1 HIGH COURT OF MADHYA PRADESH : BENCH AT INDORE (DIVISION BENCH OF HON'BLE JUSTICE SHRI P.K. JAISWAL & HON'BLE SHRI ALOK VERMA, JJ.) W.P. No.188/2015 Commissioner of Income-Tax-I, Aayakar Bhawan Annex, White Church Road, Indore & Anr. V/s. M/s. Asian Natural Resources India Ltd. & Anr. Shri R.L. Jain, learned Senior Advocate with Ms. V. Mandlik, learned counsel for petitioners. Shri Sumeet Nema, learned counsel for respondent No.1. Shri A.K. Jain, Deputy Commissioner of Income Tax I (1), Indore is also present in person along with his counsel. None for respondent No.2. ORDER (13.2.2015) Per P.K. JAISWAL, J : - Heard on I.A.No.378/2015, application for vacating interim order dated 9.1.2015. 2. income tax department has filed present writ petition against order dated 18.8.2014 passed by respondent no.2 settlement commission under Section 245 (D(1) of Income Tax Act, 1961 and letter dated 24.9.2014 (Annexure P/9). 3. Brief facts of case are that on 25.9.2007, search and seizure operation was conducted by investigating wing of Income Tax Department along with cases of Bhatia Group. search and seizure operation was carried out on respondent No.1 company at business 2 premises as well as residential premises of Directors of Company. Thereafter, assessment of relevant Assessment year from 2002 03 to 2006 07 had been completed under Section 153A/153C and assessment proceedings for Assessment Years 2007 08 and 2008 09 is pending due to stay granted by Apex Court in Petition (S) for Special Leave to Appeal (C) No (s).18937/2012. 4. During course of assessment proceedings Assessing Officer made reference under Section 92 CA to TPO after taking approval of Commissioner of Income Tax I, Indore, for assessment year 2007-08 & 2008-09. 5. TPO has forwarded copy of order under Section 92CA of Act dated 29.10.2010 to Assessing Officer as well as respondent No.1 company separately for assessment year 2007 08 & 2008 09. 6. respondent No.1 company filed writ petition bearing Nos.2229/2011 & 2230/2011 for both Assessment years before this Court on 14.5.2012. This Court dismissed writ petitions on account of alternative remedy. assessing company did not accept above order and filed SLP (c) 18936/2012 & SLP No.18937/2012, for assessment year 2007 08 & 2008 09, respectively before Apex Court. On 10.7.2012 vide Annexure P/2, Hon'ble Supreme Court granted stay in favour of respondent No.1 and directed that respondent No.1, assessing officer, shall not proceed with assessment proceedings pursuant to impugned order. 7. In respect of assessment order 2009 10, respondent No.1 company filed writ petition no.3021/2013 and by interim order dated 7.3.2013 this court stayed assessment order. In respect of assessment years 2010 11 W.P.No.1516/2013 was filed and Division Bench of this Court 3 by order dated 28.2.2014 stayed assessment proceedings till further orders. 8. In year 2011 12, 2012 13 and 2013 14, assessing authority has issued notice under Section 143(2). 9. respondent No.1 company has filed application under Section 245(C) (1) before respondent No.2 Settlement Commission on 5.8.2014 for assessment years 2007 08 to 2014 15. respondent No.1 company also intimated to assessing officer through letter dated 5.8.2014 and Form 34BA of Rules. 10. On 18.8.2014, settlement application of assessee company was processed by Settlement Commission (SA No.MP/INC-1/003/2014-15/IT) and order under Section 245D(1) was passed on 18.8.2014 admitting Settlement Application. 11. On 19.8.2014 Settlement Commission called report under Section 245D(2B) from Commissioner of Income Tax I, Indore through letter within 30 days on receipt of said letter. 12. On 18.9.2014, Commissioner of Income Tax I, Indore has furnished report under Section 245(D)(2B) of IT Act, 1961 and in para 2.1 has clearly mentioned under remark that assessment proceedings were stayed by Hon'ble Supreme Court and High Court of Madhya Pradesh from Assessment Year 2007 08 to Assessment Year 2010 11. In para 6 of said report it is also stated that matter is 'sub- judice' . Commissioner of Income Tax I, Indore has requested through its report to Settlement Commissioner that proceeding may kindly be kept in-abeyance till matters are decided by Hon'ble Apex Court and High Court. On 18.12.2014 Settlement Commission has sent letter to Commissioner Income Tax I, Indore with final opportunity to 4 furnished report of Rule 9 of SCP Rule 1997 on or before 12.1.2015. It is also stated by Settlement Commission in its letter that please note that, in case no report is received in this case on or before 12.1.2015, Commission shall proceed further without report to initiate 245D(4) proceeding . department being aggrieved by order dated 18.8.2014 and communication dated 24.9.2014 has prayed for quashment of same. 13. On 9.1.2015 this court issued show cause notice to respondent No.1 and also passed interim order staying further proceeding pending before respondent No.2 in respect of assessment year 2007 08 to 2014 15 until further orders from this court. 