Principal Commissioner Of Income Tax Central Patna Through Mr Subratogoswami, Assistant Commissioner Of Income Tax Central Circle- 3 Patna v. The Union Of India

IN THE HIGH COURT OF JUDICATURE AT PATNACivil Writ Jurisdiction Case No.25595 of 2019 ====================================================== Principal Commissioner of Income Tax Central Patna through Mr SubratoGoswami, Assistant Commissioner of Income Tax Central Circle- 3 Patna,aged about 50 years, male, son of Ajay Kumar Goswami, resident of C.R.Building, Patna. ... ... Petitioner/s Versus 1.The Union of India through its Secretary Income Tax SettlementCommission, Kolkata having its office at 10C Middleton Street, Kolkata.Commission, Kolkata having its office at 10C Middleton Street, Kolkata. 2.Dr.Md. Muntazir, Hospital Road, Siwan- 841226 (Bihar). 3.Mrs. Raihana Khatoon Hospital Road, Siwan- 841226 (Bihar). 4.Sufia Memorial Hospital Pvt. Ltd., Hospital Road, Siwan- 841226 (Bihar). 5.Cactus Pharmaceuticals Pvt. Ltd., Hospital Road, Siwan- 841226 (Bihar). ... ... Respondent/s ======================================================Appearance :For the Petitioner/s: Mrs.Archana Sinha @ Archana Shahi, Advocate For the Respondent/s: Mr. Ajay Kumar Rastogi, Sr. Advocate Mrs. Kalpana Rastogi, Ad, Ms. Smriti Singh, Advocate ====================================================== CORAM: HONOURABLE THE CHIEF JUSTICE and HONOURABLE MR. JUSTICE RAJIV ROYCAV JUDGMENT(Per: HONOURABLE THE CHIEF JUSTICE) Date : 06-02-2024 The writ petition by the Principal Commissioner ofIncome Tax challenged the order dated 20.03.2019 of theSettlement Commission passed in the case of the respondentNos. 2 to 5. The challenge is also on the ground that the IncomeTax Settlement Commission (hereinafter referred to as the‘Commission’) had not considered the Rule 9 report and did notpermit the filing of further enquiry report before passing the final order under Section 245D(4) of the Income Tax Act(hereinafter referred to as the ‘Act’). The Department is alsoaggrieved with sufficient opportunity for hearing having notbeen afforded. 2. Before us, the learned Senior Standing Counsel, onthe last occasion, contended that there was no order underSection 245D(2B) of the Act, wherein the Commission wasunder an obligation to call for a report within 30 days. Wedirected the Department to file an affidavit as to whether suchan order was received or not. A supplementary affidavit hasbeen filed on 25.01.2024 wherein, it is clearly stated that areport was called for under Section 245D(2B) of the Act bycommunication dated 27.11.2017, produced therein, which wasreplied to on 27.12.2017 and received in the office of theCommission on 12.01.2018. 3. The learned Senior Standing Counsel argued that inapproaching the Commission, the assessee has to fulfill threeingredients; being (i) full and true disclosure, (ii) the manner inwhich such income was derived and (iii) additional amount ofincome tax payable on such income and such other particularsas may be prescribed. None of the ingredients are satisfied bythe assessee and the report on that count has not been considered, is the specific contention taken. 4. The leaned Senior Counsel appearing for the assessee, on the other hand, would counter the arguments withspecific reference to the findings of the Commission in theimpugned order. The learned Senior Counsel would also cautionus that the writ petition only seeks a judicial review which doesnot permit this Court to look into the decision itself, but, onlyenables an examination of the procedure; which has beenscrupulously followed by the Commission. considered, is the specific contention taken. 4. The leaned Senior Counsel appearing for the assessee, on the other hand, would counter the arguments withspecific reference to the findings of the Commission in theimpugned order. The learned Senior Counsel would also cautionus that the writ petition only seeks a judicial review which doesnot permit this Court to look into the decision itself, but, onlyenables an examination of the procedure; which has beenscrupulously followed by the Commission. 