Pr. Commissioner Of Income Tax (Central v. S.s.associates & One Another

HIGH COURT OF MADHYA PRADESH : BENCH AT INDORE D.B : HON’BLE SHRI JUSTICE S.C. SHARMA AND HON'BLE SHRI JUSTICE VED PRAKASH SHARMA W.P.No.1491/2016 Pr. Commissioner of Income Tax (Central) vs.Maa Vaishno Real Estate and Another W.P.No.1492/2016 Pr. Commissioner of Income Tax (Central) vs. S.S.Associates & One Another W.P.No.1493/2016 Pr. Commissioner of Income Tax (Central) vs. S.T.Associates & One Another W.P.No.1494/2016 Pr. Commissioner of Income Tax (Central) vs. Saakar Reality & One Another O R D E R (Delivered on this 30th August , 2016) -AS PER: S.C.SHARMA,J: Regard being had to the similar controversy involved inabove cases, they have been heard analogously together with the consent of the parties and a common order is beingpassed in the matter. Facts of W.P.No.1491/2016 arenarrated as under:- 2.The petitioner before this Court PrincipalCommissioner of Income Tax (Central), Bhopal has filed thispresent petition being aggrieved by the order dated18/05/2015 passed by Income Tax Settlement Commission,AdditionalBench-I,MumbaiincaseNo.MH/BHCC/129/2014-15/IT. The petitioner before this Court Principal 3. The facts of the case as stated in writ petition reveals thatrespondent No.1 assessee M/s. Saakar Group is engaged inreal estate and construction projects and search and seizureoperations were conducted by the Investigating Wing underSection 132 of the Income Tax Act on 21/09/2012 at thepremises of M/s. Saakar Reality, its partners and familymembers. The other major firms of the Group are M/s. S.T.Associates, M/s Maa Vaishno Real Estate and M/s S.S.Associates. 4. It has been further stated that group is owned, managedand controlled by Shri Gopal Goyal and Shri Sanjay Dasot.Shri Gopal Goyal and Shri Sanjay Dasot partners of the firmhave voluntarily admitted additional undisclosed income ofRs. 30 crores on behalf of Saakar Group during the search proceedings. 5. The cases were centralised with the then DCIT (Central),Indore and notices were issued under Section 153A / 153 Cfor the Assessment Years 2008-2009 and 2013-2014. Noticewas issued under Section 143(2) for the Assessment year2014-2015 on 30/06/2014. The assessee has filed anapplication before the Settlement Commission on23/03/2015. The application of the assessee was processedby the Settlement Commission in SA No. MP/BCC/128 to131/2014-15/IT and an order was passed under Section 245D(1) on 31/03/2015. 6. It has been further stated that on receipt of order of theITSC, the Principal Commissioner of Income Tax (Central),Bhopal submitted a detailed report under Section 245D (2B)on 05/05/2015 and prayed for that the Additional Incomedisclosed before the Settlement Commission cannot be heldas full and true disclosure and the settlement application ofthe respondent assessee be rejected. 7. It has been further stated that the SettlementCommission vide its impugned Order dated 18/05/2015passed under Section 245D(2C) of the Act declared the fourapplications of the Group as 'Not Invalid'. Meaning thereby,the Settlement Commission is proceeding ahead in the matter to decide the issue. 6. It has been further stated that on receipt of order of theITSC, the Principal Commissioner of Income Tax (Central),Bhopal submitted a detailed report under Section 245D (2B)on 05/05/2015 and prayed for that the Additional Incomedisclosed before the Settlement Commission cannot be heldas full and true disclosure and the settlement application ofthe respondent assessee be rejected. 7. It has been further stated that the SettlementCommission vide its impugned Order dated 18/05/2015passed under Section 245D(2C) of the Act declared the fourapplications of the Group as 'Not Invalid'. Meaning thereby,the Settlement Commission is proceeding ahead in the matter to decide the issue. 8. The contention of the learned Counsel appearing onbehalf of the Income Tax Department is that based upon thematerials seized from the residential premises and otherpremises of the group, there was huge tax evasion done byShri Gopal Goyal and Shri Sanjay Dasot and the assessee'stotal estimated income comes to Rs. 289.16 crores and thesettlement commission is proceeding ahead in the matter bytaking into account a meager amount of Rs. 19.08 crores.The other grounds have also been raised by the petitioner.However, Shri Sumit Nema appearing on behalf ofrespondent No.1 has vehemently argued before this Courtthat the order dated 18/05/2015 passed by the SettlementCommission under Section 245D(2C) of the Income Tax Actis only a primafacie order which deals only with the aspectof either accepting the application or rejecting theapplication. No final order has been passed by theSettlement Commission and the Settlement Commission hasto proceed in the matter in accordance with Section245D(2B), 245D(3), 245D(4),245D(4A), 245D(5), 245D(6)and245D(6A) of the Act. 9. It has been further stated that the Income Tax Actprovides for complete mechanism for dealing with thesettlement applications and said mechanism is a complete code in itself and merely because an interim admissionorder has been passed under Section 245D(2C), it does notmean any irreparable loss has been caused to the IncomeTax Department. 