This Court In Major Metals Ltd v. Union Of India And Ors. 359 Itr 450 While Dealing With The Extent Of Judicial Review In Respect

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.798 OF 2014 Commissioner of Income Tax-25 and anr.vs. Income Tax Settlement Commissioner,Additional Bench II and ors. ..Petitioners. ..Respondents. Mr. Arvind Pinto for the Petitioners.Mr. A.K.Jasani for the Respondents. CORAM : M. S. SANKLECHA AND M.S. SONAK, JJ.DATE : O3 NOVEMBER 2014 DATE : PC: This petition under Article 226 of the Constitution of India challenges the order dated 19 August 2013 passed by the Income Tax Settlement Commission (Settlement Commission) under Section 245D(4) of the Income Tax Act, 1961 (“the Act”). By the impugned order the assessment of the respondent assessee was settled for A.Y.2010-11, 2011-12 and 2012-13 under Chapter XIXA of the Act. The grievance of petitioner revenue is that the settlement by the impugned order is bad as the impugned order ignores the petitioner's objection that the assessee has not made true and full disclosure of its Income to the Settlement Commission in its application and also at the time of passing the impugned order. 2)This Court in Major Metals Ltd. vs. Union of India and ors. 359 ITR 450 while dealing with the extent of judicial review in respect of order passed by the Settlement Commission observed as under:- “Before we deal with the merits of the challenge, it must be noted at the outset that the extent of judicial review in a determination made by the Settlement Commissioner must fall with the parameters settled by decided cases. In Jyotendrasinhji vs. S.I. Tripathi (1993) 201 ITR 611 (SC); AIR 1993 SC 1991 the Supreme Court emphasized that the only ground upon which an order passed by the Settlement Commission can be interfered with is that the order of the Commission is contrary to the provisions of the Act and that such contravention has prejudiced the appellant. This would be apart from grounds of bias, fraud or malice which would constitute a separate category. The Supreme Court held as follows ( Page 623 of 211 ITR). The scope of enquiry, whether by the High Court under article 226 or by this court under article136 is also the same-Whether the order of the Commission is contrary to any of the provisions of the Act and if so, apart from ground of bias, fraud and malice which, of course, constitute a separate and independent category, has it prejudiced the petitioner appellant. Reference in this behalf may be had to the decision of this court in R.B.Shreeram Durga Prasad and Fatechand Nursing Das vs. Settlement Commission (IT and WT) (1989) 176 ITR 169 (SC); AIR 1989 SC 1038 which too was an appeal against the orders of the Settlement Commission. Sabyasachi Mukharji, J. speaking for the Bench comprising himself and S.R. Pandian, J. observed that in such a case this court is concerned with the legality of procedure followed and not with the validity of the order. The learned Judge added judicial review is concerned not with the decision but when the decision making process. Reliance was placed upon the decision of the House of Lords in Chief Constable of the Chief Constable of the N.W. Police v. Evans(1982) 1 WLR 1155 (HL). Thus, the appellate power under article 136 was equated to power of judicial review, where the appeal is directed against the orders of the Settlement Commission. For all the above reasons, we are of the opinion that the only ground upon which this Court can interfere in these appeals is that order of the Commission is contrary to the provisions of the Act and that such contravention has prejudiced the appellant.” Evans(1982) 1 WLR 1155 (HL). Thus, the appellate power under article 136 was equated to power of judicial review, where the appeal is directed against the orders of the Settlement Commission. For all the above reasons, we are of the opinion that the only ground upon which this Court can interfere in these appeals is that order of the Commission is contrary to the provisions of the Act and that such contravention has prejudiced the appellant.” The same principle has since been reiterated in a more recent judgment rendered in relation to the powers of the Settlement Commission constituted under the Central Excise Act in Union of India vs. Ind Swift Laboratories Ltd. (2011) 40 VST 1(SC); (2011) 7 GSTR 348 (SC); (201`1) 4 SCC 635 by the Supreme Court (page 10 of 40VST and page 357 of 7 GSTR); An order passed by the Settlement Commission could be interfered with only if the said order is found to be contrary to any provisions of the Act. So far as the findings of fact recorded by the Commission or question of facts are concerned, the same is not open for examination either by the High Court or by the Supreme Court.” 3)Keeping the above parameters in mind we shall now examine the grievance of the petitioner. It is submitted by Mr. Pinto, learned Counsel for the petitioner that the revenue had before the Settlement Commission objected to the settlement as the assesse had not made in its settlement petition full and true disclosure of its income . It is the petitioner's case that the amount shown as purchases to the extent of Rs.55.92 lacs of ploy bags be added to the petitioner's income under Section-69C of the Act. ( A website published by the Sales Tax department who had declared its supplier not to be genuine but mere name lender in 2004). 4)We find that that the aforesaid submission of the revenue has been considered by the Tribunal in Paragraphs 10 to 12 of the impugned order. After recording the submissions of the petitioner the impugned order holds that the explanation given by the applicant is reasonable as the applicant had based his disclosures of additional income by adopting the higher GP rate. Consequently, the alleged suspicious purchases was of no relevance. Besides, it also records that the Revenue does not disputes that the applicant had made actual purchases of poly bags as evidenced by the Rule 9 report of the Commissioner of income Tax. The petitioner's submission that Section 69C of the Act has to be invoked was on the ground that the suppliers were not available was also found untenable in view of the decision of this Court in CIT vs. Nikunj Eximp Enterprises (P) Ltd. 35 Taxman 384 (Bombay)/216 Taxman 171 wherein it was held that merely because supplier of goods had not appeared before the Assessing Officer it would not lead to the conclusion that no purchases were made by the petitioner. 5)In view of the fact that the Tribunal has considered the submissions of the petitioners as well as assessee and has recorded a finding of fact that the purchases of the assessee were genuine. Consequently no occasion to invoke Section 69C of the Act can arise. Moreover, this finding of fact has not been shown to be perverse. In the circumstances, we find no reason to interfere with the order of the Settlement Commission passed under Section 245D(4) of the Act. ASN 6)Accordingly, the petition is dismissed with no order as to costs. (M. S. SONAK, J.) (M.S. SANKLECHA, J.)