Wtax/1555/2018 Of Indu Srivastava v. Income Tax Settlement Commission

Court No. - 3Case :- WRIT TAX No. - 1555 of 2018 Petitioner :- Indu SrivastavaRespondent :- Income Tax Settlement CommissionCounsel for Petitioner :- Ritvik UpadhyaCounsel for Respondent :- S.S.C.,Anant Kumar Tiwari,S.C. I.T. Hon'ble Naheed Ara Moonis,J.Hon'ble Saumitra Dayal Singh,J. Heard Shri V.K. Upadhya, learned Senior Counsel assisted by ShriRitvik Upadhya, learned counsel for the petitioner, Shri GauravMahajan, learned counsel for the Revenue and Shri Anant KumarTiwari, learned counsel for the Union of India. Challenge has been raised to the order dated 27.09.2018 passed by theIncome Tax Settlement Commission, Additional Bench-II, NewDelhi. By that order passed under Section 245 (D)(1) of the IncomeTax Act, 1961 (hereinafter referred to as 'Act'), the Income TaxSettlement Commission (hereinafter referred to as 'SettlementCommission') has summarily rejected the petitioner's settlementapplication, at the first stage itself. The reason to reject the applicationis one, being the manner of earning the undisclosed income has notbeen satisfactorily explained. Relevant to above, it may be noted that the present petitioner Mrs.Indu Srivastava, was subjected to search proceeding under Section132 of the Act on 19.04.2017 and 20.04.2017, at Noida. During thecourse of that search, cash of Rs. 10,75,23,000/- was discovered ather residence. Of that, Rs. 10,74,91,000/- was seized. Also, jewellery,documents and certain other items were seized in the course of thatsearch. Parallel search was also conducted in the case of the husbandof the petitioner Mr. Keshav Lal on 19.04.2017 and 20.04.2017, at Kanpur. However, that search proceedings did not lead to any furtherseizure. During the course of the search, the statement of the presentpetitioner was also recorded under Section 132 of the Act with respectto the cash found and seized from her possession. At that stage, thepetitioner appears to have explained the cash discovered as partlybelonging to herself, partly to her daughter and partly by way of cashkept with her by certain friends/acquaintance. As to the jewellery, the petitioner claimed the same, having beenreceived from her father-in-law and her mother-in-law. Some part ofthe jewellery was explained as belonging to her daughters, lying withher for safe custody. Upon conclusion of the search, the petitioner wasagain summoned under Section 131 of the Act, wherein, she appearsto have reiterated her statement recorded during the search. At thesame time, it is the case of the petitioner that during the secondstatement, thus recorded, she had made a statement to the AssessingOfficer explaining the cash discovered belonging to three personswith whom, she had entered into a business arrangement to set up ajoint venture enterprise. A Memorandum of Agreement is alsoclaimed to have been produced by her. However, it is the case of thepetitioner that neither that part of her statement was recorded underSection 131 of the Act nor the documents namely the Memorandumof Agreement received on record. Therefore, the petitioner furtherclaims to have sent the same to the Assessing Authority by speed poston 21.09.2017. In such facts, the petitioner was visited with an assessment noticeunder Section 153 A of the Act. She filed her return thereto declaringnil income. While the assessment proceedings were thus pending, the petitionerfiled her application before the Settlement Commission on In such facts, the petitioner was visited with an assessment noticeunder Section 153 A of the Act. She filed her return thereto declaringnil income. While the assessment proceedings were thus pending, the petitionerfiled her application before the Settlement Commission on 19.09.2018, for the first time, disclosing hither to undisclosed incomeof Rs. 13,16,94,000/- derived by her during the A.Y. 2012-13 to 2018-19. She further disclosed tax payable on the additional income thusdeclared as Rs. 4,46,43,758/-. As extracted in the order itself, thepetitioner disclosed three sources of her undeclared income. First, itwas explained that though the petitioner had earlier disclosed thebusiness income derived from an entity M/s SIB International whichwas at Noida engaged in the business of AMC on softwares andservices etc., the petitioner further claimed another source of incomefrom jewellery designing etc., that she carried out under the umbrellaof M/s SIB International. In that regard, she further claimed to havederived the income from commission from the sale of jewellery. As tothe third source of undeclared income, the petitioner disclosed havingentered