LexCOMMISSIONER OF INCOME TAX, CALCUTTA (CENTRAL) versus MIS PAHARPUR COOLING TOWERS PVT. LTD.
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.tf COMMISSIONER OF INCOME TAX, CALCUTTA (CENTRAL) A v. MIS PAHARPUR COOLING TOWERS PVT. LTD. MARCH 11, 1996 [B.P. JEEVAN REDDY AND M.K. MUKHERJEE, JJ.] B Income Tax Act, 1961-Section 245-Settlement Proceedings-Powers of Settlement Commission-Power to reopen any completed proceed- ings-Scope of-Whether the Commission could drop the penalry proceedings relating to Assessment years 1970-71 to 1974-75 in an application for settle- C ment relating to Assessment Year 1975-76-Held, No. Tue· assessee, a Private Company, filed an application U/S 245-C of the Income Tax Act, 1961, for settlement in respect of the Assessement year 1975-76. The assessee filed a statement of facts, disclosing certain addi.- D tional income for the Assessment Year 1975-76 requesting that the addi- tional income be spread over all the six Assessment Years 1970-71 to 1975-76 and also for issuing stay orders in respect of penalty proceedings pertaining to earlier assessment years. The Chairman and the two mem- bers differed on the question as to whether the Commission could drop the penalty proceedings relating to the Assessment Years 1970-71 to 1974- E 75 in an application for settlement relating to Assessment Year 1975-76. The majority opinion was that commission did have such power while the Chairman held to the contrary stating that since the application for settlement was only in respect of n.ssessment year 1975-76, the penalty proceedings relating to earlier assessment years were in no way connected F with the settlement application or statement of facts made by assessee and, therefore, the Commission had no jurisdiction to waive of drop those penalty proceedings and further that the penalty proceedings were in respect of some other concealment already detected by the Income Tax Officer and not relating to incomes considered in the settlement applica- tion. These appeals had been filed by the Revenue against the judgment G and order made by the Settlement Commission U/S 245-D of the Act. The appellant submitted that the application for settlement per- tained only to Assessment Year 1975-76 and not to the earlier assessment )'ears, that the assessee had given its consent for re-opening the earlier H 187 188 SUPREME COURT REPORTS [1996]3 S.C.R. A assessment years for the limited purpose of the spreading over/distribut- ing the additional income disclosed as he did not want the entire additional income to be added to his income in the Assessment Year 1975-76 which would have enhanced his tax liability and there was no request or concur- rence to reopen the earlier assessments for all purposes; that the penalty B proceedings relating to the earlier assessment years, pending at the time of filing of the settlement application, pertained to some other conceal- ments and not to the items which were disclosed in the settlement applica- tion and that a settlement application can be filed only in respect of a pending matter whereas the assessments in respect of the earlier years were already concluded and they were also not appealed against by the C assessee. The respondent assessee alleged that the assessee had expressly requested and had given his consent/concurrence for re-opening the as· sessments for the earlier Assessment Years 1970-71, to 1974-75, that the D Commission did have the undoubted power in these circumstances to reopen the assessments relating to these earlier years and add certain amounts on account of enhanced valuation of the opening stocks and once the Commission re-opened the said assessments, it was entitled to pass necessary and appropriate orders relating to those earlier assessment years as there was no restriction or limitation upon the Commission's E power and that even though the penalty proceedings relating to the earlier assessment years pertained to certain other alleged concealments by the assessee the Commission had the power, in law, to direct dropping of those penalty proceedings also; that the penalty proceedings were co-related to the amount of concealment and once the amount concealed undergoes a F change by virtue of additions made in the earlier assessment years on account of spreading over, the penalty proceedings became unsustainable G in law. Allowing the appeals, this Court HELD : 1.1. In settlement proceedings VIS 245 of the Income Tax Act, 1961, the commission has not only to act in accordance with the provisions of the Act but that its juris
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