10. It has also been argued that the petition has been filedafter nine months and therefore, it deserves to be dismissedon the ground of delay and latches. It has also been statedthat the issue involved in the present case stands concludedas an identical writ petition has been decided by theDivision Bench of this Court at Principal seat in the case of Pr.Commissioner of Income Tax (Central) Bhopalvs. DilipBuildcon Limited in W.P.No.20818 of 2015. It has also beenstated that the Hon'ble Supreme Court of India has takensimilar view in the case of K.Jaiprakash Narayanan reportedin (2009)184 TAXMAN 85(SC). The respondent No.1 hasprayed for dismissal of the writ petition. 11. Heard learned Counsel for the parties at length andperused the record. 12. In the present case, the undisputed facts reveal thatrespondent No.1 was subjected to Search and Seizureoperations conducted by the Investigating Wing underSection 132 of the Income Tax Act on 21/09/2012. It has alsobeen an admitted fact that the Group has voluntarily admitted additional disclosed income of Rs.30 crores. 13. It is also an undisputed fact that respondent No.1 hassubmitted an application before the Settlement Commissionon 23/03/2015 and the matter was processed by theSettlement Commission,. The Principal Chief Commissionerof Income Tax (Central) Bhopal has submitted a detailedreport in the matter under Section 245D(2B) on 05/05/2015and a prayer was made to reject the application submittedfor settlement. The Settlement Commission vide its orderdated 18/05/2015 passed under Section 245D(2C) of the Acthas passed an order holding the applications for settlementas maintainable and to be proceeded with further. The orderpassed by the Settlement Commission reads as under:- admitted additional disclosed income of Rs.30 crores. 13. It is also an undisputed fact that respondent No.1 hassubmitted an application before the Settlement Commissionon 23/03/2015 and the matter was processed by theSettlement Commission,. The Principal Chief Commissionerof Income Tax (Central) Bhopal has submitted a detailedreport in the matter under Section 245D(2B) on 05/05/2015and a prayer was made to reject the application submittedfor settlement. The Settlement Commission vide its orderdated 18/05/2015 passed under Section 245D(2C) of the Acthas passed an order holding the applications for settlementas maintainable and to be proceeded with further. The orderpassed by the Settlement Commission reads as under:- “ We find that the department's only objection wasrelating to declaration made by the applicants was riot trueand full. In this case the department has not adduced anyevidence which could conclusively prove that the informationsubmitted by the applicants was incorrect, false or applicantshad withheld certain information to the detrimental interestof the revenue. On the other hand the applicants stated thatthey have made the declaration true and full before theCommission. We are conscious that at the 245D(2C) stage it isnot expected by the applicants or the department to establishbeyond doubt by adducing of all the evidences at thisjuncture to prove their versions or stands. What is expected atthe level of 245D(2C) is to examine in a macroscopic mannerwhether there is any information available with thedepartment or with the Commission which would warrant tohold that the information or the income declared by theapplicants is not true and full. Here we find that we do nothave any such information either at our level or any suchinformation has been provided by the department. Hence asof now we hold that the information and department. Henceas of now we hold that the information and the facts given by the applicants are true and full on the basis of which theincome offered by them was to the best belief of theapplicants true and full. Therefore, we hold these applicationsto be not invalid and allow them to be proceeded withfurther.” 14. In light of the aforesaid order, the SettlementCommission is proceeding ahead with the matter on merits.Various grounds have been raised by the petitioner,however, the fact remains that an identical matter washeard by the Principal seat in W.P.No.20817/2015 in the caseof Pr. Commissioner of Income Tax (Central) Bhopal vs. Smt.Seema Suryavanshi and another and the Division Bench ofthis Court by an order dated 27/07/2016 in paragraph 3 to 9has held as under:- “3- Various grounds are raised in the writ petition to say that theprocedure followed by the Department is unsustainable and insupport thereof reliance is placed on the cases of Bombay HighCourt and Delhi Court: Commissioner of Income Tax (Central)Vs. Income Tax Settlement Commissioner (ITSC), (2014) 267CTR 0007 (BOM); and, Marc Bathing Luxuries Limited Vs.Income Tax Settlement Commission and Another, (2013) 94 DTR0241 (DEL), to say that the order passed under section 245-D(2C)without taking note of the Report of the Department isunsustainable and the prayer made is that the matter be remandedback and proceeded with. Writ Petition Nos:: 20817/2015, 20818/2015 & 20892/2015. 4- Refuting the aforesaid Shri Sumit Nema, learned counsel forthe respondent, invites our attention to an order passed by theSupreme Court in the case of Commissioner of Income Tax Vs. K.Jayaprakash Narayanan, (2009) 184 TAXMAN 85 (SC), to saythat interference at this stage is not called for. The proceedings arestill pending before the Settlement Commissioner and, therefore,the Department can raise all such question before the SettlementCommissioner, where the matter is pending and the SettlementCommissioner can still take note of the same. Writ Petition Nos:: 20817/2015, 20818/2015 & 20892/2015. 