into the Memorandum of Agreement dated 27.3.2017 withMr. Indravardan G Patel, Mrs. Bindu D. Trivedi and Mr. Pravin K.Patel to start a new business of sole selling agency of the principalnamely M/s RoyalRatna Edible Oils Pvt. Ltd, a company engaged inthe manufacture of Cotton seed oil and palm oil. It was the furthercase of the petitioner that the capital to start the new business was tobe contributed by the above named persons being Rs. 4 crores each tobe contributed by Mr. Indravardan G. Patel and Mrs. Bindu D. Trivediand a further Rs. 6 crores to be contributed by Mr. Pravin K. Patel.The petitioner's contribution was confined to Rs. 1 crore. Relyingupon clause 3.7 of the said Memorandum of Agreement, it wasfurther disclosed that a sum of Rs. 10 crores and 50 lakhs had beencontributed by the aforesaid Mr. Indravardan G Patel, Mrs. Bindu D.Trivedi and Mr. Pravin K. Patel being Rs. 2.5 crores, 2.5 crores andRs. 5.5 crores, in cash. That amount was disclosed to have beendeposited with the petitioner for the purpose specified in theMemorandum of Agreement entered between the parties. Though, the money did not belong to the petitioner, however, as to the manner ofher undeclared income arising therefrom, it was explained that theaforesaid parties who had contributed to the capital required in thenew business had, disowned their connection to it, inasmuch,according to the petitioner, they were not coming forward to claimthat money before the Income Tax Authority, occasioned by theseizure of the same in the proceedings carried out against thepetitioner. Therefore, the petitionerdisclosed the manner in which shecame to own that money and therefore offered it as her income beforethe Settlement Commission. As to the documentary evidence, it does appear that a voluminousdocuments running into 688 pages in two volumes were submittedbefore the Settlement Commission containing the details ofassessment records of the entity M/s SIB International to establish itsgenuineness and the income derived therefrom, by the petitioner.Further, the petitioner produced before the Settlement Commissionthe will deed executed by her father-in-law late Shiv Shankar Lal withrespect to the Jewellery disclosed by her. She also placed on recordthe copies of invoices to establish the sale of jewellery and alsoearning commission from the jewellery business. Certain receipts andother documents have also been placed on record. Copies of theMemorandum of Agreement dated 27.03.2017 claimed to have beensigned by all the parties to the agreement was also placed before theSettlement Commission. In such facts, the matter came up for consideration before theSettlement Commission. At the first stage of entertainment of thatapplication, the commission after taking note of the disclosure madebefore it, has proceeded to reject the application primarily on asolitary reasoning that the manner of acquiring the undeclared income has not been explained by the petitioner. While dealing with theundeclared income acquired from the business of M/s SIBInternational, the Settlement Commission has observed that thepetitioner has disclosed the undeclared income of Rs. 25 lakhs eachfor the A.Y. 2012-13 to A.Y. 2016-17. Since the petitioner did notproduce the record of earning of such income indicating the mannerand source either from the material seized or otherwise, theSettlement Commission has concluded that the manner of earning ofthe income Rs. 1.25 crores was not explained. As to the undisclosed income, declared by the petitioner, from thesale of jewellery for Rs. 61.92 lakhs during the A.Y. 2013-14, Rs.45.83 lakhs for the A.Y. 2016-17 and jewellery worth Rs. 3.3 croresfound in her possession, the Settlement Commission has recorded thatthe evidence to establish the time and purchase of such jewellery hasnot been disclosed by the petitioner. Though, the SettlementCommission presumed that such jewellery had been generated fromunknown activities. However, the manner of the unaccounted moneywas observed to be unexplained. As to the disclosure of cash of Rs. 10.5 crores out of total Rs. 10.75crores discovered during the search, the same was also not disclosedby the petitioner in her return filed in response to the notice underSection 153 A of the Act. After taking note of the Memorandum of Agreement dated 27.3.2017relied upon by the petitioner, the Settlement Commission furtherobserved that the Memorandum of Agreement was not referred to orwas not relied upon by the petitioner either during the searchproceedings or during her statement recorded under Section 131 ofthe Act or while filing her return in response to the notice underSection 