SCA/1164/2000 1/10 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 1164 of 2000 TO SPECIAL CIVIL APPLICATION No. 1186 of 2000 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE D.A.MEHTA AND HONOURABLE MR.JUSTICE H.B.ANTANI ========================================= ================== 1 Whether Reporters of Local Papers may be allowed to see the judgment? NO 2 To be referred to the Reporter or not? NO 3 Whether Their Lordships wish to see the fair copy of the judgment? NO 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any Order made thereunder? NO 5 Whether it is to be circulated to the Civil Judge? NO ================================================= ====================== COMMISSIONER OF INCOME TAX – PETITIONER VERSUS FRIENDS & FRIENDS CO. – RESPONDENT ================================================= ====================== Appearance : MR MANISH R BHATT for the Petitioner. MR KIRTIKANT THAKER for the Respondent. SCA/1164/2000 2/10 JUDGMENT ================================================= ====================== CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA AND HONOURABLE MR.JUSTICE H.B.ANTANI DATE : 19/06/2008 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE D.A.MEHTA) 1. This group of petitions involve common facts and issues and hence, are taken up for hearing together. Initially, in each of the petitions, the challenge was to order dated 30- 07-1997 made by Income Tax Settlement Commission under Section 245D (1) of the Income Tax Act, 1961 (“the Act”) wherein the settlement applications made under Section 245C of the Act by the respondent-assessees came to be admitted by the Settlement Commission. 2. Subsequently, by amendment granted on 28-08- 2000, final order made by the Settlement Commission on 29- 03-2000 under Section 245D (4) of the Act came to be challenged. SCA/1164/2000 3/10 JUDGMENT 3. Sometime in September 1994, search proceedings were undertaken under Section 132 of the Act by the petitioner – Revenue in respect of the respondent – assessees. It is the case of the petitioner that upon seizure of various incriminating documents, a detailed examination was undertaken by the Revenue. During the course of the proceedings under Section 132 of the Act, statement of one of the key persons of the Group, Shri Sukhraj Singhvi, was recorded whereby a disclosure to the tune of Rs. 5,84,73,140/- was made on behalf of the Group. That after investigation and inquiries, assessments were made in cases of certain individual assessees making additions towards undisclosed income. However, the respondents approached the Settlement Commission some time in April 1996 and made 19 separate applications under Section 245C of the Act. As required by provisions of Section 245D (1) of the Act, the petitioner submitted a report objecting to the admission of the settlement applications moved by the respondent-assessees. However, overruling the objections, the Settlement Commission admitted the applications on 30-07-1997. 4. Mr. M. R. Bhatt, learned Senior Standing Counsel SCA/1164/2000 4/10 JUDGMENT appearing for the petitioner in all the cases, contended that the Settlement Commission had no jurisdiction to entertain the applications filed by the respondent-assessees because the prerequisite conditions set out in sub-section (1) of Section 245D of the Act were not satisfied. It was submitted that the Revenue was in possession of adequate material which established concealment on the part of the respondent- assessees, assessments had been framed already on the basis of seized documents, and hence, there was no complexity of investigation involved having regard to the nature and circumstances of the case. It was further submitted that under Section 245C (1) of the Act, the respondent-assessees were required to apply for settlement by making a full and true disclosure of income which had not been disclosed before the Assessing Officer, and also indicate the manner in which such income had been derived coupled with the additional amount of tax payable on such undisclosed income. However, the facts reveal that as against the admission to the tune of Rs. 5 Crores and odd in statement recorded under Section 132 (4) of the Act, the settlement applications disclosed only additional income to the tune of Rs. 2 Crores and odd. This suggested that there was absence of full and true disclosure. A further submission was that the additional income worked out by the SCA/1164/2000 5/10 JUDGMENT Department was backed by the assets as stated by the petitioner in his report submitted before the Settlement Commission but the Settlement Commission had failed to deal with the said aspect of the matter while passing the order of admission. In support of the submissions made, reliance has been placed on Apex Court's decision in case of Commissioner of Income Tax Vs. Express Newspapers Limited, [1994] 206 ITR 443 (SC) to contend that in a case where the Department was in possession of material gathered after investigation which would establish concealment or was likely to establish concealment, the Settlement Commission should not interfere. Alternatively, it was pleaded that even if the order of admission made by the Settlement Commission could be treated as an order made in accordance with law in exercise of jurisdiction vested in the Settlement Commission, the order be treated as a perverse order and was required to be quashed permitting the petitioner – Revenue to proceed ahead with the assessments under normal provisions of the Act. 5. A further alternative submission was to the effect that even the final order deciding the settlement applications under Section 245D (4) of the Act on 29-03-2000 was also an SCA/1164/2000 6/10 JUDGMENT order which was bad in law because (i) the applications had been entertained without jurisdiction by the Settlement Commission; and (ii) on merits, the order permitted the respondent – assessees to get away by paying far less taxes than what the assessees would have been called upon to make the payment if regular assessments were permitted to be framed. 