4- Refuting the aforesaid Shri Sumit Nema, learned counsel forthe respondent, invites our attention to an order passed by theSupreme Court in the case of Commissioner of Income Tax Vs. K.Jayaprakash Narayanan, (2009) 184 TAXMAN 85 (SC), to saythat interference at this stage is not called for. The proceedings arestill pending before the Settlement Commissioner and, therefore,the Department can raise all such question before the SettlementCommissioner, where the matter is pending and the SettlementCommissioner can still take note of the same. 5- Further reliance is placed on a Division Bench Judgment of thisCourt in the case of Commissioner of Income Tax, Indore Vs.Asian Natural Resources India Limited, (2015) 63 taxman.com169 (MP), wherein similar question was considered and an order was passed admitted an application under section 245-D(1),challenge to which made by the Department, was disposed of withliberty to the Department to raise the grounds before theSettlement Commissioner, who was directed to consider the same.6- We have heard learned counsel for the parties at length andperused the records. 7- We find that merely because the application filed under section245-D(1) has been admitted and the Report of the Departmentunder section 245-D(2) has not been considered, no case is madeout for interference. The matter is still pending before theSettlement Commissioner, the petitioner can raise all the groundsbefore the Settlement Commissioner, including the objection asare raised in the writ petition, and it is for the SettlementCommissioner to look into this aspect of the matter and proceed inaccordance with law. This is the principle which we find from theorder passed by the Supreme Court in the case of K. JayaprakashNarayanan (supra) and the law laid down by a Coordinate Benchof this Court, in the case of Asian Natural Resources India Limited(supra). 8- The judgments cited by the Revenue based on the decisionrendered by the Bombay High Court and the Delhi High Court, inthe cases of Commissioner of Income Tax (Central) [supra) andMarc Bathing Luxuries Limited (supra) need not be considered atthis stage, when a Coordinate Bench of this Court under similarcircumstances in the case of Asian Natural Resources IndiaLimited (supra) has refused to interfere and has relegated theDepartment to raise the objections before the SettlementCommissioner, who has been directed to proceed in the matter inaccordance with law. 9- Accordingly, finding no ground to interfere in the matter, wedispose of the writ petitions with liberty to the petitioner/Revenueto raise the grounds before the Settlement Commissioner, whoshall before deciding the matter consider and proceed inaccordance with law.” 15. The matter has also been considered by the Hon'bleSupreme Court of India in the case of K.JaiprakashNarayanan reported in (2009)184 TAXMAN 85(SC). TheHon'ble Supreme Court in Para 1 & 2 has held as under:- “1. Delay condoned. 2. This Special Leave petition is filed against the decisionof the Settlement Commission admitting the application ofthe assessee under Section 245D of the Income-Tax Act,1961. It is the case of the Department that the assessee hadfailed to make full and true disclosure in the first instance and that the said declaration made at a later date by way ofsecond declaration cannot be the ground for admitting theapplication under Section 245D. Since this Special Leavepetition is filed only against the order of the SettlementCommission admitting the application of the assesseeunder Section 245D, we do not wish to interfere at thisStage. However, we make it clear that on the point ofmaintainability of the Application, it would be open to theDepartment to raise the contention before the SettlementCommission who would be entitled to examine thatquestion at the final hearing of the matter.” and that the said declaration made at a later date by way ofsecond declaration cannot be the ground for admitting theapplication under Section 245D. Since this Special Leavepetition is filed only against the order of the SettlementCommission admitting the application of the assesseeunder Section 245D, we do not wish to interfere at thisStage. However, we make it clear that on the point ofmaintainability of the Application, it would be open to theDepartment to raise the contention before the SettlementCommission who would be entitled to examine thatquestion at the final hearing of the matter.” 16. The Division Bench of this Court in the case ofCommissioner of Income Tax-I, Indore vs. Asian naturalResources India Ltd., has again decided a similarcontroversy. Paragraph 21-29 of the aforesaid judgmentreads as under:- 21. The Division Bench of Delhi High Court in the caseof Commissioner of Income -tax v/s. Income TaxSettlement Commission, 2013 (35) Taxmann.com 56(Delhi) has held the following in para 22, 24, 25 and 34which reads as under :-22. From the above, it is clear that in True Woods Pvt.Ltd. (supra), a specific argument had been raised onbehalf of the Revenue that it was incumbent upon theSettlement Commission to record a specific finding tothe effect that the applicant had made a full and truedisclosure before it admitted the application or took anyfurther steps on the basis thereof. This argument wasrejected by the Division Bench. The Division Bench wasof the view that while the foundation for settlement wasan application from the assessee in which the assessee isrequired to make a full and true disclosure, it wasequally true that such requirement need not be examinedand authoritatively determined at the threshold of anyproceeding initiated before the Commission.Importantly, the Division Bench observed that there maybe cases where it is possible for the Commission torecord a finding that the disclosure made in theapplication is full and true. At the same time, there couldalso be situations in which the Commission may not beable to, at the stage of admission of the application,record a finding with any amount of certainty. It is insuch a situation that it would be permissible for the Commission to keep the question open to be examinedat a later stage or at the stage of disposal of theapplication. As in the case of True Woods Pvt. Ltd.