153-A of the Act. Thereafter, the Settlement Commission has proceeded to consider the possibilities and probabilities in twoscenarios being (i) if the cash actually belongs to the persons, asclaimed by the petitioner and (ii) what would emerge if it belongs tothe petitioner. The Settlement Commission has itself chosen to usewords and phrases which do not indicate any definite opinion beingformed by it, inasmuch as it has only contemplated two possibilitiesthat may exist. After making a discussion of the same, the SettlementCommission has again reached a conclusion that the manner ofderiving such unaccounted income has not been explained by thepetitioner. We will deal with that reasoning, a little later. proceeded to consider the possibilities and probabilities in twoscenarios being (i) if the cash actually belongs to the persons, asclaimed by the petitioner and (ii) what would emerge if it belongs tothe petitioner. The Settlement Commission has itself chosen to usewords and phrases which do not indicate any definite opinion beingformed by it, inasmuch as it has only contemplated two possibilitiesthat may exist. After making a discussion of the same, the SettlementCommission has again reached a conclusion that the manner ofderiving such unaccounted income has not been explained by thepetitioner. We will deal with that reasoning, a little later. In such facts, learned Senior Counsel for the petitioner submits thatundisputedly, the proceedings before the Settlement Commission maybe divided broadly into three stages. At the first stage, the matterremains confined between the Settlement Commission and thedeclarant to test whether the declarant had made a true and fulldisclosure of the undeclared income brought forth by it by means ofthe declaration. Second, it is to be examined if the manner in whichsuch declared income has been acquired is disclosed by the declarantor not. Third, whether the additional tax liability has been declared ornot. At this stage, no adjudication is to take place and no definitefindings are required to be recorded by the Settlement Commission.Once the satisfaction is reached as to the prima-facie fulfilment of theaforesaid three conditions by the declarant, the SettlementCommission may then call upon a report of the jurisdictionalCommissioner and the revenue authority may raise all objections onmerits as also to the maintainability of the application, if such groundexists. Even at that stage, the applicant alone is to be heard by theSettlement Commission. If not satisfied, the SettlementCommission may declare the application to be invalid and drop the proceedings. Only at the third stage, a detailed hearing is to take placewherein both the applicant/declarant and the revenue authorities areto be heard, and if necessary, after a detailed investigation that maytake place as directed by the Settlement Commission, the final termsof the settlement are drawn which may be different from the termsoffered by the declarant in the application initially filed. TheSettlement Commission is not powerless to accept or to reject part ofthe declaration, at that stage. In the present case, it has been submittedthat the Settlement Commission has neither chosen to record itssatisfaction on the prima-facie case set up by the petitioner in anydefinite terms nor it has chosen to allow the parties to contest thematter before the Commission. Thus, the Settlement Commission hasprematurelyterminated the proceedings without any valid reason. Theobservations made by the Settlement Commission in its order withrespect to the income disclosed by the petitioner from M/s SIBInternational and jewelleries, are stated to be wholly perverse. TheCommission has completely failed to examine the admitteddocuments in the shape of record of assessment of M/s SIBInternational in its bank statements etc. that establish genuinebusiness activity of that entity. Similarly, the Settlement Commissionhas failed to look at the will deed which was executed by the father-in-law of the petitioner, the affidavit of the attesting witness or thesale invoices with respect to the jewellery and has rushed to record itsconclusion that the manner of earning from the aforesaid two sourceswas not disclosed. Such observations/findings do not arise from therelevant material existing on record. They are stated to be whollyuntenable. In fact, it is the submission of learned counsel for thepetitioner that the Settlement Commission was obligated to look atsuch material and thereafter record its tentative opinion as to themanner of earning (undisclosed income) declared by the petitioner. As to the cash discovery, it has been