The Commissioner Of Income Tax,Central-Ii v. M/S.adhiparasakthi Charitable Medical, Educational And Cultural Trust, Gst Road, Melmaruvathur, Cheyyar Taluk, Kanchipuram District-603 319

IN THE HIGH COURT OF JUDICATURE OF MADRAS RESERVED ON : 15.09.2020 PRONOUNCED ON : 29.10.2020CORAM: THE HONOURABLE MR.JUSTICE M.S.RAMESHW.P.NOS.34040 & 34041 OF 2014&M.P.NOS.1 & 1 OF 2014 In W.P.No.34040 of 2014 The Commissioner of Income Tax,Central-II, No.46, Mahatma Gandhi Road,Chennai-600 034....Petitioner Vs. 1. M/s.Adhiparasakthi Charitable Medical, Educational and Cultural Trust, GST Road, Melmaruvathur, Cheyyar Taluk, Kanchipuram District-603 319. 2. The Income Tax Settlement Commission, Additional Bench, 640, Anna Salai, Nandanam, Chennai-600 035....RespondentsIn W.P.No.34041 of 2014 The Commissioner of Income Tax, Central-II, No.46, Mahatma Gandhi Road, Chennai-600 034....PetitionerVs. 1.Sri.G.Bangaru 2.The Income Tax Settlement Commission, Additional Bench, 640, Anna Salai, Nandanam, Chennai-600 035. ...Respondents Additional Bench, 640, Anna Salai, Nandanam, Chennai-600 035. ...Respondents PRAYER in W.P.No.34040 of 2014: Writ Petition filed under Article 226 of the Constitution ofIndia, praying to issue a Writ of Certiorarified Mandamus,calling for the records on the file of the second respondent inSettlementApplicationNo.TN/CN/53/2012-13/7/IT,dated28.03.2014 and to quash the same as illegal and direct thesecond respondent to restore the jurisdiction of the AssessingOfficer in respect of the assessments for assessment years 2005-06 to 2011-12 of the first respondent. PRAYER in W.P.No.34041 of 2014: Writ Petition filed under Article 226 of the Constitution ofIndia, praying to issue a Writ of Certiorarified Mandamus,calling for the records on the file of the second respondent inSettlementApplicationNo.TN/CN/53/2012-13/6/IT,dated08.04.2014 and to quash the same as illegal and direct thesecond respondent to restore the jurisdiction of the AssessingOfficer in respect of the assessments for assessment years 2005-06 to 2011-12.For Petitioner: Mr.A.P.Srinivas, Sr.S.CounselFor Respondent-1:Mr.R.SivaramanC O M M O N O R D E R With the consent of both parties, the present Writ Petitionsare heard through Video Conferencing on 15.09.2020. 1.The brief facts of the case in W.P.No.34040 of 2014 are asfollows: 1.a) The first respondent herein is a Charitable Trustfounded by Shri G.N.Bangaru (hereinafter referred to as the‘assessee’). On 02.07.2010, search and seizure operations underSection 132 of the Income Tax Act (hereinafter referred to asthe 'Act') were carried out by the Income Tax Department(hereinafter referred to as the 'Department') in the offices andresidential premises of various members of the assessee groupand during the operations, cash amounting to Rs.13,17,00,000/-and jewelery weighing 11339.160 grams, along with incriminatingdocuments were seized. Subsequent to the search, the assesseewas issued with notices under Sections 153A/153C/142(1) of theAct for the Assessment Years (AYs) 2005-06 to 2011-12. 1.b) In pursuance of the said notices, the assessee filed aSettlement Application under Section 245C of the Act on25.01.2012 before the Income Tax Settlement Commission (ITSC)disclosing additional income of Rs.11,50,09,902/- Crores for theAYs 2007-08 to 2011-12. On 07.02.2012, the ITSC rejected thesaid application under Section 245D(1) of the Act for non-payment of taxes on the additional income disclosed in theSettlement Application and did not allow the same to beproceeded with. Thereafter, on 30.04.2012, the assessee filedits returns of income for the AYs 2007-08 to 2011-12. 1.b) In pursuance of the said notices, the assessee filed aSettlement Application under Section 245C of the Act on25.01.2012 before the Income Tax Settlement Commission (ITSC)disclosing additional income of Rs.11,50,09,902/- Crores for theAYs 2007-08 to 2011-12. On 07.02.2012, the ITSC rejected thesaid application under Section 245D(1) of the Act for non-payment of taxes on the additional income disclosed in theSettlement Application and did not allow the same to beproceeded with. Thereafter, on 30.04.2012, the assessee filedits returns of income for the AYs 2007-08 to 2011-12. 1.c) Subsequently, on 26.11.2012, the assessee filed anotherSettlement Application under Section 245C of the Act before theITSC, disclosing an additional income of Rs.9,65,10,102/- forthe AYs 2007-08 to 2011-12. By an order dated 10.12.2012, theITSC allowed the Settlement Application to be proceeded withunder Section 245D(1) of the Act. The reports under Section 245D(2B) were then called for from the Department and on beingsatisfied with the conditions stipulated in Section 245D(2C) ofthe Act, the ITSC held that the Settlement Application coveringAYs 2005-06 to 2011-12 cannot be said to be invalid. On receiptof the report under Rule 9 of the ITSC (Procedure Rules), thefollowing issues were taken up by ITSC, for consideration: i) Suppression in income admitted before SettlementCommission; ii) Anonymous donations taxable u/s.115 BBC;iii) Collection of unaccounted capitation fee;iv) Diversion of capitation fee to relatives of founder;v) Payment of salary in cash;vi) Bogus employment of doctors;vii) Application of accounted income of trust to benefit therelatives of founder; andviii) Violations of conditions of Sec.11/Sec.10(23C). 