, 1961 before the Income-tax Settlement Commission, Mumbai. In the aforesaid applications all the petitioners voluntarily disclosed certain additional income. The petitioner, Ashok Kumar Goyal, offered additional income for the purpose of tax Rs. 1,50,06,254. All the petitioners have offered following additional income for the purpose of settlement under Section 245C(1) of the IT Act, 1961:
(a) Mr. Harishankar Goyal 27,13,653(b) Mr. Ashok Kumar Goyal 1,50,06,254(c) Mr. Gulzar Singh 1,89,36,254(d) Smt. Renu Goyal 4,10,000(e) Mr. Tarun Goyal 9,85,000(f) Smt. Nirupam 5,85,205(g) Smt. Preeti Goyal 7,51,000(h) Mr. Yash Goyal 1,27,02,908
6. The petitioner mentioned in the statement of facts of the application filed before the Settlement Commission that he had additional unaccounted income from his partner Mr. Gulzar Singh from out of joint venture in the name and style of M/s Progressive Enterprises through liquor business. As per the petitioner he received 50 per cent of his share from the aforesaid business. Earlier, the petitioner filed a writ petition before the High Court, which was disposed of vide order dt. 26th July, 2007 with the observation that the petitioner may approach the Settlement Commission.
7. The Commission directed the AO, Income-Tax, Circle 2, Gwalior and Addl. Director of Investigation, Settlement Commission, Mumbai to submit a detailed report before the Commission. The CIT, Gwalior also submitted a detailed statement in reply to the application filed by the petitioner. The CIT has specifically submitted that huge amount of income has been concealed by the Goyal Group and Gulzar Singh Group of cases and to ascertain the same deep and detailed enquiry and verification of books of accounts relating to seized material and documents are required in the above-mentioned cases. The Asstt. CIT and Dy. CIT, Gwalior, also issued various letters to the petitioners and requested them to furnish their explanation in regard to the evidence gathered during the search. Some of the letters have been filed by the petitioner along with the petitions. One of the letter is dt. 16th May, 2008 issued to Mr. Ashok Goyal, the petitioner. In the aforesaid letter Dy. CIT, Circle 2, Gwalior asked various explanations. Subsequently, on 6th June, 2008 another letter had been issued to the petitioner. The petitioner did not submit any reply to the aforesaid letters. On 17th July, 2008 also a letter was issued to the petitioner.
8. Because the matter could not be finalized by the Commission within time then the petitioner filed a writ petition before this Court, which was registered as Writ Petn. No. 986 of 2008, for certain directions. The aforesaid writ petition has been disposed of vide order dt. 4th March, 2008 with the following directions:
13. Considering the nature of relief claimed by the petitioner, I am in full agreement with the view taken by the Division Bench of the Delhi High Court and the Madras High Court in the cases referred to hereinabove, and resultantly, a direction is issued to the Settlement Commission, the respondent No. 2 herein to dispose of the settlement application filed by the petitioner on 28th May, 2007 on or before 31st March, 2008, so that the proceedings do not abate in terms of Section 245HA(1) of the Act.
14. With the above direction, all the writ petitions stand allowed and disposed of. The Settlement Commission is directed to dispose of the settlement applications filed by the petitioners on or before 31st March, 2008 in accordance with law. No order as to cost.
9. Thereafter, the Settlement Commission passed the impugned order. The Commission has observed that as per the directions of the High Court the applications had to be disposed of in accordance with law on or before 31st March, 2008 and the Commission was not in a position to order enquiry as per the provisions of Section 245D(3) of the IT Act and the Commission further observed that it has no option but to accept the additional income as disclosed before it by the applicants. The Commission further directed that a proper enquiry be conducted by the Department within a period of six months from the date of receipt of the order and it shall submit a report to the Commission for appreciation that whether full and true disclosures have been made by the applicants. The petitioners are aggrieved by the aforesaid direction.
10. Learned Counsel for the petitioner has submitted that the additional direction issued by the Commission for enquiry is against the provisions of Section 245D of the IT Act. The petitioners have voluntarily disclosed their income and they have again been sent to the Department for enquiry, which is illegal. It is obligatory on the part of the Commission to accept the income disclosed by the petitioners and there is no provision under the Act to direct the Department for enquiry or verification. Contrary to this, learned senior counsel appearing on behalf of the respondent Department, has submitted that the petitioner himself has not cooperated with the Department. He had been given number of opportunities and letters by the Department to explain undisclosed, income and about the documents which had been seized by the Department in a search operation. As per the reply filed by the Department before the Commission all the petitioners including the present petitioner have concealed an income of Rs. 120 crore and any how the petitioners want to evade the enquiry in order to escape themselves from the payment of liability of the tax.