submitted that the conclusionsdrawn by the Settlement Commission are based on extraneousmaterial. In any case, they are self contradicted. The fact that theMemorandum of Agreement dated 27.3.2017 was not discoveredduring the search proceedings or during her statement recorded underSection 131 of the Act (even if true), would make no difference to themaintainability of the application filed by the petitioner. It is theundisclosed income, that may be brought forth, before the SettlementCommission. Inasmuch as, the petitioner had not filed any return ofincome with respect to the cash discovery made during the searchconducted on 19.04.2017 and 20.04.2017 the petitioner's applicationwas maintainable before the Settlement Commission, to that extent.Then, it has been submitted that the Settlement Commission has dealtwith possibilities and probabilities, beyond the scope of itsjurisdiction to make an observation that the money could not havebeen received by the petitioner without any agreement or without anycorroborative material before the assessing authority. What would bethe true merits of the claim made by the petitioner would remain to beexamined at subsequent stages of the proceedings. However, based onthe provisions of law as exist by virtue of Section 132 (4A), Section56 (2) (VII) and Section 292 (C), coupled with the fact that the entireamount of Rs. 10 crores 74 lakhs had been seized from the petitioner,the presumption in law was operating against the petitioner. Onlywhen the persons to whom the money actually belonged, havedisowned it, the petitioner realized that it may be difficult for her toestablish that fact in regular proceedings. At that stage, the declarationwas filed before the Settlement Commission. As to the manner of earning that money, the petitioner had clearlydisclosed the above narrated facts of the money having been deposited by Mr. Indravardan G Patel, Mrs. Bindu D. Trivedi and Mr.Pravin K. Patel and the fact that they had now disowned the same. Noother or further declaration could have been made by the petitioner insuch facts. As to the manner in which she came to earn that income isclear. According to the petitioner, she came to earn that money moreby operation of law and conduct of third parties and not by owndeliberate conduct. Money that was truly not hers is now to beassessed at her hands because of the provisions of the law and theconduct of the third parties. The fact that she had not disclosed thesame either in her regular return or in her return to be filed inresponse to Section 153-A of the Act would also be of noconsequence as that return was filed prior to filing the applicationbefore the Settlement Commission. If at all, it only makes herapplication maintainable in law as she had never claimed that moneyin any income tax proceedings. Also, it has been submitted that thereis no principle under the Income Tax Law that may have beenoffended by the petitioner. The rejection order has been passed onmere whims and fancies and not on cogent material or reasoning. Learned counsel for the Income Tax Department has submitted thatthere is no error in the order passed by the Settlement Commissioninasmuch as the petitioner had failed to explain the manner in whichthe undisclosed income had been earned by the petitioner from eitherof the three sources disclosed. He has placed reliance on the decisionof the Supreme Court in Ajmera Housing Corporation vs.Commissioner of Income Tax (2010) 326 ITR 642. He has alsoplaced reliance on the decision of Delhi High Court in Vishwa NathGupta vs. Principal Commissioner of Income Tax, Central Kanpur(2017) 395 ITR 165 (Delhi). Having heard learned counsel for the parties and perused the record, Learned counsel for the Income Tax Department has submitted thatthere is no error in the order passed by the Settlement Commissioninasmuch as the petitioner had failed to explain the manner in whichthe undisclosed income had been earned by the petitioner from eitherof the three sources disclosed. He has placed reliance on the decisionof the Supreme Court in Ajmera Housing Corporation vs.Commissioner of Income Tax (2010) 326 ITR 642. He has alsoplaced reliance on the decision of Delhi High Court in Vishwa NathGupta vs. Principal Commissioner of Income Tax, Central Kanpur(2017) 395 ITR 165 (Delhi). Having heard learned counsel for the parties and perused the record, the scope of the proceedings before the Settlement Commission, atthe stage of entertaining a declaration made i.e. the first stage hasbeen considered by the Supreme Court in Ajmera HousingCorporation (supra). In paragraphs 24 to 27 of the report, it was heldas