(supra), this is exactly what has happened in the presentcase. The Settlement Commission has noted the rivalcontentions of the Revenue and the applicants withregard to the issues of full and true disclosure and themanner of deriving the undisclosed income and hastaken a prima facie view in favour of the applicants. It isnot a definitive or final view and it is for this reason thatthe Settlement Commission, in its wisdom, left theissues open to be determined at the stage of final hearingunder Section 245D(4) of the said Act. It may very wellbe that the Settlement Commission, at that stage, mayagree with the Revenue on the basis of the material onrecord and the report submitted by the Commissioner ofIncome-tax that the applications were not maintainableunder Section 245C(1) of the said Act. In fact, theSettlement Commission may, at any stage till it passes afinal order under Section 245D(4), examine the issuesand if there is sufficient material on record, determinethe question of full and true disclosure and the mannerin which the undisclosed income was derivedconclusively and, depending on such a decision, theapplications may be thrown out or they may beproceeded with further. 24. We are of the view that the order of the SupremeCourt in K. Jayaprakash Narayanan (supra) and thedecision of the Division Bench of this Court in TrueWoods Pvt. Ltd. (supra) clinch the issue in favour of therespondents. As such, this Court ought not to interferewith the impugned orders. However, we need toexamine the decision of the Supreme Court in the caseof Ajmera Housing (supra) which has been stronglyrelied upon by the learned counsel for the petitioner. Infact, the learned counsel for the petitioner went to theextent of submitting that in view of the decision of theSupreme Court in Ajmera Housing (supra), theorders/decisions in K. Jayaprakash Narayanan (supra)and True Woods Pvt. Ltd. (supra) would no longer begood law. 25.In Ajmera Housing (supra), an order had beenpassed by the Income Tax Settlement Commission underSection 245D(1) on 17.11.1994, allowing the settlementapplication filed on behalf of the assessee to beproceeded with. That order was not challenged by theRevenue. The Settlement Commission proceeded withthe said settlement application and passed a final orderunder Section 245D(4) of the said Act on 29.01.1999.That settlement order was challenged by the Revenue before the Bombay High Court which set aside the sameon, inter alia, the ground that no finding had beenreturned by the Settlement Commission as to whetherthere was a full and true disclosure of income on the partof the assessee/applicant. The Bombay High Court alsoheld that the order dated 17.11.1994 passed underSection 245D(1) of the said Act was void and remittedthe case to the Settlement Commission for a decisionafresh and kept all the questions open. Theapplicant/assessee, being aggrieved by the said decisionof the Bombay High Court, went up in appeal before theSupreme Court which, by an order dated 11.07.2006, setaside the Bombay High Court order and remitted thematter to the High Court for a fresh decision. In thesecond round, the Bombay High Court again set asidethe Income Tax Settlement Commission's order dated29.01.1999 and remanded the case to the SettlementCommission for fresh adjudication. While doing so, theBombay High Court observed as under:- "In view of the facts and the legal position noted above,even though we find that the respondents had not madefull and true disclosure of their income while makingapplications under Section 245C, it would not be properto set aside the proceeding. However, at the same time,the Commission appears to have misdirected itself onseveral important aspects while passing the final order.The Settlement Commission had not supplied theannexure Dated 19.9.1994 declaring additional incomeof Rs.11.41crore and thus, due opportunity was notgiven to the Revenue to place (sic) its stand properly.Huge amount of unexplained expenses, unexplainedloans and unexplained surplus, total of which is morethan Rs.14 crore, was not taken into consideration whilepassing the final order. Thirdly, the Settlement Commission has imposed tokenpenalty of Rs.50 lakhs while in its own assessmentleviable penalty would be 562.87 (sic Rs.562.87). In factif the amounts, which were not taken into considerationwhile assessing the total undisclosed income, are alsotaken into consideration, the amount of leviable penaltymay be much more. Taking into consideration themultiple disclosures and the fact that the respondentshad failed to make true and full disclosure initially aswell as at the time of second disclosure, we do not findany justifiable reasons to reduce or waive the amount ofpenalty so drastically. Taking into consideration all these circumstances, in ourconsidered opinion, it will be in the interest of justice toset aside the final order passed by the SettlementCommission and to remand the matter back to the Taking into consideration all these circumstances, in ourconsidered opinion, it will be in the interest of justice toset aside the final order passed by the SettlementCommission and to remand the matter back to the Settlement Commission for hearing parties afresh and topass orders as per law. Facts and circumstances noted inrespect of writ petition No. 2191 of 1999 are alsorelevant for the remaining writ petitions and, therefore,it will be necessary that the final orders passed in allthese proceedings should be set aside." 