5. Section 245D delineates a procedure by which theCommission has to deal with an application under Section245(C). Within seven days from the date of receipt of theapplication, a notice has to be issued to the assessee to showcause as to why the application should be proceeded with andafter hearing the applicant, the Commission is empowered toeither reject the application by order in-writing or allow it to beproceeded with. The proviso deals with an application notconsidered within the aforesaid period, being enabled to befurther proceeded with. Sub-section(2) of Section 245D requiresa copy of the order under sub-section(1) to be sent to theapplicant and to the Commission. Sub-section(2A) deals withthe situation prior to the amendment by the Finance Act, 2007. Sub-section (2B) requires the Commission to call for a reportfrom the Commissioner, with respect to applications allowed tobe proceeded with. It also mandates that such report shall beplaced before the Commission, within a period of 30 days fromreceipt of the notice. Section 245D(2C) provides that within 15days of receipt of a report, the Commission could declare theapplication to be invalid, after hearing the applicant. The secondproviso also requires that if no report has been furnished withinthe aforesaid period, the Commission shall proceed further evenin the absence of the report of the Commissioner. 6. With the above provisions in the background, welook at the order passed. It is specifically stated that the orderunder Section 245D(1) was passed on 24.11.2017 directing theapplication to be proceeded with. A report was called for fromthe Principal Commissioner of Income Tax under Section245D(2B), which wasreceived after the due date. Hence,Section 245D(2C) requires the application to be proceeded within the absence of the report, which, as admitted in thesupplementary counter affidavit, reached the Commission afterthe expiry of 30 days. Section 245D(3)(ii), however, requires anapplication referred to in sub-section (2D), allowed to be furtherproceeded with under that sub-section, to be proceeded with after calling for report from the Commissioner. The Rule 9report with respect to the applicant was submitted by the officeof the Commissioner, which has been dealt with by theCommission. 7. The Commission specifically extracted theobjections raised in the Rule 9 report with respect to therespondent Nos. 2 and 3, who were individuals and respondentNos. 4 and 5, Private Limited Companies; whose Directors werethe respondent Nos. 2 and 3. It is also seen that the request foradjournment made on the ground of the officer being deputedfor election duty, was considered and rejected. The Commissionhas specifically noticed that the report of the Assessing Officerwas due on 28.02.2019, while the General Elections wereannounced only on 10.03.2019. The Department’s request totake up the case after the General Electionwas also found to benot permissible since the elections would be over only on23.05.2019 and the applications were getting time barred as on31.05.2019. The Department was also represented before theCommission. 8. We find absolutely no reason to interfere with thesame on the ground of absence of reasonable opportunity ofhearing having not been afforded, especially since the Department was represented and heard as also the existence ofthe Rule 9 report before the Commission. 8. We find absolutely no reason to interfere with thesame on the ground of absence of reasonable opportunity ofhearing having not been afforded, especially since the Department was represented and heard as also the existence ofthe Rule 9 report before the Commission. 9. As we noticed, after extracting various objectionsraised, the same was considered by the Commission. 10. Insofar as the valuation of a building, thevaluation submitted by the Valuation Cell of the Departmentassessed it at 6.21% above the value shown in the books ofaccount; which was a negligible difference not permissible ofadditions. The contention with respect to the gifts received fromthe father and brother not being genuine, was negatived findingthe presence of the brother, who deposed in accordance with thesubmission of the applicant. The gifts were also channeledthrough banks and the donors were close relatives of the donee,who were working abroad and had maintained NRI accountsthrough which the transactions were occasioned. 11. The next issue was with respect to the payments asdisclosed from an agreement of sale, which were also found tobe in tune with the payments received by the respondent Nos. 2and 3. The other issues were stated to be issues in which noadverse inference could be drawn against the applicants. 12. It is reiterated that wefind absolutely no reason tointerfere with the order passed, especially since the procedure under Section 245D was scrupulously followed by theCommission. We reject the writ petition leaving the parties tosuffer their respective costs. (K. Vinod Chandran, CJ) Rajiv Roy, J: I agree. (Rajiv Roy, J)