1.d) On consideration of the explanations, the ITSC, by itsimpugned award dated 28.03.2014, settled the first respondent'sincome by accepting the additional income of Rs.1.65 Croresoffered in the Settlement Application and the further income ofRs.11,02,55,021/- disclosed as per order under Section 245D(4)of the Act, together with the returned income ofRs.8,00,10,102/-, thereby settling the total income atRs.20,67,65,123/- for the AYs 2007-08 to 2011-12. The Departmenthas challenged the award in the present Writ Petition. 2. The brief facts of the case in W.P.No.34041 of 2014 areas follows: 2.a) The first respondent herein (hereinafter referred to as https://hcservices.ecourts.gov.in/hcservices/ the ‘assessee’), is the founder of Adhiparasakthi Charitable,Medical, Educational and Cultural Trust. On 02.07.2010, searchand seizure operations under Section 132 of the Income Tax Act(hereinafter referred to as the 'Act') were carried out by theDepartment on the assessee and certain other related Trusts andindividuals and during the operations, cash amounting toRs.13,17,40,000/- and jewelery weighing 11339.160 grams, alongwith incriminating documents were seized. Subsequent to thesearch, the assessee was issued with notices under Sections153A/153C/142(1) of the Act for the Assessment Years (AYs) 2005-06 to 2011-12. 2.b) In pursuance of the said notices, the assessee filed aSettlement Application under Section 245C of the Act on25.01.2012 before the Income Tax Settlement Commission (ITSC)disclosing additional income of Rs.1,67,00,000/- for the AYs2005-06 to 2010-11. On 07.02.2012, the ITSC rejected the saidapplication under Section 245D(1) of the Act for non-payment oftaxes on the additional income disclosed in the SettlementApplication and did not allow the same to be proceeded with.Thereafter, on 17.04.2012, the assessee filed its returns ofincome for the AYs 2005-06 to 2010-11 and the returns for theAYs 2011-12 were filed on 28.11.2011. 2.b) In pursuance of the said notices, the assessee filed aSettlement Application under Section 245C of the Act on25.01.2012 before the Income Tax Settlement Commission (ITSC)disclosing additional income of Rs.1,67,00,000/- for the AYs2005-06 to 2010-11. On 07.02.2012, the ITSC rejected the saidapplication under Section 245D(1) of the Act for non-payment oftaxes on the additional income disclosed in the SettlementApplication and did not allow the same to be proceeded with.Thereafter, on 17.04.2012, the assessee filed its returns ofincome for the AYs 2005-06 to 2010-11 and the returns for theAYs 2011-12 were filed on 28.11.2011. 2.c) Subsequently on 26.11.2012, the assessee filed anotherSettlement Application under Section 245C of the Act before theITSC, disclosing an additional income of Rs.1.67 Crores for theAYs 2007-08 to 2010-11. Though the assessee had disclosed thesame total income of Rs. 1.67 crores both in the 1[st] and 2[nd]applications, an income of Rs.47 lakhs was deferred in thesecond application for AYs 2007-08 to 2010-11. By an order dated10.12.2012, the ITSC allowed the Settlement Application to beproceeded with under Section 245D(1) of the Act. The reportsunder Section 245D(2B) were called for from the Department andon being satisfied with the conditions stipulated in Section245D(2C) of the Act, the ITSC held that the SettlementApplication covering AYs 2005-06 to 2010-11 cannot be said to beinvalid. On receipt of the report under Rule 9 of the ITSC(Procedure Rules), the following issues were taken up forconsideration:i) Deferment of income admitted before the SettlementCommission to later assessment year;ii) The Assessment Years in which cash of Rs.8,60,00,000seized from the premises of the applicant has to be assessed andthe actual quantum to be assessed; iii) In which applicant's hands the cash of Rs.3,51,00,000/-seized from the office of M/s.Adhiparasakthi Charitable,Medical, Educational and Cultural Trust has to be assessed;iv) In which applicant's hands the cash of Rs.8,00,000seized from the Engineering College run by the Trust has to be assessed; v) Income of the applicant as per seized records notadmitted; 2.d) On consideration of the explanations, the ITSC, by itsimpugned award dated 04.08.2014, settled the first respondent'sincome by accepting the additional income of Rs.1.67 Croresoffered in the Settlement Application and the further income ofRs.6,16,70,923/- disclosed as per order under Section 245D(4) ofthe Act, thereby settling the total income at Rs.20,04,06,714/-.The said award has been challenged by the Department in thepresent Writ Petition. 3. The legal grounds raised in these two Writ Petitions arepredominantly one and the same and therefore with the consent ofboth sides, both the Writ Petitions are disposed of through acommon order. 4. To a preliminary issue raised by this Court with regardto the maintainability of the Writ Petition challenging theAward of the ITSC, Mr.A.P.Srinivas, learned Senior Standingcounsel for the Department, submitted that these Writ Petitionsare maintainable since the decision making process adopted bythe ITSC in these cases are contrary to the procedure prescribedby the Act and hence the Writ Petitions, challenging the awardof the ITSC is sustainable, which proposition has been upheld invarious legal precedents. 3. The legal grounds raised in these two Writ Petitions arepredominantly one and the same and therefore with the consent ofboth sides, both the Writ Petitions are disposed of through acommon order. 