under:-. “24. Before embarking upon the rival contentions, it would be instructiveto refer to the scheme of Chapter XIX-A of the Act. The Chapter wasinserted in the Act by the Taxation Laws (Amendment) Act, 1975, pursuantto the recommendations of the Justice Wanchoo Committee Report. Therecommendation, contained in Chapter 2 of the report (2010) 2 SCC 733(2005) 2 SCC 751 (1979) 2 SCC 396 under the caption "Black Money andTax Evasion", was for setting up of a statutory settlement machinery,whereby a tax evader could make a clean breast of his past illegitimateaffairs, discharge his tax liability as determined by the body so establishedand thus, buy quittance for himself and in the process accelerate recoveryof taxes by the State, although less than what may have been recoveredafter protracted litigation and recovery proceedings. The said Chapter, withsome amendments, envisages settlement of complex tax disputes and grantof immunity from criminal proceedings by a Settlement Commissionconstituted in this regard. The Chapter sets out in detail the mechanics ofapplication, investigation, consideration, hearing and disposal of theapplication. 25. Proceedings under the said Chapter commence on the filing of anapplication by an assessee underSection 245C(1) of the Act, which reads asfollows:- "245-C. Application for settlement of cases.--(1) An assessee may, atany stage of a case relating to him, make an application in such formand in such manner as may be prescribed, and containing a full andtrue disclosure of his income which has not been disclosed before theAssessing Officer, the manner in which such income has beenderived, the additional amount of income-tax payable on such incomeand such other particulars as may be prescribed, to the SettlementCommission to have the case settled and any such application shallbe disposed of in the manner hereinafter provided: ............................................................................" 26. A bare reading of the provision would reveal that besides such otherparticulars, as may be prescribed, in an application for settlement, theassessee is required to disclose: (i) a full and true disclosure of the incomewhich has not been disclosed before the assessing officer; (ii) the mannerin which such income has been derived and (iii) the additional amount ofincome tax payable on such income. 27. It is clear that disclosure of "full and true" particulars of undisclosedincome and "the manner" in which such income had been derived are thepre-requisites for a valid application under Section 245C(1) of the Act.Additionally, the amount of income tax payable on such undisclosed income is to be computed and mentioned in the application. It needs little emphasisthat Section 245C(1) of the Act mandates "full and true" disclosure of theparticulars of undisclosed income and "the manner" in which such incomewas derived and, therefore, unless the Settlement Commission records itssatisfaction on this aspect, it will not have the jurisdiction to pass any orderon the matter covered by the application.” 27. It is clear that disclosure of "full and true" particulars of undisclosedincome and "the manner" in which such income had been derived are thepre-requisites for a valid application under Section 245C(1) of the Act.Additionally, the amount of income tax payable on such undisclosed income is to be computed and mentioned in the application. It needs little emphasisthat Section 245C(1) of the Act mandates "full and true" disclosure of theparticulars of undisclosed income and "the manner" in which such incomewas derived and, therefore, unless the Settlement Commission records itssatisfaction on this aspect, it will not have the jurisdiction to pass any orderon the matter covered by the application.” Insofar as the decision of Vishwa Nath Gupta vs. PrincipalCommissioner of Income Tax (supra) is concerned, that was aconverse case of fact, inasmuch as the declarant (in that case) claimedtitle over money that had been seized at the hands of third parties whoalso claimed title over that seized property. In that fact, the declarantfiled an application disclosing that income as his own. The facts ofthe present case are converse to the same, inasmuch as here, themoney has been seized from the hands of the petitioner and no otherparty has owned that money. Therefore, the decision of the VishwaNath Gupta (supra) is distinguishable on facts. There can be no doubt that at this stage, the petitioner was required todisclose (i) full proof of disclosureof the income (ii) the manner inwhich such income had been derived and (iii) the additional amountof income tax payable on