14. application for vacating stay has been filed by respondent No.1 company on ground that order dated 18.8.2014 is only interim order and final order will be passed by Settlement Commission after examination of records, considering report of Commissioner, and material brought on record before Settlement Commission. Settlement Commission has jurisdiction to provide for terms of Settlement including demanding any tax, penalty or interest. Commission has also jurisdiction to examine as to whether any order has been obtained by way of fraud or mis- representation of facts. Thus, Income Tax Act provides for complete mechanism for dealing with settlement applications and said mechanism is complete code in itself and merely because of fact that interim order has been passed under Section 245(D1) does not mean that any irreparable losses has been caused to Income Tax Department. 15. It is also submitted that Income Tax Department did not object order dated 18.8.2014 while filing its report on 5 18.9.2014 and even thereafter in response to letter dated 24.9.2014, Income Tax Department did not raise any objection and merely requested for extension of time of 60 days, which was given to extent of 30 days by Settlement Commission. Department after failing to get extension of 60 days has rushed to this Court and filed present petition, after waiting for 4 months from date of order dated 18.8.2014. It is also pointed out that provisions of Settlement of cases under Chapter XIXA of Income Tax Act are complete code itself and provide for time bound manner and deciding application. application which was filed before Settlement Commission was maintainable and Department has opportunity to raise all legal and valid objections before Settlement Commission and thereafter, Department is not going to suffer any way and prays for vacating stay. It has also been pointed out by learned counsel for petitioner that W.P. No.3021/2013 and W.P.No.1516/2014, have been permitted to be withdrawn without granting any opportunity to respondent No.1 by orders dated 14.1.2015. 16. In respect of pendency of two SLP's learned counsel for respondent company has made statement at bar that application for withdrawal was filed in aforesaid Special Leave Petitions and thus applications were mentioned on 28.1.2015. Hon'ble Supreme Court directed for listing matter on 2.2.2015 before appropriate Bench and as per instructions received from his client, Hon'ble Supreme Court permitted respondent No.1 to withdraw both SLP's. It is also submitted that both SLP (Petitions) were pending since 2012, but no objection was filed by department nor they brought to knowledge of Hon'ble Suprme Court about order dated 18.8.2014 and 24.9.2014. He has also drawn our attention to report dated 18.9.2014 (Annexure P/8). Para 2.0, 6 2.1, 3,4,5 and 7 are relevant which reads as under :- 2.0 Validity of application for relevant years: Search u/s. 132 of I.T. Act 1961was conducted in case of above mentioned assessee group namely 'Bhatia Group' on 25.9.2007. Thereafter statutory notices were issued and served upon assessee for previous years and also for A.Ys.2007 08 and 2008 09. In Block period of case, Assessment Years 2007-08 and 2008 -09 are involved. A.Y. 2007 08 is covered under provisions of Section 153A and A.Y. 2008 09 being search year is covered u/s. 143(2)/142(1) of Act. assessee had filed its returns of income in response to statutory notices issued under provision of Income Tax Act. assessment proceedings are pending in case of assessee for A.Y. 2007 08 and 2008 09 because proceeding of scrutiny assessment have been stayed by Hon'ble Supreme Court and also by High Court in following assessment years. 2.1 factual status of case with respect to pendency of proceedings of scrutiny assessment and also proceedings pending before various courts for A.Ys. 2007-08 to 2014-15 in this case of assessee are being produced as under :- Asst. Proceedings Before whom Date from which Remark Years pending u/s. pending proceedings are pending 2007-08 153A/143(3) After decentralization of 03.03.2008. On 10.7.2012 Supreme Court has ordered case proceeding (u/s 153A) in SLP(C) No.18936 of 2012 dt. 10.7.2012 pending before ACIT- directing assessing officer not to 3(1) proceed with assessment proceedings pursuant to order passed by Ld. TPO and proceedings shall not be barred by limitation on account of pendency of writ petition. relevant order of Hon'ble Apex Court dated: 10.7.2012 is enclosed as per annexure-A. 2008-09 143(3) As above Notice issued For A.Y. 08-09 on 10.7.2012 Supreme u/s.143(2) for Court has ordered in SLP(C) No.18937 of A.Y. 08-09 2012 dt. 10.7.2012, directing 03.10.2008. assessing officer not to proceed with assessment proceedings pursuant to order passed by Ld. TPO. relevant order of Hon'ble Apex Court dated 10.7.2012 is enclosed as per annexure -B. 2009-10 143(3) As above Notice u/s.143(2) A.Y. 2009-10 for A.Y. 09-10 MP High Court vide WP No.3021/2013 issued on 31.8.2010 passed interim order dt.7.3.13 directing & 6.9.2010. assessing officer not to proceed with assessment proceedings pursuant to order passed by Ld. TPO. relevant order of Hon'ble High Court of M.P. dated 7.3.13 is enclosed as per annexure-C. 7 2010-11 143(3) As above Notice u/s.143(2) A.Y. 2010-11 for A.Y. 2010-11 MP High Court vide WP No.1516/2013 issued on 29.8.2011 passed interim order dt.28.2.2014 directing assessing officer not to proceed with assessment proceedings and also observed that assessment proceeding shall not be barred by limitation on account of pendency of writ petition. relevant order of Hon'ble High Court of M.P. dated 28.2.2014 is enclosed as per annexure- D. 2011-12 143(3) As above Notice u/s.143(2) Matter is pending before Addl. for A.Y. 2011-12 Commissioner of Income Tax (TPO), on 7.8.2012 Ahemedabad, which was referred to TPO vide letter dated: 20.12.2012 after obtaining approval of CIT-I, Indore relevant letter is enclosed as per annexure-E. 2012-13 143(3) As above Notice u/s.143(2) Matter has to be referred to Addl. for A.Y. 2012-13 Commissioner of Income Tax (TPO), issued on 12.8.13. Ahemedabad. It will be sent shortly. 