4. To a preliminary issue raised by this Court with regardto the maintainability of the Writ Petition challenging theAward of the ITSC, Mr.A.P.Srinivas, learned Senior Standingcounsel for the Department, submitted that these Writ Petitionsare maintainable since the decision making process adopted bythe ITSC in these cases are contrary to the procedure prescribedby the Act and hence the Writ Petitions, challenging the awardof the ITSC is sustainable, which proposition has been upheld invarious legal precedents. 5. Apart from this, the learned Senior Standing counselwould submit that the assessee had not made a full and truedisclosure of their income in the Settlement Application, ascontemplated under Section 245C(1) of the Act and hence theassessee is ineligible for settlement of income, as well as forimmunity from prosecution and penalty. He further submitted thatwhen the first Settlement Application under Section 245C (1) wasrejected, the settlement proceedings abates in view of Section245HA (1) (i) and the Assessing Officer is entitled to use allthe material produced by the Assessee before ITSC. Therefore,when the disclosure of income in the second SettlementApplication was less than the income disclosed in the firstapplication in WP No. 34040 of 2014 and an income of Rs.47 lakhswas deferred in the second application in WP No. 34041 of 2014,disclosure of the income cannot be construed to be a full andtrue disclosure. It is also his submission that since theadditional amount of income tax payable on the disclosed incomein the second Settlement Application has not exceeded, at leastby Rs.50 lakhs as contemplated under proviso (i) of Section 245C(1) of the Act, the second application ought not to have beenentertained by the ITSC. In support of his contentions, thelearned Senior Standing counsel relied on various case laws. 6. Mr.R.Sivaraman, learned counsel for the assesseesubmitted that the grounds raised by the petitioner are not suchof those permissible exceptions to maintain a Writ Petitionagainst the award of the ITSC. Insofar as the claim that therewas no true and full disclosure in the Settlement Application isconcerned, the learned counsel would submit that the reasons forthe non disclosure have been explained and considered by theITSC and therefore, the income disclosed in the secondapplication is deemed to be a full and true disclosure. Withregard to the submission that the second Settlement Applicationhas not exceeded Rs.50 lakhs is concerned, the learned counselstated that it is factually an incorrect statement and that theadditional income tax payable were more than Rs. 50 lakhs, asevidenced in the Settlement Application itself. The learnedcounsel also relied on a few decisions to substantiate hiscounter arguments, which I will deal with later. 7. I have given my careful and anxious consideration to thesubmissions made by the respective counsels. 8. It is a settled proposition of law that the scope ofinterference to an award of the ITSC by invoking Article 226 ofthe Constitution of India is very limited to such awards, thatare in violation to the provisions of Act. In other words,judicial review would be concerned with the decision-making-process alone and not the decision. The issue as to whether theawards of the ITSC or the decision making process culminating tothe award, are in violation of the provisions of the Act or not,could be ascertained if the grounds raised by the petitioner,other than the ground of maintainability of the writ petition,are addressed first. 7. I have given my careful and anxious consideration to thesubmissions made by the respective counsels. 8. It is a settled proposition of law that the scope ofinterference to an award of the ITSC by invoking Article 226 ofthe Constitution of India is very limited to such awards, thatare in violation to the provisions of Act. In other words,judicial review would be concerned with the decision-making-process alone and not the decision. The issue as to whether theawards of the ITSC or the decision making process culminating tothe award, are in violation of the provisions of the Act or not,could be ascertained if the grounds raised by the petitioner,other than the ground of maintainability of the writ petition,are addressed first. 9. In Writ Petition No. 34040 of 2014, the predominantground raised by the petitioner is to the effect that in thefirst Settlement Application under Section 245C(1), the assesseehad disclosed an income of Rs.11,50,09,902/- for the assessmentyears 2007-08 to 2011-12, whereas in the second SettlementApplication, an income of Rs.9,65,01,102/- alone was disclosed,which is less than the total additional income disclosed in theprevious Settlement Application and therefore, there was no fulland true disclosure of his income as required under Section 245Cof the Act, which is a pre-requisite for maintaining theapplication. Since due process as provided under the provisionsof the Act was not adopted for making the final decision, theimpugned award of the ITSC requires to be quashed. 10. Likewise, in Writ Petition No. 34041 of 2014, a similarground of non-disclosure of full and true income has been taken,stating that, though the assessee had disclosed the same total https://hcservices.ecourts.gov.in/hcservices/ income of Rs. 1.67 crores in the 1[st] and 2[nd] applications, anincome of Rs.47 lakhs was deferred in the second application forAYs 2007-08 to 2010-11. 