11. Chapter XIX of the IT Act, 1961 prescribes provision with regard to settlement of cases. Section 245C(1) prescribes provision for making application for settlement of cases, which is as under:
(1) An assessee may, at any stage of a case relating to him, make an application in such form and in such manner as may be prescribed, and containing a full and true disclosure of his income which has not been disclosed before the AO, the manner in which such income has been derived, the additional amount of income-tax payable on such income and such other particulars as may be prescribed, to the Settlement Commission to have the case settled and any such application shall be disposed of in the manner hereinafter provided:
Provided that no such application shall be made unless:
(i) the additional amount of income-tax payable on the income disclosed in the application exceeds three lakh rupees; and
(ii) such tax and the interest thereon, which would have been paid under the provisions of this Act had the income disclosed in the application been declared in the return of income before the AO on the date of application, has been paid on or before the date of making the application and the proof of such payment is attached with the application.
(1A) For the purposes of Sub-section (1) of this section, the additional amount of income-tax payable in respect of the income disclosed in an application made under Sub-section (1} of this Section shall be the amount calculated in accordance with the provisions of Sub-sections (1B) to (1D).
(1B) Where the Income disclosed in the application relates to only one previous year,-
(i) if the applicant has not furnished a return in respect of the total income of that year, then, tax shall be calculated on the income disclosed in the application as if such income were the total income;
(ii) if the applicant has furnished a return in respect of the total income of that year, tax shall be calculated on the aggregate of the total income returned and the income disclosed in the application as if such aggregate were the total income.
(1C) The additional amount of income-tax payable in respect of the income disclosed in the application relating to the previous year referred to in Sub-section (1B) shall be,-
(a) in a case referred to in Clause (i) of that sub-section, the amount of tax calculated under that clause;
(b) in a case referred to in Clause (ii) of that sub-section, the amount of tax calculated under that Clause as reduced by the amount of tax calculated on the total income returned for that year;
(c) ***
(1D) Where the income disclosed in the application relates to more than one previous year, the additional amount of income-tax payable in respect of the income disclosed for each of the years shall first be calculated in accordance with the provisions of Sub-sections (IB) and (1C) and the aggregate of the amount so arrived at in respect of each of the years for which the application has been made under Sub-section (1) shall be the additional amount of income-tax payable in respect of the income disclosed in the application.
(1E) ***
(2) Every application made under Sub-section (1) shall be accompanied by such fees as may be prescribed.
(3) An application made under Sub-section (1) shall not be allowed to be withdrawn by the applicant.
(4) An assessee shall, on the date on which he makes an application under Sub-section (1) to the Settlement Commission, also intimate the AO in the prescribed manner of having made such application to the said Commission.
12. It is clear from the aforesaid Section that it is obligatory on the part of the assessee to make a full and true disclosure of his income.
13. The Settlement Commission was constituted as a result of a report given by a committee headed by Hon'ble Mr. Justice K.N. Wanchoo, a former Chief Justice of India. The Wanchoo Committee recommended a settlement machinery since, in the administration of fiscal laws, the primary objective is to raise revenue and so there has to be room for compromise and settlement. A rigid attitude would not only inhibit a onetime tax evader or an unintending defaulter from making a clean breast of his affairs, but would also unnecessarily strain the investigational resources of the Department in cases of doubtful benefit to Revenue, while needlessly proliferating litigation and holding up collections.
14. The Wanchoo Committee recommended the setting up of a Direct Taxes Settlement Tribunal which would ensure impartial and quick decisions. That Tribunal would proceed with a settlement petition only if the IT Department raised no objection to its being entertained otherwise that Tribunal might become an escape route for the tax evaders. In other words, the Wanchoo Committee gave adequate protection both to the taxpayer in terms of ensuring an impartial and quick decision or settlement in his case and also to the IT Department by enabling it to oppose a settlement application in case the tax evader sought to use the process of the Settlement Tribunal as an escape route for evading tax. Acting on these recommendations, the Act was amended w.e.f. 1st April, 1975 by introducing Chapter XIX-A for settlement of cases through a Settlement Commission.
15. It is clear from the provisions in the IT Act that Settlement Commission has exclusive jurisdiction to exercise powers and perform the functions of an IT authority under the provisions of IT Act in relation to the cases before it. When a taxpayer or a tax evader, as the case may be, files a settlement application before the Commission he cannot withdraw the application and Section 245-I of the IT Act makes every order passed by the Settlement Commission conclusive as to the matters stated therein and the matter covered by the final order passed by the Settlement Commission shall not be reopened in any proceedings under the Act or any other law for the time being in force. Hence, the Settlement Commission has enormous powers. The purpose of recommending or establishment of Settlement Commission is to ensure impartial and quick decisions to give protection to a person who has disclosed his income truly.