2013-14 143(3) As above Notice u/s.143(2) Case for A.Y. 2013-14 has been for A.Y.2013-14 selected for scrutiny assessment in has been issued on month of September 2014 and statutory 2.9.2014 notice u/s. 143(2) has been issued which was duly served to assessee. 2014-15 As above For A.Y. 2014-15, Assessee has filed application with proceedings are Settlement Commission on 5.8.2014 pending as defined u/s.245C. in Explanation (iv) to 245A(b) of Act. 3.0 Correctness of additional tax interest paid by applicant: assessee has made disclosure of additional income of Rs.18,93,19,340/- before Hon'ble Settlement Commission. On this additional tax is Rs.5,25,30,036/- and interest thereon is Rs.3,49,85,023 is calculated, and paid, relevant tax payments is verified with OLTAS and same is in order, enclosed as per Annexure F. 4.0 On basis of evidence gathered and analysis of documents during assessement proceedings proposed adjustment made by TPO-1 Ahmedabad, for various assessment years for which application has been filed by assessee, is as under:- F.Y. A.Y Adjustment proposed on account of Amount of adjustment proposed by TPO as per draft order u/s 92CA(3) 2006-07 2007-08 TPO passed order by taking foreign 2007-08 12,33,45,587 2007-08 2008-09 2008-09 2009-10 party (AE) as tested party, instead of taking 2008-09 357,20,97,260 2009-10 2010-11 Indian Party (ie., assessee company), in 2009-10 56,67,01,894 computation of arm's length price. 2010-11 46,47,15,067 2008-09 2009-10 Addition on account of guarantee fees 2009-10 18,94,60,000 2009-10 2010-11 proposed on account of guarantee given by 2010-11 14,56,92,234 assessee company for AE. 2009-10 2010-11 In assessment order TPO, has made Protective protective addition on account of transaction 380,33,10,000/- related to restructuring between two AE situated at Dubai & Singapore. 4.1 On basis of written submission made by applicant before Hon'ble Settlement Commission it is gathered that disclosed various amounts in 8 relevant assessment years under different sources of income are as under :- Additional Income Offered A.Y. Transfer of Payment of Purchased Disallowance Disallowance Indenting Adho- Total Amount COAs freght and sale of u/s. 14A of deferred Commission Disclosure () coal revenue exp. 2007-08 6,72,55,707 -- 81,139 2,00,000 50,00,000 7,25,36,846 2008-09 1,00,442 3,00,000 50,00,000 54,00,442 2009-10 --- 31,40,889 -- 45,897 -- 7,50,000 50,00,000 89,36,786 2010-11 --- 1,80,74,108 3,78,95,937 33,50,000 50,00,000 6,43,20,045 2011-12 --- -- 41,50,000 41,50,000 2012-13 --- -- 1,51,888 1,50,000 3,01,888 2013-14 3,35,73,333 1,00,0000 3,36,73,333 2014-15 Total 6,72,55,707 2,12,14,997 3,78,95,937 3,79,366 3,35,73,333 90,00,000 2,00,00,000 18,93,19,340 assesses has not shown above additional incomes in returns of income filed u/s 153A/143(3) & 139 of Act. above additional incomes disclosed by assessee with Hon'ble Settlement Commission are totally new averments against adjustment proposed by TPO. 5.0 Adequacy of Taxes:- It is brought to your kind notice that; order was poassed on basis of Transfer Pricing Officer's report, because only issued involved was in respect of Arms Length Price (ALP) value of international transactions carried out with its Associated Enterprises. Therefore comments on merits regarding adequacy of quantum of disclosed income before Hon'ble Settlement Commission may be called from TPO-I, Ahemedabad. Hence no comments are offered on this issue. 6.0. It is further requested that Hon'ble Supreme Court and Hon'ble High Court of M.P. through their aforesaid orders have stayed assessment proceedings in case. As such, matter is sub judice. Hence, it is requested that proceedings before Settlement Commission may kindly be kept in abeyance till matter is decided by Hon'ble Courts. 6.1 Assessing Officer, i.e. ACIT-3(1), Indore and JCIT, Range-3, Indore have also opined as per above. Reports of JCIT/AO are enclosed herewith. 7.0 Looking to sensitivity of case; case record is being sent personally by Income Tax Inspector deputed by Department. Submitted for kind perusal. 17. procedure prescribed is that on receipt of application by Settlement Commission, he has to issue 9 notice to applicant within 7 days and on hearing applicant order has to be passed under Section 245 D(1) rejecting or allowing application to be proceeded with. At this stage, no hearing is required to be given to commission of Income Tax and only applicant has to be heard. 