11. Section 245C of the Act enables the assessee to file anapplication at any stage of a case relating to him with a “fulland true disclosure of his income”, which income was notdisclosed before the Assessing Officer. It is also mandated thatthe application should disclose the manner in which suchundisclosed income was derived and the additional amount ofincome tax payable on such income requires to be disclosed. Onreceipt of the application, the ITSC calls for a report from theCommissioner under Section 245D(2B) of the Act and on the basisof the material contained in the report and having regard to thenature and circumstances of the case or complicity of theinvestigation involved therein, it can either reject anapplication or allow the application to be proceeded with, asprovided in Section 245D(1) of the Act. 12. There is no bar for filing of a second applicationbefore the ITSC, when the earlier application was ‘not allowed’to be proceeded with under Section 245D(1) of the Act. Section245K(2) of the Act prohibits a subsequent application, only whenthe assessee had earlier made an application under Section 245Cand such an application has been ‘allowed’ to be proceeded withunder Section 245D(1). In contrast, there is no provision underthe Income Tax Act, disbarring the assessee from subsequentlymaking an application after his original application was‘rejected’ under Section 245D(1) and ‘not allowed’ to beproceeded with. 13. The fundamental requirement of the application underSection 245C(1) of the Act is that the full and true disclosureof the income has to be made, along with the manner in whichsuch income was derived. What requires to be taken into accountby the ITSC is as to whether the assessee had explained themanner in which the additional income which was not disclosedbefore the Assessing Officer, has been disclosed in theapplication or not and whether, such a disclosure is a full andfair disclosure. This would basically be a factual aspect. 13. The fundamental requirement of the application underSection 245C(1) of the Act is that the full and true disclosureof the income has to be made, along with the manner in whichsuch income was derived. What requires to be taken into accountby the ITSC is as to whether the assessee had explained themanner in which the additional income which was not disclosedbefore the Assessing Officer, has been disclosed in theapplication or not and whether, such a disclosure is a full andfair disclosure. This would basically be a factual aspect. 14. The case of the Department in the Writ Petition No.34040 of 2014 is that there was a reduction of the additionalincome disclosed in the first application, when compared to thesecond application, by Rs.1,84,99,800/- for the AYs 2007-08 to2011-12. Likewise, in Writ Petition No. 34041 of 2014, anincome of Rs.47 lakhs was deferred in the second application forAYs 2007-08 to 2010-11. The assessee had submitted theirexplanations before the ITSC with regard to this discrepancy bystating that they had received certain amounts of anonymous https://hcservices.ecourts.gov.in/hcservices/ voluntary donations during the relevant assessment years andthat, they were later able to locate necessary proof of suchanonymous donations in 400 to 500 cases and thus, these amountswere offered to tax as additional undisclosed income in thesecond application before the ITSC. Hence the discrepancy. 15. In order to settle this issue, the ITSC had called forestimations from both the Department as well as the assessee andthe basis for arriving at such estimations. After muchdeliberations, it was mutually decided that donations of lessthan Rs.20,000/- in cash will be accepted. Accordingly, both theparties had provided details of working as hereunder: Details provided by ASSESSEE: The details given by the department came to be accepted by ITSCand while the donations of less than Rs.20,000/- amounting toRs. 27,96,90,547/- was allowed, donations of above Rs.20,000/-amounting to Rs.8,17,50,380/- was added back for want of fulland complete details. Accordingly, the first respondent's totalincome of Rs 20,67,65,123/- came to be settled through theimpugned award. 16. Thus, it would be seen that the ITSC, had determined thesuppression in income, as well as the anonymous donations, basedon the inputs of both the parties and had thus rendered afactual finding. The settlement of the additional income wasalso on the basis of mutual consent by both the Assessee, aswell as the Department, to accept cash donations of less thanRs.20,000/-. Such a factual finding of the ITSC, cannot be interfered with, by this Court by exercising its powers underArticle 226 of the Constitution of India. Above all, when themanner in which the additional income derived has been disclosedin the application under Section 245C of the Act and the samehas been considered by the ITSC based on the inputs given byboth the parties and on mutual agreement to accept cashdonations of less than Rs.20,000/-, it cannot now be said atthis stage, that the application was bereft of full and truedisclosure of the assessee's income. 17. Mr. A.P. Srinivas, learned Senior Standing counsel forthe Department placed reliance on the decision of the Hon'bleSupreme Court in Ajmera Housing Corporation Vs. Commissioner ofIncome Tax reported in 2010 (326) ITR 642 (SC) and submittedthat, disclosure of full and true particulars of undisclosedincome is a pre-requisite for a valid application under Section245C(1) and since the disclosure of additional income made inthe first Settlement Application is less than the disclosuremade in the second application, the assessee has failed todisclose the full and true particulars and therefore the secondapplication ought to have been rejected by the ITSC, at theinception itself. 