Principal Commissioner Of Income Tax, Central Patna, Through Acit Centralcircle-I, Patna v. Late Shri Krishna Prasad, Messors Johnson Paint Company, Ashoka Palace,Exhibition Road, Patna- 1. Exhibition Road, Patna- 1

IN THE HIGH COURT OF JUDICATURE AT PATNACivil Writ Jurisdiction Case No.12320 of 2017 ====================================================== Principal Commissioner Of Income Tax, Central Patna, through ACIT CentralCircle-I, Patna ... ... Petitioner/s Versus 1. The Union Of India through Income Tax Settlement Commission Kolkata2. Shri Nishant Krishna, Proprietor M/s Johnson Paints Industries and MessorsSita Cells, 11A Ashoka Palace, Exhibition Road, Patna-1 2. Shri Nishant Krishna, Proprietor M/s Johnson Paints Industries and MessorsSita Cells, 11A Ashoka Palace, Exhibition Road, Patna-1 3. Late Shri Krishna Prasad, Messors Johnson Paint Company, Ashoka Palace,Exhibition Road, Patna- 1. Exhibition Road, Patna- 1. ... ... Respondent/s ======================================================Appearance :For the Petitioner/s: Ms. Archana Sinha @ Archana Shahi, Mr. Alok Kumar & Mr. Sanjeev Kumar, AdvocatesFor the Respondent/s: Mr. Ajay Kumar Rastogi, Ms. Smriti Singh, Mr. Parijat Saurav & Mr. Aakash Kumar, Advocates ====================================================== CORAM: HONOURABLE MR. JUSTICE JYOTI SARAN and HONOURABLE MR. JUSTICE ARVIND SRIVASTAVAORAL JUDGMENT(Per: HONOURABLE MR. JUSTICE JYOTI SARAN) Date : 05-02-2019 Heard Ms. Archana Sinha, learned counselappearing for the petitioner-Principal Commissioner of IncomeTax, Central Patna and Mr. Ajay Kumar Rastogi, learnedcounsel appearing for the respondent nos. 2 & 3 i.e. the Assesseebefore the Department. The petitioner is aggrieved by the order dated30.12.2016, passed by the Income Tax Settlement Commission(hereinafter referred to as “the Commission”), in exercise ofpowers vested under section 245 D(4) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), whereby thesettlement application filed by the respondent nos. 2 & 3 hasbeen allowed. This Court had an occasion to examine the Schemeunderlying Section 245 of the Act to bring about a settlementwhere assessment proceedings are pending in its judgment sincereported in 2019 (1) B.L.J. 510. The provision in the Act inconstituting the Commission was incorporated under the Actwith a view to bring about a settlement in between the claimant-assessee as well as the stand of the department, notwithstandingthe lawful recourse otherwise available. Chapter XIX A of the Act provides for a specialprocedure for settlement of any dispute and inter alia enablesany assessee, whose assessment proceeding is pending, a rightto invoke the provisions by filing an appropriate applicationbefore ‘the Commission’ for settlement under section 245 C andthe Commission after satisfying itself as to the validity of suchapplication can allow it in exercise of powers vested undersection 245D(1) of the Act and then call upon the Departmentthrough the Commissioner to submit its report under Rules 9 ofthe Income-Tax Settlement Commission (Procedure) Rules,1997 (hereinafter referred to as “the Rules”) under section 245 D (2B) of the Act. The Scheme of the settlement does not stophere and the Commission on consideration of the report maydeclare the application of the assessee ‘invalid’ or may allow itto proceed under section 245D (3) as ‘not invalid’ and in suchcase the Commission shall fix the date for hearing under section245D (4). On the date so fixed, the Commission after giving anopportunity of hearing to the assessee to disclose such incomewhich he failed to disclose while filing the return and an equalopportunity to the Commission to rebut the same because a copyof such application disclosing full particulars of the incomeincluding those which the assessee failed to disclose in hisreturns had already been brought to the notice of theCommissioner to invite his report under Rules 9, passappropriate orders. The object behind the Scheme of settlementprovided under Chapter XIXA is to bring about a settlement inthe matter without relegating the parties to the normal chain ofstatutory procedure of appeal, revision etc. It is acting under the privilege provided under theScheme, so present in Chapter XIXA of ‘the Act’, that anapplication under section 245C (1) was filed by the respondentnos. 