such income. Also, the test to be applied bythe Settlement Commission was only to record a satisfaction on theseaspects. Unless that satisfaction was first recorded, the proceedings ifany, conducted by the Settlement Commission would remaindefective. Applying the aforesaid principle as laid down by the Supreme Court,plainly, the burden cast upon the declarant is only to make a full andtrue disclosure. To make a disclosure and to prove that fact are twodifferent things. In the nature of proceedings before the Settlement Commission, at thefirst stage, as laid down by the Supreme Court, it is only the factum of disclosure that is to be ascertained. In the present case, there is nodenial of the fact that such a disclosure had been made by thepetitioner. All that remains to be examined is whether the same wastrue and full in the eyes of the Settlement Commission. To test whether the disclosure made was true and full, the SettlementCommission was only obligated to record a satisfaction. Again, asatisfaction is different and distinct from a concrete finding of fact orlaw. By very nature of things, the word ‘satisfaction’ may remain onlya tentative opinion based on the material existing before an authority,at that stage. The decision of the Supreme Court only uses the word'satisfaction' and not finding. It cannot be denied that in the course of proceedings that may beentertained by a Settlement Commission i.e. at the final stage, it maychose to reject the application after entertaining the report of thePrincipal Commissioner, if it finds the application to be invalid.Therefore, the satisfaction to be recorded is only an expression of atentative opinion to entertain an application or to allow it to beprocessed further. Such a satisfaction does not and it could notdetermine either the rights of the parties to any extent or limit theoptions of the Settlement Commission to reach a different conclusioni.e. to reject the application either in part or in entirety, at a later stage. It cannot be denied that in the course of proceedings that may beentertained by a Settlement Commission i.e. at the final stage, it maychose to reject the application after entertaining the report of thePrincipal Commissioner, if it finds the application to be invalid.Therefore, the satisfaction to be recorded is only an expression of atentative opinion to entertain an application or to allow it to beprocessed further. Such a satisfaction does not and it could notdetermine either the rights of the parties to any extent or limit theoptions of the Settlement Commission to reach a different conclusioni.e. to reject the application either in part or in entirety, at a later stage. We also cannot overlook a fact that the satisfaction required to berecorded is wholly ex-parte against the revenue authority inasmuch asat this stage, the revenue authorities are not required or permitted tobe heard. Therefore, unless the application filed is found to be whollybogus or unfounded on facts or law, there may remain less reason toreject such applications outrightly. In the facts of the present case, thepetitioner had supported his claim and the Settlement Commissionhad not reached a conclusion that the disclosure made was not full or true inasmuch as the quantification was not in dispute at that stage. The truthfulness of the disclosure made may be said to have been notbelieved by the Settlement Commission inasmuch as there areobservations disbelieving the manner of acquiring the declaredincome. In that regard, the petitioner had supported the disclosureswith material in the shape of income tax returns, bank statements andanother documents pertaining to the business entity M/s SIBInternational with respect to disclosure of undeclared income of Rs. 1crore 25 lakhs. It had also brought on record the will deed, theaffidavit of the attesting witness and also the invoices of sale andpurchase of jewellery etc. in support of the disclosure arising from thejewellery business. These materials have not been considered at all bythe Settlement Commission while recording a satisfaction in thenegative, to reject the application filed by the petitioner. We find no reason to endorse such an approach adopted by theSettlement Commission inasmuch as at that stage of the proceedings,there was no material to discard such evidence relied upon by thepetitioner. The Settlement Commission had no basis to overlook theevidence produced by the petitioner. It would be one thing if theSettlement Commission after considering the same had recorded anyconclusion disbelieving the same for cogent reasons. That having notbeen done, the order of the Settlement