34. The learned counsel for the petitioner had also takena point that the settlement applications of respondents 3and 4 had been rejected for failure to pay the additionaltax and therefore the subsequent applications of the saidrespondents 3 and 4 filed on 23.11.2012 ought not tohave been entertained. In our opinion, the learnedcounsel for the respondents 2 to 5 has given a completeanswer to this argument. He has referred to Section245K(2) of the said Act which stipulates that where aperson has made an application under Section 245C onor after the first day of June, 2007, and if suchapplication has been allowed to be proceeded with underSection 245D(1), such person shall not subsequently beentitled to make an application under Section 245C. Itwas contended by the learned counsel for therespondents 2 to 5 that this bar from making anotherapplication under Section 245C would only apply if theearlier application had been allowed to be proceededwith under Section 245D(1). But, in the present case, theearlier applications filed by respondents 3 and 4 had notbeen allowed to be proceeded with under Section245D(1) and had been rejected at the threshold for wantof payment of the full amount of the additional tax andinterest due. Prima facie, we are in agreement with thesubmission made by the learned counsel for therespondents. However, since we are not inclined tointerfere with the impugned orders, we feel that thisissue can also be left open to be decided by theSettlement Commission at the time of furtherproceedings till the order under Section 245D(4) ispassed. For all these reasons, we agree with the learnedcounsel for the respondents 2 to 5 that this is not thestage at which this Court ought to interfere with theimpugned orders and the proceedings pending before theSettlement Commission. The writ petition is accordinglydismissed. We make it clear that we have not expressedany opinion on the merits of the issues as to whether therespondents 2 to 5 had made a full and true disclosureand had indicated the manner in which the undisclosedincome had been derived. Those and related issues onmerits are for the Settlement Commission to decide.There shall be no order as to costs. 22. Similar view is taken by the Bombay High Court in the case of Commissioner of Income Tax (Central) Punev/s. Income Tax Settlement Commission (ITSC), 2013(40) taxmann.com 201 (Bombay) which reads asunder :- “The Commissioner of Income Tax (Central), Pune haschallenged an order passed by the SettlementCommission on 29 August 2013 under the provisions ofsub-section (2C) of Section 245D of the Income Tax Act1961. By the order which has been impugned, theSettlement Commission has held as follows : “In the totality of facts available to us at present, we aresatisfied about the true and full nature of the disclosuremade. The manner of making undisclosed income, in thefacts of the case, as stated, is on sales kept outside thebooks resulting in understatement to sales. Needless tosay, as observed by the Hon'ble High Court in this verycase, that if at a later stage of the proceedings, factscome to our knowledge showing suppression of fullmaterial facts or mis-statements thereof, the law willtake its own course. 2. The Commission has accordingly held that the “In the totality of facts available to us at present, we aresatisfied about the true and full nature of the disclosuremade. The manner of making undisclosed income, in thefacts of the case, as stated, is on sales kept outside thebooks resulting in understatement to sales. Needless tosay, as observed by the Hon'ble High Court in this verycase, that if at a later stage of the proceedings, factscome to our knowledge showing suppression of fullmaterial facts or mis-statements thereof, the law willtake its own course. 2. The Commission has accordingly held that the application filed by the Second Respondent is not aninvalid application and should be allowed to beproceeded with further. Following the order which waspassed by the Settlement Commission on 29 August2013, further hearings took place before theCommission on 19 September 2013 and 7 October2013. The grievance of the Petitioner is that theCommission has without ordering an enquiry by theCommissioner under Section 245D(3), directlyproceeded under sub-section (4) and a letter wasreceived from the Directorate of Investigation of theSettlement Commission on 4 October 2013 requiring theinspection of the factory premises of the SecondRespondent. The contention of the Revenue is that in thepresent case it was necessary for the SettlementCommission to cause the Commissioner to make orcause to be made a further enquiry or investigation andto furnish a report on the matters covered by theapplication to the Settlement Commission. 