2 & 3, which after being accepted under section 245 D (1)of ‘the Act’ as valid, that a report was called for under rule 9 of the Rules from the Commissioner and on its receipt and afterhearing the parties that the order put to challenge, has beenpassed. The ground put up on behalf of the Department byMs. Archana Sinha to question the order passed by ‘theCommission’ finds mention at paragraph 15 of the writ petitionwherein it is stated that the assessee filed a bulky paper-book aday before the hearing took place without giving copy to thedepartment for inviting their stand thereon and which defaultwas overlooked by the Commissioner & has consequentlyprejudiced the case of the department in responding to the issueswhatsoever raised in the paper book. It is on this sole groundthat the order passed by ‘the Commission’ is being questioned.According to Ms. Sinha, even though this paper-book was fileda day before the hearing took place but nowhere in theimpugned order this position has been noted. Mr. Ajay Kumar Rastogi, learned counsel appearing for the assessee, while opposing the issue raised bythe department, submits that even though the plea of filing of apaper-book by the assessee is taken for maintaining the writpetition but the very fact that the order of ‘the Commission’places no reliance on the paper-book for recording their opinion, it removes the foundation of the objection taken. Learnedcounsel has also invited the attention of the Court to the orderof the Commission at paragraph 12.1 to submit that even if anysuch paper-book was filed by the assessee that he surrendered tothe wisdom of the Commission coupled with the fact that theorder impugned does not in any manner ignore the report of theCommission nor the objection taken therein, the departmentcannot raise any such grievance. We have heard learned counsels for the parties andperused the record. No doubt it is a matter of settled procedurethat any pleading filed before an authority performing quasijudicial functions, is to be served on the other side in advance.The rules framed for regulating discharge by any quasijudicialauthority do have this mandatory condition and the proceedingsbefore ‘the Commission’ is no exception. In case a copy of such pleading is not served on theother side, the quasijudicial authority would be well within itsjurisdiction to ignore the same and, perhaps, that is why theorder of the Commission does not take notice of the bulkypaper-book, if any, filed by the assessee, so complained of, bythe department to maintain this writ petition by making aspecific pleading to such effect at paragraph 15 of the writ petition. That no reference is made by the Commission to thepaper-book, if any, filed by the assessee, perhaps, Mr. Rastogi iscorrect that this cannot give a cause of action to the departmentto maintain the writ petition. The situation present, goes a stepahead in the present matter because even if the assessees did fileany such paper-book, the observations present at paragraph 12.1is conclusive of the fact that they left the decision at the wisdomof the Commission and reads under : “However, in the spirit of settlement and to buypeace and to avoid protracted litigation, theaddition (as per details enclosed) can be made bythe hon’ble commission although no suchevidence/material exist on record to disbelieve theoffer made in the SA and/or to establish the caseagainst the applicant in respect of the addition (asper details enclosed) now being made.” “However, in the spirit of settlement and to buypeace and to avoid protracted litigation, theaddition (as per details enclosed) can be made bythe hon’ble commission although no suchevidence/material exist on record to disbelieve theoffer made in the SA and/or to establish the caseagainst the applicant in respect of the addition (asper details enclosed) now being made.” Apart from what we have observed above, sincethere is nothing in the pleadings which would demonstrate thatthe report of the Commissioner filed under Rule 9 of the Ruleswas ignored by the Commission or the objections raised, havenot been considered, simply because the order of ‘theCommission’ is not to the liking of the department, it would notinvite a different opinion by this Court because neither the orderpassed by ‘the Commission’ impugned herein has been questioned on merits nor on manner of discharge or onperversity. The writ petition accordingly stands dismissed. (Jyoti Saran, J) (Arvind Srivastava, J) mcv/- AFR/NAFRAFRCAV DATENAUploading Date09.03.2019Transmission DateNA