18. In present case, Settlement Commission called for report vide letter dated 18.8.2014 from Commissioner of Income Tax. Commissioner of Income Tax furnished its report on 18.9.2014 and in this report Commissioner of Income Tax has accepted pendency of assessment proceedings and has not made any prayer for rejecting / declaring application made by respondent as invalid. only averment that has been made by Commissioner before Settlement Commission is to keep proceedings in abeyance till matter is decided by High court and Hon'ble Supreme Court. In view of report dated 18.9.2014 of Commissioner of Income Tax, which has been reproduced herein before, application of respondent No.1 was not declared invalid under Section 245D(2C). There is no procedure or irregularity or lack of jurisdiction of Settlement Commission and Commission has rightly proceeded in matter prescribed under Act. 19. Under provisions of Rule 9, Commissioner shall furnish further report within period of 45 days. In case in hand, as per report sent by Income Tax Commissioner there was no prayer to declare application invalid therefore, next step ie., calling of report under Rule 9 is only consequence as provided in Act since there is no mandate provided in Act to keep proceeding in abeyance, which was made by petitioner and, therefore, Settlement Commission has rightly proceeded in matter vide letter dated 24.9.2014. two writ petitions which were pending in High 10 Court and two SLP's before Apex Court matters have been now withdrawn by respondent No.1 and at time of withdrawal no objection was raised by department. At this stage, it cannot be said that respondent No.1 has not made full and true disclosure as required under provisions of Act. 20. Apex Court in case of Commissioner of Income Tax v/s. K. Jayaprakash Narayanan, reported as (2009) 184 Taxmaan 85 (SC), Supreme Court dismissed similar prayer by passing following order :- ( 2. ) THIS SLP is filed against decision of Settlement Commission admitting application of assessee under s. 245D of IT Act, 1961. It is case of Department that assessee had failed to make full and true disclosure in first instance and that said declaration made at later date by way of second declaration cannot be ground for admitting application under s. 245D. Since this SLP is filed only against order of Settlement Commission admitting application of assessee under s. 245D, we do not wish to interfere at this stage. However, we make it clear that on point of maintainability of application, it would be open to Department to raise contention before Settlement Commission who would be entitled to examine that question at final hearing of matter. 21. Division Bench of Delhi High Court in case of Commissioner of Income -tax v/s. Income Tax Settlement Commission, 2013 (35) Taxmann.com 56 (Delhi) has held following in para 22, 24, 25 and 34 which reads as under :- 22. From above, it is clear that in True Woods Pvt. Ltd. (supra), specific argument had been raised on behalf of Revenue that it was incumbent upon Settlement Commission to record specific finding to effect that applicant had made full and true disclosure before it admitted application or took any further steps on basis thereof. This argument was rejected by Division Bench. Division 11 Bench was of view that while foundation for settlement was application from assessee in which assessee is required to make full and true disclosure, it was equally true that such requirement need not be examined and authoritatively determined at threshold of any proceeding initiated before Commission. Importantly, Division Bench observed that there may be cases where it is possible for Commission to record finding that disclosure made in application is full and true. At same time, there could also be situations in which Commission may not be able to, at stage of admission of application, record finding with any amount of certainty. It is in such situation that it would be permissible for Commission to keep question open to be examined at later stage or at stage of disposal of application. As in case of True Woods Pvt. Ltd. (supra), this is exactly what has happened in present case. Settlement Commission has noted rival contentions of Revenue and applicants with regard to issues of full and true disclosure and manner of deriving undisclosed income and has taken prima facie view in favour of applicants. It is not definitive or final view and it is for this reason that Settlement Commission, in its wisdom, left issues open to be determined at stage of final hearing under Section 245D(4) of said Act. It may very well be that Settlement Commission, at that stage, may agree with Revenue on basis of material on record and report submitted by Commissioner of Income-tax that applications were not maintainable under Section 245C(1) of said Act. In fact, Settlement Commission may, at any stage till it passes final order under Section 245D(4), examine issues and if there is sufficient material on record, determine question of full and true disclosure and manner in which undisclosed income was derived conclusively and, depending on such decision, applications may be thrown out or they may be proceeded with further. 