The same fact has been mentioned in Section 245C of the IT Act, in which it has been mentioned that 'a full and true disclosure of his income'. The aforesaid safeguard has been taken by the legislature to see that tax evaders cannot get an undue benefit under the provisions of Section 245C and the Department can also submit before the Commission that assessee has not made true and total disclosure of his income before the Commission.
16. In the present case, there was a search at the premises of the petitioner and in the aforesaid search operations the Department found number of documents and thereafter petitioner himself submitted application before the Commission and admitted the fact of undisclosed income. The Department has issued number of letters to the petitioner as mentioned earlier in the order with regard to submission of detailed information to the authority, so the authority can verify that whether the petitioner has made full and true disclosure of undisclosed income. However, the petitioner did not submit any information or reply to the Department. From the conduct of the petitioner this Court has gathered an impression that the petitioner deliberately avoided to submit reply or information to the Department and purpose of this was to evade the enquiry.
17. The Commission in the impugned order has specifically made certain observations about the petitioner, which are as under:
8.4 While the additional income offered in the SOF of these cases altogether amount to Rs. 5,20,90,274, as per the Rule 9 report of the CIT, the possible undisclosed income of the applicants of this group could be of the order of Rs. 120 crores approx. It is not the size which is daunting but the extent of unverified issues, which are many as have been brought out in the Rule 9 report of the CIT. Although the learned Authorised Representative has submitted that the applicants have given due regard to all aspects while making the disclosure, in view of the specific substantial issues raised, we would ordinarily be obliged under law to have the verifications made.
8.5 On several occasions the Hon'ble apex Court have underscored the importance of garnering resources of the country. As a machinery in the process of settlement of disputes for the purposes of collection of taxes, it is our obligation to ensure that all aspects of a case are properly looked into. But, due to constraint of time, we are unable to do so.
8.6 Although the learned Authorised Representative has forcefully submitted that the CIT had adequate time at his disposal to conduct enquiries, we would not agree with his view. We would rather agree with the CIT that the applicants have blocked the process of enquiry whenever such enquiry has been undertaken. Mere perusal of the statement of YKG under Section 132(4) would show that in spite of certain documents being recovered from his possession, he has bluntly refused to acknowledge such recovery itself, what to talk of explaining the contents thereof. It is noteworthy that certain disclosures are based on those very materials which were then being disowned by YKG.
8.7 Another instance was that the AO had issued questionnaires. Instead, they filed the settlement applications.
8.8 So we find that there never was adequate time to conduct enquiries. The applicants had not co-operated with the enquiries and now we have before us matters which do require careful and elaborate enquiry. But we do not have time at our disposal to have all issues involved in these cases to be appropriately verified and enquired into. Under the circumstances we have no option but to accept the additional incomes as disclosed before us by these applicants.
8.9 Time and again during the course of his submissions, the learned Authorised Representative has very fairly submitted that the disclosure made by the applicants can be subjected to verification and enquiry and if found false or understated, the provisions as per Section 245D(6) and Section 245H(2) may be invoked against the applicant concerned. In view of the substantial issues involved which require enquiry, we would accept the submissions of the learned Authorised Representative which are also echoed by the CIT (Departmental Representative) as well, inasmuch as he demands that proper enquiry be done.
18. From the facts of the case, it is clear that the observations made by the Commission in the impugned order are based on facts. The petitioner did not submit any reply to the IT authority. In such circumstances, it would not be possible for the Commission to determine that whether the petitioner has made full and true disclosure of his income which has been disclosed under Section 245C of the IT Act. In my opinion, this is the important point which has to be decided by the Commission because the benefit of Section can only be given by the Commission after recording a finding that the assessee has made full and true disclosure of his income. Hence, the Commission has not committed any error of law in directing the CIT to conduct a comprehensive enquiry into all the issues involved in the case. The Commission has also observed in the order that the possible undisclosed income of the petitioner of this group as per the report submitted by the CIT under Rule 9 before the Commission could be around Rs. 120 crores and all the petitioners have disclosed total undisclosed income of Rs. 5,20,90,274. Hence, there is no illegality or irregularity in the order passed by the Commission.
19. Consequently, I do not find any merit in this petition. It is hereby dismissed at motion stage. No order as to cost.