17. Mr. A.P. Srinivas, learned Senior Standing counsel forthe Department placed reliance on the decision of the Hon'bleSupreme Court in Ajmera Housing Corporation Vs. Commissioner ofIncome Tax reported in 2010 (326) ITR 642 (SC) and submittedthat, disclosure of full and true particulars of undisclosedincome is a pre-requisite for a valid application under Section245C(1) and since the disclosure of additional income made inthe first Settlement Application is less than the disclosuremade in the second application, the assessee has failed todisclose the full and true particulars and therefore the secondapplication ought to have been rejected by the ITSC, at theinception itself. 18. The facts involved in Ajmera Housing Corporation arethat the Assessee originally filed an application under Section245C(1) of the Act before the Commission, disclosing an incomeof Rs.1.94 Crores, in addition to the income declared in thereturns submitted by them earlier. The Settlement Commissionercalled for a report from the Commissioner in terms of Section245D(1) r/w. Rule 6. The Commissioner, while objecting to theentertainment of the application through settlement, claimedthat the disclosure has not been full and true. The Assesseethen filed a revised Settlement Application by declaring anadditional income by Rs.11.41 Crores. After an order underSection 245D(1) was passed and the cases commenced, the Assesseemade a third disclosure of undisclosed income of Rs.2.76 Crores.Subsequently, another disclosure of Rs.1 Crore was made for thefourth time, by revising the statement of facts and ultimately,the Settlement Commissioner passed a final order under Section245D(4). It is in this background, that the Hon'ble SupremeCourt had held that the Scheme of Chapter XIX-A of the Act doesnot contemplate revision of the income disclosed in theapplication and thus, the natural corollary is thatdetermination of income by the Settlement Commission hasnecessarily to be with reference to the income disclosed in theapplication. 19. The Assessee in Ajmera Housing Corporation had revisedtheir additional income in the application under Section 245C(1), on three occasions after their first disclosure, at different stages of the case. The mode of comparison adopted bythe Hon’ble Supreme Court to determine the failure to disclosethe full and true income, was between the income/revised incomedisclosed in the settlement application and the income disclosedin the returns filed before the Assessing Officer. In thisbackground, the Hon'ble Supreme Court had held that there is nostipulation for revision of an application under the Scheme ofChapter XIX-A and if such revision is permitted, it would amountto withdrawal of the original application, which isimpermissible in view of sub-section (3) of Section 245D. Therelevant portion of the order reads thus:- different stages of the case. The mode of comparison adopted bythe Hon’ble Supreme Court to determine the failure to disclosethe full and true income, was between the income/revised incomedisclosed in the settlement application and the income disclosedin the returns filed before the Assessing Officer. In thisbackground, the Hon'ble Supreme Court had held that there is nostipulation for revision of an application under the Scheme ofChapter XIX-A and if such revision is permitted, it would amountto withdrawal of the original application, which isimpermissible in view of sub-section (3) of Section 245D. Therelevant portion of the order reads thus:- “26. .... It is plain from the language of sub-section (4) of Section 245D of the Act that thejurisdiction of the Settlement Commission to pass suchorders as it may think fit is confined to the matterscovered by the application and it can extend only tosuch matters which are referred to in the report of theCommissioner under sub-section (1) or sub-section (3)of the said Section. A "full and true" disclosure ofincome, which had not been previously disclosed by theassessee, being a pre-condition for a valid applicationunder Section 245C(1) of the Act, the scheme of ChapterXIX-A does not contemplate revision of the income sodisclosed in the application against item No. 11 of theform. Moreover, if an assessee is permitted to revisehis disclosure, in essence, he would be making a freshapplication in relation to the same case by withdrawingthe earlier application. In this regard, Section 245C(3) of the Act which prohibits the withdrawal of anapplication once made under sub-section (1) of the saidSection is instructive in as much as it manifests thatan assessee cannot be permitted to resile from hisstand at any stage during the proceedings. Therefore,by revising the application, the applicant would beachieving something indirectly what he cannot otherwiseachieve directly and in the process rendering theprovision of sub-section (3) of Section 245C of the Actotiose and meaningless. In our opinion, the scheme ofsaid Chapter is clear and admits no ambiguity. ....28. As afore-stated, in the scheme of Chapter XIX-A, there is no stipulation for revision of anapplication filed under Section 245C(1) of the Act andthus the natural corollary is that determination ofincome by the Settlement Commission has necessarily tobe with reference to the income disclosed in theapplication filed under the said Section in theprescribed form.” 20. In the present case, the fact remains that theassessee’s first application under Section 