24. We are of view that order of Supreme Court in K. Jayaprakash Narayanan 12 (supra) and decision of Division Bench of this Court in True Woods Pvt. Ltd. (supra) clinch issue in favour of respondents. As such, this Court ought not to interfere with impugned orders. However, we need to examine decision of Supreme Court in case of Ajmera Housing (supra) which has been strongly relied upon by learned counsel for petitioner. In fact, learned counsel for petitioner went to extent of submitting that in view of decision of Supreme Court in Ajmera Housing (supra), orders/decisions in K. Jayaprakash Narayanan (supra) and True Woods Pvt. Ltd. (supra) would no longer be good law. 25. In Ajmera Housing (supra), order had been passed by Income Tax Settlement Commission under Section 245D(1) on 17.11.1994, allowing settlement application filed on behalf of assessee to be proceeded with. That order was not challenged by Revenue. Settlement Commission proceeded with said settlement application and passed final order under Section 245D(4) of said Act on 29.01.1999. That settlement order was challenged by Revenue before Bombay High Court which set aside same on, inter alia, ground that no finding had been returned by Settlement Commission as to whether there was full and true disclosure of income on part of assessee/applicant. Bombay High Court also held that order dated 17.11.1994 passed under Section 245D(1) of said Act was void and remitted case to Settlement Commission for decision afresh and kept all questions open. applicant/assessee, being aggrieved by said decision of Bombay High Court, went up in appeal before Supreme Court which, by order dated 11.07.2006, set aside Bombay High Court order and remitted matter to High Court for fresh decision. In second round, Bombay High Court again set aside Income Tax Settlement Commission's order dated 29.01.1999 and remanded case to Settlement Commission for fresh adjudication. While doing so, Bombay High Court observed as under:- "In view of facts and legal position 13 noted above, even though we find that respondents had not made full and true disclosure of their income while making applications under Section 245C, it would not be proper to set aside proceeding. However, at same time, Commission appears to have misdirected itself on several important aspects while passing final order. Settlement Commission had not supplied annexure Dated 19.9.1994 declaring additional income of Rs.11.41crore and thus, due opportunity was not given to Revenue to place (sic) its stand properly. Huge amount of unexplained expenses, unexplained loans and unexplained surplus, total of which is more than Rs.14 crore, was not taken into consideration while passing final order. Thirdly, Settlement Commission has imposed token penalty of Rs.50 lakhs while in its own assessment leviable penalty would be 562.87 (sic Rs.562.87). In fact if amounts, which were not taken into consideration while assessing total undisclosed income, are also taken into consideration, amount of leviable penalty may be much more. Taking into consideration multiple disclosures and fact that respondents had failed to make true and full disclosure initially as well as at time of second disclosure, we do not find any justifiable reasons to reduce or waive amount of penalty so drastically. Taking into consideration all these circumstances, in our considered opinion, it will be in interest of justice to set aside final order passed by Settlement Commission and to remand matter back to Settlement Commission for hearing parties afresh and to pass orders as per law. Facts and circumstances noted in respect of writ petition No. 2191 of 1999 are also relevant for remaining writ petitions and, therefore, it will be necessary that final orders passed in all these proceedings should be set aside." 14 34. learned counsel for petitioner had also taken point that settlement applications of respondents 3 and 4 had been rejected for failure to pay additional tax and therefore subsequent applications of said respondents 3 and 4 filed on 23.11.2012 ought not to have been entertained. In our opinion, learned counsel for respondents 2 to 5 has given complete answer to this argument. He has referred to Section 245K(2) of said Act which stipulates that where person has made application under Section 245C on or after first day of June, 2007, and if such application has been allowed to be proceeded with under Section 245D(1), such person shall not subsequently be entitled to make application under Section 245C. It was contended by learned counsel for respondents 2 to 5 that this bar from making another application under Section 245C would only apply if earlier application had been allowed to be proceeded with under Section 245D(1). But, in present case, earlier applications filed by respondents 3 and 4 had not been allowed to be proceeded with under Section 245D(1) and had been rejected at threshold for want of payment of full amount of additional tax and interest due. Prima facie, we are in agreement with submission made by learned counsel for respondents. However, since we are not inclined to interfere with impugned orders, we feel that this issue can also be left open to be decided by Settlement Commission at time of further proceedings till order under Section 245D(4) is passed. For all these reasons, we agree with learned counsel for respondents 2 to 5 that this is not stage at which this Court ought to interfere with impugned orders and proceedings pending before Settlement Commission. writ petition is accordingly dismissed. We make it clear that we have not expressed any opinion on merits of issues as to whether respondents 2 to 5 had made full and true disclosure and had indicated manner in which undisclosed income had been derived. Those and related issues on merits are for Settlement Commission to decide. There shall be no order as 15 to costs. 