COMMISSIONER OF INCOME TAX, JALPAIGURI versus OM PRAKASH MITTAL

Citation: [2005] 2 S.C.R. 263 · Decided: 22-02-2005 · Supreme Court of India · Bench: RUMA PAL · Disposal: Disposed off

Judgment (excerpt)

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COMMISSIONER OF INCOME TAX, JALPAIGURI 
A 
v. 
OM PRAKASH MITT AL 
FEBRUARY 22, 2005 
[MRS. RUMA PAL, ARIJIT PASAYAT AND C.K. THAKKER, JJ.] 
B 
Income Tax Act, 1961; Section 245 : 
Income Tax Settlement Commission-Order .of Settlement-Section 245-
Scope and ambit of-Held: Foundation for settlement is filing of an application C 
by assessee at any stage of a case-Full and true disclosure of the income is 
statutory requirement for consideration of the application provided additional 
tax on the undisclosed income not to exceed the prescribed limit-Merely 
because provisions under Section 245(I) provides that order of settlement is 
conclusive it does not take away the power of the Commission/Revenue to D 
decide whether the settlement was obtained by fraud/misrepresentation-Mis-
representation/fraud implies no true and fair disclosure of the income, which 
is against the legislative intent-Since Revenue established that the order was 
obtained by misrepresentation, Commission could decide the issue afresh-
Directions issued-Interpretation of Statutes. 
Settlement Commission's power of settlement-Scope of-Discussed 
Order vis-a-vis assessment-Distinction between. 
Words and Phrases : 
'case'-Meaning of in the context of Section 245A(b) of the Income 
Tax Act, 1961. 
E 
F 
Respondent-assessee filed an application for settlement in terms of 
Section 245C of the Income Tax Act before the Income Tax Settlement 
Commission. Assessee claimed to have received certain amount, as loan G 
as disclosed by him in the application. The Settlement Commissioner 
passed an order treating the loan amount as advance. The order was 
challenged by Revenue Authorities by filing a petition under Section 
2450(6) of the Act, which was rejected by the Commissioner. Hence the 
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SUPREME COURT REPORTS 
f2005] 2 S.C.R. 
A present appeal filed by the Revenue. 
It was contended by the Revenue that the·application filed by them 
was not really for review; that there was no question of the subsequent 
Bench sitting in appeal over the earlier Bench's decision; that the 
jurisdiction under Section 2450(6) of the Act is exercisable when it is 
B subsequently found by the Commission that the settlement had been 
obtained by fraud or misrepresentation of facts; that the investigating 
officer had stated that the alleged money lenders categorically denied to 
have advanced any loan; that there was inherent improbability in the 
assessee's stand that seven persons/money lenders would keep huge sums 
c of money and would give money on the same day by c~sh; that since there 
was no assessment, question of furnishing certificates about assessment 
from unconnected persons, is sufficient to show misrepresentation of facts; 
and that no returns of income were filed by the lenders upto relevant time. 
Assessee submitted th.at finality is attached to the order passed under 
D Section 2450 ( 4) in terms of Section 2451 of the Act; that the order was 
obtained by fraud or misrepresentation of facts; that the Revenue cannot 
initiate any proceedings in terms of Section 2450(6) of the Act; that on 
mere unsubstantiated allegation regarding lack of capacity to advance 
loans, alleged inherent improbabilities, or the authorities' giving a different 
version after having issued certificates, there is no scope for coming to 
E the conclusion that there was any fraud or misrepresentation of facts. 
F 
Thus, the Commission had rightly refused to accept the prayer made by 
the Revenue as it would have amounted to review of the earlier order and 
in essence would have amounted to the subsequent Bench sitting in appeal 
over the decision of the earlier Bench. 
Disposing of the appeal, the Court 
HELD: I.I. The Income Tax Settlement Commission is not bound 
to proceed with any application filed under Section 245C of the Income 
Tax Act, as is clear from Section 2450 of the Act. An assessee cannot 
G approach the Commission for settlement of his case in respect of an income 
which has already been disclosed as contemplated is in the nature of 
voluntary disclosure of concerned income. The Commission's power of 
settlement has to be exercised in accordance with the provisions of the Act. 
Though the Commission has sufficient elbowroom in assessing the income 
of the applicant and it cannot make any order with terms of settlement 
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C.l.T. 1· O.P. l'vllTT/\L 
265 
which would be in conflict with the mandatory provisions of tl1e Act. The A 
object of the 

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