3Section 245D(3) provides as follows : “(3) The Settlement Commission, in respect of- (i)an application which has not been declared invalidunder sub-section (2C); or (ii)an application referred to in sub-section (2D)which has been allowed to be further proceeded withunder that sub-section, may call for the records from theCommissioner and after examination of such records, ifthe Settlement Commission is of the opinion that anyfurther enquiry or investigation in the matter is necessary, it may direct the Commissioner to make orcause to be made such further enquiry or investigationand furnish a report on the matters covered by theapplication and any other matter relating to the case, andthe Commissioner shall furnish the report within aperiod of ninety days of the receipt of communicationfrom the Settlement Commission; Provided that where the Commissioner does not furnishthe report within the aforesaid period, the SettlementCommission may proceed to pass an order under sub-section (4) without such report. 4.The provisions of sub-section (3) of Section245D would make it clear that where an application hasnot been declared to be invalid by the SettlementCommission under sub-section (2C), the Commission isempowered to call for records from the Commissionerand upon the examination of such records, if it is of theopinion that a further enquiry or investigation in thematter is necessary, it may direct the Commissioner todo so. The jurisdiction to determine as to whether afurther enquiry or investigation is necessary is thusvested with the Settlement Commission. In the presentcase, from the compilation of correspondence which isplaced on the record, it is clear that on 3 October 2013,the Commissioner of Income Tax (Central) Pune hadaddressed a communication to the SettlementCommission setting out that an enquiry under sub-section (3) of 245D was necessary in respect of certainspecific issues. The grievance of the Petitioner, is that on19 September 2013 at a hearing before the Commissionit wasindicated that the department would be heard onthe issue relating to a Section 245D(3) enquiry on 7October 2013, but as a matter of fact the Commissionhas not applied its mind to whether an enquiry underSection 245D(3) should be ordered. 5. The learned senior counsel appearing on behalf of theSecond Respondent on the other had has submitted thatthe issue as to whether an enquiry under Section245D(3) should be ordered by the SettlementCommission has not been finally concluded by theSettlement Commission, and during the course of theproceedings, the Settlement Commission would applyits mind to that aspect. As we have noted earlier, by aletter dated 3 October 2013 to the SettlementCommission, the Commissioner of Income Tax(Central) Pune has drawn the attention of theCommission to the specific issues on which a furtherenquiry or investigation under Section 245D(3) wouldbe necessary. 6. Sub-section (4) of Section 245D provides as follows : “(4) After examination of the records and the report ofthe Commissioner, if any, received under - (I)sub-section (2B) or sub-section (3), or (ii) the provisions of sub-section (1) as they stoodimmediately before their amendment by the FinanceAct, 2007, and after giving an opportunity to theapplicant and to the Commissioner to be heard, either inperson or through a representative duly authorised inthis behalf, and after examining such further evidence asmay be placed before it or obtained by it, the“Settlement Commission may, in accordance with theprovisions of this Act, pass such order as it thinks fit onthe matters covered by the application and any othermatter relating to the case not covered by theapplication, but referred to in the report of theCommissioner.” 7. Under sub-section (4) of Section 245D the SettlementCommission has to : (i) examine the records; (ii)examine the report of the Commissioner, if any, receivedunder sub-section (2B) or sub-section (3), as the casemay be, (or under sub-section (1) as it stood before theFinance Act 2007); (iii) examine such further evidenceas may be placed before it or obtained by it. TheSettlement Commission is also required to furnish anopportunity to the applicant and to the Commissioner tobe heard before it passes an order under sub-section (4).A reading together of the provisions of sub-section (3)and sub-section (4) would indicate that the SettlementCommission is not as a mandate of law required to ordera further enquiry or investigation by the Commissionerunder Section 245D(3) in every case. Whether the factsof the case are of such a nature or complexity as wouldrequire a further enquiry or investigation has to bedetermined by the Settlement Commission after it hasoccasion, upon calling for the records from theCommissioner and the examination of those records todecide whether a further enquiry or investigation isnecessary. Undoubtedly, if the Settlement Commissionholds that a further enquiry or investigation is necessaryunder sub-section (3), such an enquiry or investigationhas to be ordered by the Commissioner because sub-section (3) confers jurisdiction on the Commissioner toconduct the enquiry or the investigation, as the case maybe. Equally, it is evident both from the language of sub-section (3) and the terms of subsection (4) that theSettlement Commission is not required in every case tocause an enquiry or investigation to be made under sub-section (3).That is evident by the use of the words “ifany” in sub-section (4). Moreover, under sub- section(4) the Settlement Commission, besides considering the report, if any, of the Commissioner under subsection(2B) or sub-section (3) is empowered to examine suchfurther evidence as may be placed before it or obtainedby it. Evidence placed before the Commission wouldinclude evidence which may be produced either by theassessee or by the Commissioner. Evidence obtained bythe Commission would include evidence which theCommission has obtained under its own authority. Inthat sense the