245C(1) was rejectedby an order under Section 245D(1) for non-payment of additionalamount of income tax on the additional income disclosed andaccordingly did not allow the same to be proceeded with.Thereafter, the assessee had filed its returns of income andthen filed the second Settlement Application under section 245Cof the Act. As observed earlier, in view of Section 245K(2),there is no bar for filing of a second application, when theearlier application was rejected under Section 245D(1). While inAjmera Housing Corporation, the factor determining full and truedisclosure was the comparison between repeated revision ofincomes in the application under Section 245C vis-à-vis theincome declared in the returns filed by that assessee earlier,the present facts are totally divergent wherein the Departmentis attempting to point out the difference in the disclosures ofincome of the assessee, between the first and secondapplications. Likewise in Ajmera Housing Corporation, while theCommissioner had raised objections for non-disclosure of fulland true income at the stage of Section 245D(1) proceedings, theDepartment in the present case, had not raised any objections,either at the stage of Section 245D(1) or 245D(2C) proceedingsand such objections are now raised for the first time in theseWrit Petitions. 21. Thus, when the assessee, in the second application, haddisclosed such income which was not disclosed before theAssessing Officer and had set forth the manner in which suchadditional income has been derived and had not repeatedlyrevised his disclosure of income in the application during thependency of the proceedings and the Department having failed toraise any objections for non-disclosure of full and true income,either at the stage of Section 245D(1) or 245D(2C) of theproceedings, the ratio decidendi in Ajmera Housing Corporation'scase (supra) may not be applicable to the present cases, sinceit is distinguishable on facts. 22. For the same proposition, the learned Senior Standingcounsel for the Department placed reliance on V.M.Shaik MohammedRowther V. ITSC [1999 (236) ITR 581 (Mad)] , and ACE InvestmentsLtd., V. ITSC [2003 (264) ITR 571 (Mad) and Canara Jewellers V.ITSC [2009 (315) ITR 328 (Mad DB). 23. In view of the discussions on the facts of the presentcase and the manner in which the assessee had made anapplication with full and true disclosure of income and themanner in which such a major portion of the income has beenderived, these three decisions, which are on the same ratio asthat of the decisions of the Hon'ble Supreme Court in AjmeraHousing Corporation, may not help the Department. Incidentally, the ratio laid down in Canara Jewellers (supra) relied upon bythe Department, came to be distinguished by a Hon'ble DivisionBench of the Bombay High Court in Principal Commissioner ofIncome Tax V. Income Tax Settlement Commission (ITSC) reportedin 2017 (79) taxmann.com 186 (Bombay) and rendered theproposition “sub-silento” in the following manner:- “7. This, reading of the Madras High Court'sdecision in Kanara Jewellers (supra) on the partof the Petitioner does not appear to be correctas evident from the facts arising before it. TheAssessee therein had filed an application forsettlement, declaring undisclosed income. TheCommission allowed the application for settlementby an order under Section 245D(4) of the Actwhile enhancing the amount declared asundisclosed income in its application forsettlement. This order was challenged by theAssessee before the learned Single Judge of theMadras High Court on the ground that Commissionhas no jurisdiction to enhance the amountsdisclosed/ declared in the Settlement Applicationwhile settling the dispute under Chapter XIX-A ofthe Act. The Assessee then S.R.JOSHI 9 of 28 wp-2562-2015 submitted that the Commission haseither to accept the amounts declared in theSettlement Application or reject it, but itcannot increase it. The learned Single Judge ofthe Madras High Court rejected the Petition onthe ground that there is no provision in the Act,prohibiting the Commission from arriving at anincome higher then that declared in theapplication for settlement. Being aggrieved, theAssesssee carried the issue in appeal before theDivision Bench, which allowed its appeal. This byholding that the Commission had come to a findingthat there is no full and true disclosure of theAssessee's income in its application forsettlement. Therefore, on the basis of the abovefinding that there is no true and fulldisclosure, the Court held that the applicationfor settlement had to be rejected. The rejectionof the application for settlement by the DivisionBench was not on the basis that the amountsdisclosed in settlement proceedings is a ceilingfor the quantum of settlement. Therefore, thebasis of the Madras High Court's decision is notpremised on the fact that the income of thePetitioner determined for settlement is higherthen that disclosed. The submission of thePetitioner that the above decision leads to an inescapable conclusion that settlement of incomeat a higher figure than that disclosed inSettlement Application, is evidence of failure tomake a full and true disclosure in the SettlementApplication made by the Applicants, cannot beaccepted. 