22. Similar view is taken by Bombay High Court in case of Commissioner of Income Tax (Central) Pune v/s. Income Tax Settlement Commission (ITSC), 2013 (40) taxmann.com 201 (Bombay) which reads as under :- Commissioner of Income Tax (Central), Pune has challenged order passed by Settlement Commission on 29 August 2013 under provisions of sub-section (2C) of Section 245D of Income Tax Act 1961. By order which has been impugned, Settlement Commission has held as follows : In totality of facts available to us at present, we are satisfied about true and full nature of disclosure made. manner of making undisclosed income, in facts of case, as stated, is on sales kept outside books resulting in understatement to sales. Needless to say, as observed by Hon'ble High Court in this very case, that if at later stage of proceedings, facts come to our knowledge showing suppression of full material facts or mis-statements thereof, law will take its own course. 2. Commission has accordingly held that application filed by Second Respondent is not invalid application and should be allowed to be proceeded with further. Following order which was passed by Settlement Commission on 29 August 2013, further hearings took place before Commission on 19 September 2013 and 7 October 2013. grievance of Petitioner is that Commission has without ordering enquiry by Commissioner under Section 245D(3), directly proceeded under sub-section (4) and letter was received from Directorate of Investigation of Settlement Commission on 4 October 2013 requiring inspection of factory premises of Second Respondent. contention of Revenue is that in present case it was necessary for Settlement Commission to cause Commissioner to make or cause to be made further enquiry or investigation 16 and to furnish report on matters covered by application to Settlement Commission. 3Section 245D(3) provides as follows : (3) Settlement Commission, in respect of - (i)an application which has not been declared invalid under sub-section (2C); or (ii) application referred to in sub-section (2D) which has been allowed to be further proceeded with under that sub-section, may call for records from Commissioner and after examination of such records, if Settlement Commission is of opinion that any further enquiry or investigation in matter is necessary, it may direct Commissioner to make or cause to be made such further enquiry or investigation and furnish report on matters covered by application and any other matter relating to case, and Commissioner shall furnish report within period of ninety days of receipt of communication from Settlement Commission; Provided that where Commissioner does not furnish report within aforesaid period, Settlement Commission may proceed to pass order under sub-section (4) without such report. 4. provisions of sub-section (3) of Section 245D would make it clear that where application has not been declared to be invalid by Settlement Commission under sub-section (2C), Commission is empowered to call for records from Commissioner and upon examination of such records, if it is of opinion that further enquiry or investigation in matter is necessary, it may direct Commissioner to do so. jurisdiction to determine as to whether further enquiry or investigation is necessary is thus vested with Settlement Commission. In present case, from compilation of correspondence which is placed on record, it is clear that on 3 October 2013, Commissioner of Income Tax (Central) Pune had addressed communication to Settlement Commission setting out that enquiry under sub-section (3) of 245D was necessary in respect of certain specific issues. grievance of Petitioner, is that on 19 September 17 2013 at hearing before Commission it was indicated that department would be heard on issue relating to Section 245D(3) enquiry on 7 October 2013, but as matter of fact Commission has not applied its mind to whether enquiry under Section 245D(3) should be ordered. 5. learned senior counsel appearing on behalf of Second Respondent on other had has submitted that issue as to whether enquiry under Section 245D(3) should be ordered by Settlement Commission has not been finally concluded by Settlement Commission, and during course of proceedings, Settlement Commission would apply its mind to that aspect. As we have noted earlier, by letter dated 3 October 2013 to Settlement Commission, Commissioner of Income Tax (Central) Pune has drawn attention of Commission to specific issues on which further enquiry or investigation under Section 245D(3) would be necessary. 6. Sub-section (4) of Section 245D provides as follows : (4) After examination of records and report of Commissioner, if any, received under - (I) sub-section (2B) or sub-section (3), or (ii) provisions of sub-section (1) as they stood immediately before their amendment by Finance Act, 2007, and after giving opportunity to applicant and to Commissioner to be heard, either in person or through representative duly authorised in this behalf, and after examining such further evidence as may be placed before it or obtained by it, Settlement Commission may, in accordance with provisions of this Act, pass such order as it thinks fit on matters covered by application and any other matter relating to case not covered by application, but referred to in report of Commissioner. 