powers of the Settlement Commission arewide. Finally, it may be necessary to note that under sub-section (4) the Settlement Commission has to pass anorder in accordance with the Act as it thinks fit onmatters covered by the application. The SettlementCommission may also pass an order on any other matterrelating to the case not covered by the application, butwhich has been referred to in the report of theCommissioner. Hence, if the Settlement Commissionintends to pass an order in respect of any other matterwhich has not been referred to in the application, thatmatter must be of a nature such that it is referred to inthe report of the Commissioner. At this stage, it wouldalso be necessary to advert to the provisions ofsubsection (2) of Section 245F under which theSettlement Commission has exclusive jurisdiction toexercise the powers and to perform the functions of theIncome Tax authority under the Act, where anapplication made under Section 245C has been allowedto be proceeded with under Section 245D, until an orderis passed under sub- section (4) of Section 245D. Thisis, however, made subject to the provisions of sub-section (3). Consequently, where the Commission in the course ofits jurisdiction under Section 245D(3) has ordered anenquiry or investigation by the Commissioner, theexclusive nature of its jurisdiction is subject to Section245D(3). 8. On the record of the case, it is common groundbetween counsel appearing on behalf of the Revenueand learned senior counsel appearing on behalf of theSecond Respondent that the Settlement Commission isyet to apply its mind to whether an enquiry underSection 245D(3) should be ordered. In view of thestatement which has been made on behalf of the SecondRespondent which is consistent with the scheme of thestatutory provisions, we are not inclined to entertain theproceedings at this stage, save and except to clarify thatthe Settlement Commission shall during the course of itsproceedings specifically bring to bear its considerationon whether an enquiry under Section 245D(3) should beordered particularly having regard to the circumstances which have been set out in the letter of theCommissioner of Income Tax dated 3 October 2013.Since the proceedings are pending before the SettlementCommission, it would not be appropriate for this Courtto entertain the proceedings any further. We accordinglydispose of the proceedings, having clarified the legalposition. There shall be no order as to costs 23. Similar view is taken by the High Court of AndhraPradesh in the case of Commissioner of Income-tax,Vijaywada vs. Settlement Commission (IT & WT), 2014(49) taxmann.com 165 (Andhra Pradesh). Para 24 and26 are relevant which reads as under :- which have been set out in the letter of theCommissioner of Income Tax dated 3 October 2013.Since the proceedings are pending before the SettlementCommission, it would not be appropriate for this Courtto entertain the proceedings any further. We accordinglydispose of the proceedings, having clarified the legalposition. There shall be no order as to costs 23. Similar view is taken by the High Court of AndhraPradesh in the case of Commissioner of Income-tax,Vijaywada vs. Settlement Commission (IT & WT), 2014(49) taxmann.com 165 (Andhra Pradesh). Para 24 and26 are relevant which reads as under :- 11. As a matter of fact, what all is required by theSettlement Commission at the stage of entertaining theapplication is whether a prima facie case is made out ornot and in that context only subsequent amendmentswhich have been brought in Sections 245C and 245D ofthe Act had dispensed with even issuing a preliminarynotice to the Commissioner of Income Tax leaving it tothe absolute discretion of the Settlement Commission toentertain a case or not for its consideration. The reasonsfor giving such discretion to the Commission cannot belost sight particularly keeping in view of the objects ofestablishment of Settlement Commission and to settlethe disputes between the taxpayer and the department inan amicable manner. As a matter of fact, the recentlegislative efforts in bringing Section 268A of the Actand in issuing various circulars whereby restraining thedepartment officials to file appeals and further appealsin all and sundry cases recognising futility of suchexercise may be noticed. A close perusal of the orderpassed by the Settlement Commission, both at the stageof admission and also at the stage of passing of the finalorder, we find, as a matter of fact, ample opportunitywas given to the Department to file their objections andalso the representatives of the department were heardbefore passing the orders and in that view of the matter,we are unable to concur with the contention of thelearned counsel for the petitioner that the order isvitiated on account of violation of principles of naturaljustice. Inasmuch as we are satisfied that it was withinthe discretion of the Settlement Commission at the stageof Section 245D(1) of the Act to admit a case forconsideration based on the prima facie view, the aspectof admission of a case by the Settlement Commissionexcept in exceptional circumstances cannot be thesubject matter of a judicial review. This becomes clearfrom the law laid down in catena of judgments withreference to the restricted scope of interference by the Courts even with the final orders of the SettlementCommission. In that view of the matter, we do not seeany reasons to order the amendment petition.Accordingly, the W.P.M.P.No.28188 of 2002 isdismissed. 