Calcutta High Court Upholds Income Tax Settlement As There Is No Legal Infirmity In Its Process

Calcutta High Court Upholds Income Tax Settlement As There Is No Legal Infirmity In Its Process

The Court felt there was no ground to interfere with the order of the Settlement Commission since no case was made out that the Commission had acted in any manner which violated any provision of law

The Calcutta High Court upheld the order of the Settlement Commission (Income Tax & Wealth Tax) since no legal infirmity was pointed by the Principal Commissioner of Income Tax in the decision-making process of the Settlement Commission in course of the income tax settlement proceeding.

A single-judge court of Justice MD. Nizamuddin in the High Court of Calcutta dealt with this petition titled Principal Commissioner of Income Tax v Settlement Commission (Income Tax & Wealth Tax) & Anr.

The Petitioner – Principal Commissioner of Income Tax through a writ petition had challenged the order of the Respondent – Settlement Commission, wherein it accepted the settlement application of M/s UTC Marketing Pvt Ltd – Company, who was arraigned as another respondent in this petition.

A report u/R 9 of the Income Tax Settlement Commission (Procedure) Rules, 1997 was submitted by the Petitioner – Principal Commissioner of Income Tax before the Respondent – Settlement Commission regarding M/s UTC Marketing Pvt Ltd – Company. This report was primarily relied on by the Petitioner while alleging that the Company had not made any true and correct disclosure of its undisclosed income before the Settlement Commission. The Petitioner further contended that the Company was in the habit of not disclosing its true and correct income before the department.

However, the Company, pointed out that the Petitioner did not cite any instance which would raise a bona fide doubt on the Company's intention or its application u/S 245 C (1) of the Income Tax Act, 1961 for settlement.

Multiple judgments were cited by the parties to support their arguments, primarily on the ambit and scope of interference by the High Court in its Constitutional writ jurisdiction under Article 226 of the Constitution of India in the income tax settlement proceedings before the Settlement Commission. Concerning this, the Court noted that the Petitioner did not make out any exceptional case for exercising constitutional writ jurisdiction of this Court under Article 226 of the Constitution for scrutinizing or re-appreciating the facts, evidence or findings of the Settlement Commission.

The Court further opined that no documents or materials were placed by the Petitioner which would have been sufficient for rejection of the settlement application.

The Court chose not to interfere with the order of the Settlement Commission since no case was made out that the Settlement Commission had acted in any manner which was in violation of any provision of law in course of the settlement proceeding or in passing the order.

Therefore, the petition was dismissed as no legal infirmity was pointed by the Petitioner in the decision making process in course of the income tax settlement proceeding.