7. Under sub-section (4) of Section 245D Settlement Commission has to : (i) examine records; (ii) examine report of Commissioner, if any, received under sub-section 18 (2B) or sub-section (3), as case may be, (or under sub-section (1) as it stood before Finance Act 2007); (iii) examine such further evidence as may be placed before it or obtained by it. Settlement Commission is also required to furnish opportunity to applicant and to Commissioner to be heard before it passes order under sub-section (4). reading together of provisions of sub-section (3) and sub-section (4) would indicate that Settlement Commission is not as mandate of law required to order further enquiry or investigation by Commissioner under Section 245D(3) in every case. Whether facts of case are of such nature or complexity as would require further enquiry or investigation has to be determined by Settlement Commission after it has occasion, upon calling for records from Commissioner and examination of those records to decide whether further enquiry or investigation is necessary. Undoubtedly, if Settlement Commission holds that further enquiry or investigation is necessary under sub-section (3), such enquiry or investigation has to be ordered by Commissioner because sub-section (3) confers jurisdiction on Commissioner to conduct enquiry or investigation, as case may be. Equally, it is evident both from language of sub-section (3) and terms of sub- section (4) that Settlement Commission is not required in every case to cause enquiry or investigation to be made under sub-section (3). That is evident by use of words if any in sub-section (4). Moreover, under sub- section (4) Settlement Commission, besides considering report, if any, of Commissioner under sub- section (2B) or sub-section (3) is empowered to examine such further evidence as may be placed before it or obtained by it. Evidence placed before Commission would include evidence which may be produced either by assessee or by Commissioner. Evidence obtained by Commission would include evidence which Commission has obtained under its own authority. In that sense powers of Settlement Commission are wide. Finally, it may be necessary to note that under sub-section (4) Settlement 19 Commission has to pass order in accordance with Act as it thinks fit on matters covered by application. Settlement Commission may also pass order on any other matter relating to case not covered by application, but which has been referred to in report of Commissioner. Hence, if Settlement Commission intends to pass order in respect of any other matter which has not been referred to in application, that matter must be of nature such that it is referred to in report of Commissioner. At this stage, it would also be necessary to advert to provisions of sub- section (2) of Section 245F under which Settlement Commission has exclusive jurisdiction to exercise powers and to perform functions of Income Tax authority under Act, where application made under Section 245C has been allowed to be proceeded with under Section 245D, until order is passed under sub- section (4) of Section 245D. This is, however, made subject to provisions of sub-section (3). Consequently, where Commission in course of its jurisdiction under Section 245D(3) has ordered enquiry or investigation by Commissioner, exclusive nature of its jurisdiction is subject to Section 245D(3). 8. On record of case, it is common ground between counsel appearing on behalf of Revenue and learned senior counsel appearing on behalf of Second Respondent that Settlement Commission is yet to apply its mind to whether enquiry under Section 245D(3) should be ordered. In view of statement which has been made on behalf of Second Respondent which is consistent with scheme of statutory provisions, we are not inclined to entertain proceedings at this stage, save and except to clarify that Settlement Commission shall during course of its proceedings specifically bring to bear its consideration on whether enquiry under Section 245D(3) should be ordered particularly having regard to circumstances which have been set out in letter of Commissioner of Income Tax dated 3 October 2013. Since proceedings are pending before Settlement Commission, it would not be 20 appropriate for this Court to entertain proceedings any further. We accordingly dispose of proceedings, having clarified legal position. There shall be no order as to costs 23. Similar view is taken by High Court of Andhra Pradesh in case of Commissioner of Income-tax, Vijaywada vs. Settlement Commission (IT & WT), 2014 (49) taxmann.com 165 (Andhra Pradesh). Para 24 and 26 are relevant which reads as under :- 11. As matter of fact, what all is required by Settlement Commission at stage of entertaining application is whether prima facie case is made out or not and in that context only subsequent amendments which have been brought in Sections 245C and 245D of Act had dispensed with even issuing preliminary notice to Commissioner of Income Tax leaving it to absolute discretion of Settlement Commission to entertain case or not for its consideration. reasons for giving such discretion to Commission cannot be lost sight particularly keeping in view of objects of establishment of Settlement Commission and to settle disputes between taxpayer and department in amicable manner. As matter of fact, recent legislative efforts in bringing Section 268A of Act and in issuing various circulars whereby restraining department officials to file appeals and further appeals in all and sundry cases recognising futility of such exercise may be noticed. close perusal of order passed by Settlement