8. In any case, if we read the Madras HighCourt's order in Kanara Jewellers (supra) assuggested by the Petitioner, then it appears tous to have been rendered sub-silento. This is soas attention of the Court was not invited to sub-section 6-A of Section 245-D of the Act. Thissub- section specifically provides that where anytax payable in pursuance of an order passed underSection 245-D(4) of the Act, is not paid within35 days from receipt of the order of theCommission, than interest on the tax sodetermined, would become payable by theApplicant. Thus, the aforesaid provisions clearlybring out the fact that the Commission couldsettle the dispute between the parties at ahigher income than the income disclosed by theAssessee in its application for settlement. It isonly in such a case that tax become payable inpursuance of the order passed under Section 245D(4) of the Act, as otherwise, the Applicant hasto pay tax payable on the income disclosed in itsapplication for settlement along with interestbefore filing its application under Section 245-C(1) of the Act with the Commission. Thus, thedecision of the Madras High Court in KanaraJewellers (supra) having not considered the abovestatutory provisions is rendered sub-silento.” 24. As stated earlier, with regard to the discrepancy of theincome declared between first and second settlementapplications, the assessee had explained before the ITSC aboutthe manner in which the income was derived, by attributing thediscrepancies to anonymous voluntary donations, the proof ofwhich were subsequently located. As such, the assessee hadexplained the sources of their income and such an explanationwas also accepted by the ITSC. These factual issues cannot bereviewed by this Court under Article 226 of the Constitution ofIndia. In these circumstances, a Hon'ble Division Bench of theBombay High Court in the case of Commissioner of Income Tax-Central-I V. ITSC reported in 2016 (65) taxmann.com 40 (Bombay),had held as follows:- “11. So far as the other objection isconcerned viz failure to disclose the manner inwhich this income has been derived, we find that the application for settlement sufficientlyexplains the source of the income being declared.The application mentions how the additionalincome which is being disclosed has been derivedi.e. on application of the ALP in respect ofexports made to its Associated Enterprise vizholding company. We do not see any merit in theabove submission on behalf of the petitioner.” 25. In Commissioner of Income Tax (C) -III Vs. Gopal Guptareported in 2014 (46) taxmann.com 312 (Delhi), a Hon’bleDivision Bench of the Delhi High Court had rejected thecontentions of the Department that the assessee had not given afull and true disclosure by holding that the interpretations ofthe assessee has been accepted by the Settlement Commission andtherefore, the Hon'ble Division Bench was of the view that thecontentions of the Department , that the assessee had indulgedin misrepresentation and not made a full and true disclosure,was rejected. In this background, the Bombay High Court had heldthat such factual issues cannot be reviewed under Article 226 ofthe Constitution of India. The relevant portion of the orderreads thus:- 25. In Commissioner of Income Tax (C) -III Vs. Gopal Guptareported in 2014 (46) taxmann.com 312 (Delhi), a Hon’bleDivision Bench of the Delhi High Court had rejected thecontentions of the Department that the assessee had not given afull and true disclosure by holding that the interpretations ofthe assessee has been accepted by the Settlement Commission andtherefore, the Hon'ble Division Bench was of the view that thecontentions of the Department , that the assessee had indulgedin misrepresentation and not made a full and true disclosure,was rejected. In this background, the Bombay High Court had heldthat such factual issues cannot be reviewed under Article 226 ofthe Constitution of India. The relevant portion of the orderreads thus:- “15. From the above, it is evident that theSupreme Court observed that the High Court oughtnot to gone into a factual issue while exercisingwrit jurisdiction and should not have substitutedits opinion against the opinion of the SettlementCommission. From all these decisions, it isabundantly clear that the scope of review underArticle 226 of the Constitution insofar as anorder passed by the Settlement Commission underSection 245D(4) of the Income Tax Act isconcerned, is a very limited one. This Courtcertainly cannot substitute its view in place ofthe Settlement Commission particularly on pointof interpretation of a particular document.Interference can only be made if there is a faultin the decision making process and not with thedecision itself. Even if this Court feels that itwould have arrived at a different decision, itcannot interfere with the conclusion arrived atby the Settlement Commission because this Courtdoes not sit in appeal over the decision of theSettlement Commission. 16.In this context, it is to be seen thatthe only point urged by the learned counsel forthe Revenue is that the interpretation placed onthe receipts was erroneous. The interpretationwhich has been placed by the Settlement Commission on the documents in question, first ofall, results in a finding of fact which, as wehave seen, cannot be interfered with. Andsecondly, the interpretation is not so outlandishto be categorized as arbitrary or perverse so asto call for interference. We make it clear thatthe interpretation sought to be placed by theRevenue may be a possible interpretation but, so,too, would be the interpretation placed by theSettlement Commission which has also beenespoused by the learned counsel for respondentNo.1. In such a situation no interference withthe Settlement Commission's order is warranted.” 