6. The entire group of petitions have been filed under Articles 226 and 227 of the Constitution of India. The position in law is well settled that a High Court shall not interfere only because on the same set of facts and circumstances of the case and the evidence on record, a different view, different from the one taken by the authority, is possible. Similarly, it is well established that in exercise of powers under Articles 226 and 227 of the Constitution, the High Court is not required to enter into reappreciation of evidence merely because the petitioner pleads that on the same set of evidence, a different view is possible. The High Court is only required to ascertain as to whether the decision making process is vitiated in law because the authority has either violated the principles of natural justice, or considered irrelevant material, or omitted to consider relevant material, or the decision making process SCA/1164/2000 7/10 JUDGMENT reflects non-application of mind, or is arbitrary and capricious. 7. Applying the aforesaid legal position to the facts of the case, it is not possible to state that the present case involves any of the relevant factors which would permit the Court to exercise powers under Articles 226 and 227 of the Constitution. Insofar as the order of admission dated 30-07- 1997 made by the Settlement Commission under Section 245D (1) is concerned, on going through the order as a whole, it becomes apparent that the Settlement Commission has heard both the parties at length, considered the material produced before the Settlement Commission at the stage of admission, and dealt with all the respective contentions of both the parties. The High Court is not required to ascertain as to whether the so-called disclosure in the statement made under Section 132 (4) of the Act was correct or not, or whether the Settlement Commission was entitled to accept the settlement applications disclosing undisclosed income at a lesser figure, because the same would involve reappreciation of evidence, the same evidence having already been appreciated by the Settlement Commission by passing the impugned order dated 30-07-1997. Each of the contentions raised by the learned Senior Standing Counsel were raised in the report tendered by SCA/1164/2000 8/10 JUDGMENT the petitioner to the Settlement Commission and the said contentions have been not only reproduced in the order but have been dealt with. 8. During the course of hearing, one of the principal contentions on which great emphasis was laid was that the settlement under Section 132 (4) of the Act was based on specific material contained in the books and documents found during the search and was adequately backed by the assets as mentioned in the report of the petitioner but the Settlement Commission had failed to deal with this aspect of the matter. The contention deserves to be recorded only to be rejected. In paragraph No. 9 (2) of the order dated 30-07-1997, the said contention has been specifically dealt with and the averments made by the petitioner in his report found to be factually incorrect on appreciation of the evidence on record. 9. The aforesaid contention has been considered here only by way of an illustration and the Court does not find it necessary to deal with each of the contentions raised on the facts and in relation to the evidence available on record. Suffice it to state that the impugned order of admission made by the Settlement Commission has dealt with each and every SCA/1164/2000 9/10 JUDGMENT contention in detail and reiteration is not necessary. 10. Similarly, applying the same legal tests when one examines the final order made by the Settlement Commission on 29-03-2000 under Section 245D (4) of the Act, it becomes apparent that the Settlement Commission has taken adequate care to finally determine the additional income in hands of the Group and the tax payable after appreciating the facts and evidence on record. The High Court does not intend to enter into realm of reappreciation of the same set of evidence. Suffice it to state that neither the order of admission under Section 245D (1) of the Act nor the final order under Section 245D (4) of the Act can be termed to be an order which is perverse in any manner. 11. In the aforesaid set of facts and circumstances of the case, no interference is warranted. It is not possible to state that the Settlement Commission acted either without jurisdiction or exceeded the jurisdiction vested in it while passing the two impugned orders. The petitions, therefore, are rejected. Rule discharged. There shall be no order as to costs. [D. A. MEHTA, J.] SCA/1164/2000 10/10 JUDGMENT [H. B. ANTANI, J.] /shamnath