24. In the case of Commissioner of Income-tax vs.Income Tax Settlement Commission, 2013 (33)taxmann.com 313 (Gujarat) para 6 is relevant whichreads as under :- “6. We are of the opinion that by such order, theSettlement Commission did not finally decide the meritor demerit of the rival contentions. It only allowed theapplication to be proceeded with. All contentions ofboth the sides would necessarily be gone into theCommission before passing any final order. The order ofSettlement Commission was only in the nature ofpermitting further enquiry into application of theassessee for settlement. In that view of the matter, nointerference is called for. Petition is dismissed. Rule isdischarged.” 24. In the case of Commissioner of Income-tax vs.Income Tax Settlement Commission, 2013 (33)taxmann.com 313 (Gujarat) para 6 is relevant whichreads as under :- “6. We are of the opinion that by such order, theSettlement Commission did not finally decide the meritor demerit of the rival contentions. It only allowed theapplication to be proceeded with. All contentions ofboth the sides would necessarily be gone into theCommission before passing any final order. The order ofSettlement Commission was only in the nature ofpermitting further enquiry into application of theassessee for settlement. In that view of the matter, nointerference is called for. Petition is dismissed. Rule isdischarged.” 25. In reply, Shri R.L. Jain, learned Senior counsel forthe petitioners has submitted that no order has beenpassed by the Commissioner under Section 245D (2C)regarding admitting the application for settlement filedby the respondent No.1 and department has onlyreceived a notice by which they came to know about it.He has also drawn our attention to the relevantprovisions of the Act and definition as defined inChapter XIX and submitted that application mustcontained a full and true disclosure of the income of theassessee, which has not been disclosed before theassessing officer, the manner in which such income hasbeen derived as required under 245(C) (1) of the Act. 26. His next submission is that before passing of orderstanding counsel of the department should he heard. Healso drawn our attention to the news item Annexures P/1and P/11 and submits that the disclosure made by therespondent No.1 was not full and true and thus, thelearned authority has committed an error in acceptingthe application. In support of the aforesaid contention heplaced reliance on the following cases CIT (Central)Calcutta v/s. B.N. Bhattachargee & Anr., 118 ITR 461(SC), CIT v/s. Anjum M.H. Ghaswala & Ors., 252, ITR1 (SC), CIT v/s. Express Newspapers Ltd, 1994 (206)443 (SC), Ajmera Housing Corpn. v.s CIT, 2010 (193)Taxman 193 (SC), Kuldeep Industrial Corporation v.Income-tax Officer & Ors., 223 ITR pg 840 (SC),Commissioner of Income Tax (Central) Pune v/s.Income Tax Settlement Commission (ITSC), 2013 (40) taxmann.com 201 (Bombay), Commissioner of Income-tax v/s. Godwin Steels P. Ltd, 2013 (353) ITR 353(Delhi), Hassan Ali Khan v/s. Settlement Commission,2008 (168) Taxman 78 (Bom), Commissionerof Income-tax v/s. Income-tax Settlement Commission & Anr.,2009 (310) ITR 10 (Mad) and Commissioner ofIncometax v/s. Om Prakash Mittal, 2005 (273) ITR pg326 (SC). 27. To counter the aforesaid allegations learned counselfor the respondent No.1 has drawn our attention toAnnexure P/1, the stand taken by the department.Statutory report which is at page 53 and para 3.0 and 5.0of the report. His contention is that no notice to eitherside is required at the time of considering theapplication. The rule of the department will start one theapplication is accepted and notice is issued to them. Atthe time of admission no objection of any kind wasraised as is evident from the report which has beenreproduced in the preceding paragraph and submits thatinterest of the department is well protected. Thedepartment just to linger on the proceedings before theSettlement Commission has filed this writ petitionwhereas they can raise all these objections before theSettlement Commission and in view of the law laiddown by the Apex court in the case of Commissioner ofIncome Tax v/s. K. Jayaprakash Narayanan (supra). TheHon'ble Apex Court has granted liberty to thedepartment to raise the contention before the settlementCommission who would be entitled to examine thatquestion on the final hearing of the matter. 28. Since the matter is pending before SettlementCommission and it has to decide as to whether fulldisclosure was made or not, it is not for the court toenter into it and petitioner is at liberty to raise allobjection regarding the maintainability of theapplication before the commission. With the aforesaidobservations, we vacate the ad-interim order dated9.1.2015 by allowing I.A.No.378/2015 filed by therespondent No.1. 29. It may be mentioned that we have not decided anyissue on merits of the case and any observation made inthe order will not in any way affect the subject matterpending for consideration before the settlementCommission.” 17.This Court in light of the aforesaid judgment and after taking into account the judgment delivered bythe Hon'ble Supreme Court, is of the opinion that as the matter is still pending before the SettlementCommission, the Settlement Commission has to decidewhether the full disclosure is made or not. Thepetitioner is certainly at a liberty to raise all issues andgrounds before the Commission. The SettlementCommission has to proceed the matter in accordancewith Section 245D (2B), 245 D(3), 245D(4),245D(4A),245D(5),245D(6), 245D(6A) of the Act.Thereafter, after examination of record, afterc