26. A similar view was also taken by the Kerala High Courtin Commissioner of Income Tax (Central), Kochi V. SettlementCommission (It & WT) reported in 2014 (51) taxmann.com 351(Kerala), by placing reliance on the decision of the Hon'bleSupreme Court and Karnataka High Court, in the following manner:-“The Karnataka High Court in N.Krishnan v.Settlement Commission [1989] 180 ITR 585/47Taxman 294 observed as folows at page 597 : “The provision for settlement would showthat it is in the nature of statutoryarbitration to which a person may submit himselfvoluntarily. Hence, many of the grounds on whichan arbitration award could be set aside wouldnot be available in view of the nature andjurisdiction of the Settlement Commission. Adecision of the Settlement Commission could beinterfered with only (i) if grave proceduraldefects such as violation of the mandatoryprocedural requirements of the provisions inChapter XIX-A of the Income Tax Act, 1961,and/or violation of the rules of natural justiceare made out; or (ii) if it is found that thereis no nexus between the reasons given and thedecision taken by the Settlement Commission. Thecourt cannot interfere either with an error offact or error of law alleged to have beencommitted by the Settlement Commission.” More recently, the Supreme Court in Unionof India V. Indo-Swift Laboratories Ltd., [2011(4) SCC 633] observed as follows at page 643: “An order passed by the SettlementCommission could be interfered with only if thesaid order is found to be contrary to any provisions of the Act. So far as the findings offact recorded by the Commission or question offacts are concerned, the same is not open forexamination either by the High Court or by theSupreme Court. In the present case the order ofthe Settlement Commission clearly indicates thatthe said order, particularly, with regard toimposition of simple interest @ 10% per annumwas passed in accordance with the provisions ofRule 14 but the High Court wrongly interpretedthe said Rule and thereby arrived at anerroneous finding. So far as the second issuewith respect to interest on Rs.50 lakhs isconcerned, the same being a factual issue shouldnot have been gone into by the High Courtexercising the writ jurisdiction and the HighCourt should not have substituted its ownopinion against the opinion of the SettlementCommission when the same was not challenged onmerits.” Hence, it is well settled that the power ofjudicial review is not to be exercised to decidethe issue on facts or on an interpretation ofthe documents available before the Court. Itfollows, therefore, that in the instant case,the enquiry by this Court can only be withregard to whether or not the SettlementCommission exercised a jurisdiction that it didnot have or, alternatively, if it did have thejurisdiction, whether it erred in the exerciseof that jurisdiction. In the latter event, thisCourt would also have to bear in mind the natureof the jurisdiction exercised by the SettlementCommission, which is akin to a statutoryarbitration.” 27. A perusal of the award of the ITSC in the present casesreveal that the procedures under Section 245C & 245D of the Acthave been duly followed and the terms of the Settlement havebeen arrived at on mutual acceptance, after perusing the offersmade by the Department and the Assessee. Hence, it cannot besaid that the award of the ITSC is in violation of the statutoryprovisions or the decision making process. If that be so, theground raised by the Department in the present Writ Petition aremerely factual in nature and since there are no procedurallapses on the part of the ITSC in adjudicating and arriving atthe terms of the settlement. Hence, by applying the ratio heldin the aforesaid decisions, the Writ Petitions challenging suchfactual aspects, cannot be sustained. 28. There is yet another crucial aspect of the matter. The“full and true disclosure of the income of the assessee” in theapplication under Section 245C of the Act, correlates to suchincome which has not been disclosed before the Assessing Officerand not to the income disclosed in the first respondent’s firstSettlement Application that was rejected under Section 245D(1)and not allowed to be proceeded with for non-payment of taxes onthe additional income disclosed in the said application. Forconvenience, Section 245C and 245D(1) of the Income Tax Act areextracted hereunder: 28. There is yet another crucial aspect of the matter. The“full and true disclosure of the income of the assessee” in theapplication under Section 245C of the Act, correlates to suchincome which has not been disclosed before the Assessing Officerand not to the income disclosed in the first respondent’s firstSettlement Application that was rejected under Section 245D(1)and not allowed to be proceeded with for non-payment of taxes onthe additional income disclosed in the said application. Forconvenience, Section 245C and 245D(1) of the Income Tax Act areextracted hereunder: Section 245C. (1) An assessee may, at anystage of a case relating to him, make anapplication in such form and in such manner asmay be prescribed, and containing a full and truedisclosure of his income which has not beendisclosed before the Assessing Officer, themanner in which such income has been derived, theadditional amount of income-tax payable on suchincome and such other particulars as may beprescribed, to the Settlement Commission to havethe case settled and any such application shallbe disposed of in the manner