KOTAK MAHINDRA BANK LIMITED versus COMMISSIONER OF INCOME TAX BANGALORE AND ANR.

Citation: [2023] 14 S.C.R. 1 · Decided: 25-09-2023 · Supreme Court of India · Bench: B.V. NAGARATHNA · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · cites 5 · see the full citation network in Lexace

Judgment (excerpt)

[2023] 14 S.C.R. 1 : 2023 INSC 855
1
CASE DETAILS
KOTAK MAHINDRA BANK LIMITED
v.
COMMISSIONER OF INCOME TAX BANGALORE AND ANR.
(Civil Appeal No. 9720 of 2014)
SEPTEMBER 25, 2023
[B. V. NAGARATHNA AND UJJAL BHUYAN, JJ.]
HEADNOTES
Issue for consideration: Whether the Division Bench of the High 
Court was right in affi  rming the fi ndings of the Single Judge, to the eff ect 
that the Settlement Commission ought not to have exercised discretion u/s. 
245H of the Income Tax Act, 1961 and granted immunity to the assessee 
de hors any material to demonstrate that there was no wilful concealment 
on the part of the assessee to evade tax and on that ground, remanding the 
matter to the Commission for fresh consideration. 
Income Tax Act, 1961 – s. 245H – Power of Settlement Commission 
to grant immunity from prosecution and penalty – Exercise of – Assessee 
placed material and particulars before the Commission as to the manner 
in which income pertaining to certain activities was derived and has 
sought to off er such additional income to tax – On basis thereof, the 
Settlement Commission proceeded to grant immunity from prosecution 
and penalty as contemplated u/s. 245H – Correctness:
Held: Settlement Commission rightly considered the relevant facts and 
material and, decided to grant immunity to the assessee from prosecution and 
penalty – Settlement Commission applied its mind to the aspect of whether 
there was wilful concealment of income by the assessee – Having noted that 
non-disclosure was on account of RBI guidelines, the Commission decided 
to grant immunity to the assessee from prosecution and penalty – Single 
Judge of the High Court erred in holding that the reasoning of the Settlement 
Commission was vague, unsound and contrary to established principles – 
Division Bench also not justifi ed in affi  rming the said view – Commission 
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SUPREME COURT REPORTS 
[2023] 14 S.C.R.
adequately applied its mind to the circumstances of the case, as well as to 
the relevant law and accordingly exercised its discretion to proceed with the 
application for settlement and grant immunity to the assessee from penalty 
and prosecution – Thus, the order of the Commission did not suff er from 
such infi rmity as would warrant interference by the High Court, by passing 
an order of remand – Judgment passed by the High Court is set aside and 
that of the Settlement Commission is restored. [Paras 7.4, 7.5, 9, and 14]
Income Tax Act, 1961 – s. 245H – Power of Settlement Commission 
to grant immunity from prosecution and penalty – Exercise of – 
Necessary ingredients:
Held: Under s. 245H(1), if the Settlement Commission is satisfi ed that 
assessee has co-operated with the Settlement Commission in the proceedings 
before it and has made a full and true disclosure of its income and the 
manner in which such income has been derived, it may grant immunity from 
prosecution or from the imposition of penalty – Even if the pre-conditions 
prescribed u/s. 245C are to be read into s. 245H, it cannot be said that in 
every case, the material “disclosed” by the assessee before the Commission 
must be something apart from what was discovered by the Assessing Offi  cer 
– What is relevant that the assessee off ered to tax, income, in addition to 
the income recorded in the return of income – s. 245C r/w s. 245H only 
contemplates full and true disclosure of income to be made before the 
Settlement Commission, regardless of the disclosures or discoveries made 
before/by the Assessing Offi  cer. [Paras 6 and 7.1]
Income Tax Act, 1961 – s. 245H – Power of Settlement Commission 
to grant immunity from prosecution and penalty – Nature of:
Held: Power vested with the Settlement Commission u/s. 245H is 
a discretionary power to be exercised if the Settlement Commission is 
satisfi ed that an applicant has complied with the preconditions specifi ed 
therein – Any judicial, quasi-judicial or administrative authority must while 
exercising discretion, direct itself properly in law and consider all the facts 
and material that it is bound to consider. [Para 7.3]
Income Tax Act, 1961 – s. 245H – Settlement Commission’s order 
– Judicial Review – Scope of:
3
Held: The scope is very narrow – It is only when the order contravenes 
provisions of the Act or has caused prejudice to the opposite party – 
Interference may also be open on the grounds of fraud, bias or malice. 
[Para 10]
Income Tax Act, 1961 – s. 245H – Proceedings of the Settlement 
Commission – Legislative intent:

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