Commission, both at stage of admission and also at stage of passing of final order, we find, as matter of fact, ample opportunity was given to Department to file their objections and also representatives of department were heard before passing orders and in that view of matter, we are unable to concur with contention of learned counsel for petitioner that order is vitiated on account of violation of principles of natural justice. Inasmuch as we are satisfied that it was within discretion of Settlement Commission at stage of Section 245D(1) of Act to admit case for consideration based on prima facie view, 21 aspect of admission of case by Settlement Commission except in exceptional circumstances cannot be subject matter of judicial review. This becomes clear from law laid down in catena of judgments with reference to restricted scope of interference by Courts even with final orders of Settlement Commission. In that view of matter, we do not see any reasons to order amendment petition. Accordingly, W.P.M.P.No.28188 of 2002 is dismissed. 24. In case of Commissioner of Income-tax vs. Income Tax Settlement Commission, 2013 (33) taxmann.com 313 (Gujarat) para 6 is relevant which reads as under :- 6. We are of opinion that by such order, Settlement Commission did not finally decide merit or demerit of rival contentions. It only allowed application to be proceeded with. All contentions of both sides would necessarily be gone into Commission before passing any final order. order of Settlement Commission was only in nature of permitting further enquiry into application of assessee for settlement. In that view of matter, no interference is called for. Petition is dismissed. Rule is discharged. 25. In reply, Shri R.L. Jain, learned Senior counsel for petitioners has submitted that no order has been passed by Commissioner under Section 245D (2C) regarding admitting application for settlement filed by respondent No.1 and department has only received notice by which they came to know about it. He has also drawn our attention to relevant provisions of Act and definition as defined in Chapter XIX and submitted that application must contained full and true disclosure of income of assessee, which has not been disclosed before assessing officer, manner in which such income has been derived as required under 245(C) (1) of Act. 22 26. His next submission is that before passing of order standing counsel of department should he heard. He also drawn our attention to news item Annexures P/1 and P/11 and submits that disclosure made by respondent No.1 was not full and true and thus, learned authority has committed error in accepting application. In support of aforesaid contention he placed reliance on following cases CIT (Central) Calcutta v/s. B.N. Bhattachargee & Anr., 118 ITR 461 (SC), CIT v/s. Anjum M.H. Ghaswala & Ors., 252, ITR 1 (SC), CIT v/s. Express Newspapers Ltd, 1994 (206) 443 (SC), Ajmera Housing Corpn. v.s CIT, 2010 (193) Taxman 193 (SC), Kuldeep Industrial Corporation v. Income-tax Officer & Ors., 223 ITR pg 840 (SC), Commissioner of Income Tax (Central) Pune v/s. Income Tax Settlement Commission (ITSC), 2013 (40) taxmann.com 201 (Bombay), Commissioner of Income-tax v/s. Godwin Steels P. Ltd, 2013 (353) ITR 353 (Delhi), Hassan Ali Khan v/s. Settlement Commission, 2008 (168) Taxman 78 (Bom), Commissioner of Income-tax v/s. Income-tax Settlement Commission & Anr., 2009 (310) ITR 10 (Mad) and Commissioner of Income- tax v/s. Om Prakash Mittal, 2005 (273) ITR pg 326 (SC). 27. To counter aforesaid allegations learned counsel for respondent No.1 has drawn our attention to Annexure P/1, stand taken by department. Statutory report which is at page 53 and para 3.0 and 5.0 of report. His contention is that no notice to either side is required at time of considering application. rule of department will start one application is accepted and notice is issued to them. At time of admission no objection of any kind was raised as is evident from report which has been reproduced in preceding paragraph and submits that interest of department is well protected. department just to linger on proceeding 23 before Settlement Commission has filed this writ petition whereas they can raise all these objections before Settlement Commission and in view of law laid down by Apex court in case of Commissioner of Income Tax v/s. K. Jayaprakash Narayanan (supra). Hon'ble Apex Court has granted liberty to department to raise contention before settlement Commission who would be entitled to examine that question on final hearing of matter. 28. Since matter is pending before Settlement Commission and it has to decide as to whether full disclosure was made or not, it is not for court to enter into it and petitioner is at liberty to raise all objection regarding maintainability of application before commission. With aforesaid observations, we vacate ad-interim order dated 9.1.2015 by allowing I.A.No.378/2015 filed by respondent No.1. 29. It may be mentioned that we have not decided any issue on merits of case and any observation made in order will not in any way affect subject matter pending for consideration before settlement Commission. 30. With aforesaid, I.A.No.378/2015, filed by respondent No.1 is allowed and disposed of. (P.K. JAISWAL) (ALOK VERMA) JUDGE JUDGE ss/- 24 Commissioner of Income-tax-I, Indore v. Asian Natural Resources India Ltd. & Anr