Commission can neither bedescribed as reasoned nor it can be said to be based uponconsideration of material on record. In fact, to that extent, it suffersfrom a non application of mind. Insofar as the disclosure of income of cash of Rs. 10 crores 74 lakhsis concerned, the observations made by the Settlement Commissionare self contradicted. In the first place, the application could not bethrown out at the threshold on the reasoning that the petitioner had not made any disclosure of such income before filing an applicationbefore the Settlement Commission. In fact, if the petitioner haddisclosed such income in any earlier proceeding it may have been aground to record such negative satisfaction to disallow the applicationto proceed because the petitioner had already disclosed such incomein any proceeding under the Act. Here, according to the SettlementCommission, the petitioner did not disclose the income either duringsearch proceedings or during the investigation carried out after thesearch or in response to the notice issued under Section 153 (A) of theAct. To that extent, the reasoning of the Settlement Commission isclearly erroneous in law. not made any disclosure of such income before filing an applicationbefore the Settlement Commission. In fact, if the petitioner haddisclosed such income in any earlier proceeding it may have been aground to record such negative satisfaction to disallow the applicationto proceed because the petitioner had already disclosed such incomein any proceeding under the Act. Here, according to the SettlementCommission, the petitioner did not disclose the income either duringsearch proceedings or during the investigation carried out after thesearch or in response to the notice issued under Section 153 (A) of theAct. To that extent, the reasoning of the Settlement Commission isclearly erroneous in law. As to the further reasoning offered by the Settlement Commissionthat the petitioner had not explained the manner of acquiring theincome (cash and jewellery), the Settlement Commission has againfailed to take into consideration the effect of the Memorandum ofAgreement and the further claim of the petitioner that the signatoriesto that agreement (who had contributed Rs. 10.5 crores to set up anew business) had disowned that amount, subsequent to that search.Prima-facie, there is merit in the submissions advanced by learnedSenior Counsel for the petitioner that by virtue of Section 132 (4A),Section 56 (2) (vii) and Section 292 (C), the presumption in law aroseas a consequence of the action/inaction of the third party in notclaiming the cash seized at the petitioner’s hands as may be treated asher income. Without drawing any final conclusion to that, we findthat the said aspect has not been examined and has been completelyoverlooked by the Settlement Commission. Further, the Settlement Commission appears to have remained insome doubt about the aspect of the matter inasmuch as its observationon the issue are hypothetical and plural. It has thus tried to weigh between two hypothetical possibilities of the money belonging to thethird party and, the money belonging to the petitioner. The approach taken by the Settlement Commission cannot beendorsed or appreciated. It is expected from the SettlementCommission to form clear opinion on facts, even at the stage ofadmission. A quasi-judicial authority vested with such vide powers isnot expected to act on doubts and probabilities but on definite opinionformed on material on record. Though such opinion is tentative (atthis stage), the Settlement Commission should have remainedconscious of the fact that it was only dealing with the first stage ofadmission of the case, wherein, no prejudice may be caused to therevenue if such application were to be entertained while on thecontrary, a rejection of the application at this stage, closes the door tothe declarant, for ever. Accordingly, the order dated 27.09.2018 passed by the Income TaxSettlement Commission, Additional Bench-II, New Delhi is herebyset aside. The writ petition is allowed and the matter is remitted toIncome Tax Settlement Commission to pass a fresh order inaccordance with law keeping in mind the observations made above.We are mindful of the fact that in the meanwhile, the SettlementCommission has been disbanded and at present stands replaced by anInterim Board. Accordingly, let the matter be placed before theInterim Board for further proceedings, in accordance with law. Since the matter has remained pending for long, it is expected that theproceeding may be taken up and appropriate orders be passed, asexpeditiously as possible. Order Date :- 17.9.2021Saurabh