W.P. No. 126 of 2017 IN HIGH COURT AT CALCUTTA Constitutional Writ Jurisdiction Original Side ABC Dubash Mining & Anr. Vs. Income Tax Settlement Commission & Ors. For Petitioners : Mr. Samaraditya Pal, Sr. Advocate Mrs. Manju Manot, Advocate Mr. Bajrang Manot, Advocate Mr. Deepan Kr. Sarkar, Advocate Mr. Ram Chandra Agarwal, Advocate For Income Tax : Md. Nizamuddin, Advocate Department Mr. Soumitra Mukherjee, Advocate Hearing concluded on : May 18, 2017 Judgment on : June 14, 2017 DEBANGSU BASAK, J.:- petitioners have assailed order of Settlement Commission dated January 24, 2017. Learned Senior Advocate for petitioners has submitted that, Settlement Commission did not adhere to scheme laid down under Chapter XIXA of Income Tax Act, 1961 in dealing with and disposing of application for settlement made by assessee. He has submitted that, assessee is entitled to approach Settlement Commission only once. purpose of settlement is to ensure that revenue receives its due share of taxes without elaborate process of adjudication and at same time assessee is granted some relief in assessment and other defaults. When assessee volunteers to approach Settlement Commission, he does so to his prejudice. Settlement Commission, therefore, should make every effort to have matter settled before it. Adverting to present case he has submitted that, Settlement Commission did not undertake process of settlement contemplated under various provisions of Chapter XIXA of Income Tax Act, 1961. impugned order of Settlement Commission does not return finding as to quantum of tax which assessee is liable to pay. Not having arrived at quantum of tax liability of assessee and not having asked assessee to pay same, according to him, Settlement Commission had failed to exercise jurisdiction vested in it by law. According to him, Settlement Commission ought to have arrived at tax liability of assessee and ought to have called upon assessee to pay same. In event, assessee did not accept assessment and did not offer to pay same, Settlement Commission could have proceeded to pass such order as deemed necessary under Chapter XIXA of Income Tax Act, 1961. Referring to 2004 Volume 4 Supreme Court Cases page 714 (State of U.P. & Anr. v. Johri Mal) learned Senior Advocate for petitioners has submitted that, Writ Court is concerned more with decision making process rather than decision itself. In present case, according to him, decision making process of Settlement Commission stands vitiated as Settlement Commission did not adhere to provisions of Chapter XIXA of Income Tax Act, 1961. He has referred to four orders passed by Settlement Commission in settlement proceedings. Referring to first order dated September 15, 2015 of Settlement Commission, learned Senior Advocate for petitioners has submitted that, Settlement Commission had proceeded not to reject application under Section 245C. Settlement Commission by such order wanted to proceed with application for settlement. Having done so, it was incumbent on Settlement Commission to proceed in accordance with law on application for settlement. Referring to second order of Settlement Commission dated October 28, 2015, learned Senior Advocate for petitioners has submitted that, petitioners were not given copy of report noted in such order. Referring to third order dated September 2, 2016 of Settlement Commission, learned Senior Advocate for petitioners has submitted that, Settlement Commission did not adhere to provisions of Section 245D(3) of Act of 1961. It did not call for records from Principal Commissioner or Commissioner. records do not show that Settlement Commission had examined such records. It did not undertake any further enquiry or investigation. It ought to have done so. Settlement Commission, therefore, could not form valid opinion as to whether or not to proceed further with settlement. Any proceedings undertaken by Settlement Commission, without requisite formation of opinion under Section 245D(3) of Act of 1961, is bad. Referring to fourth order dated January 24, 2017, which has been impugned in present writ petition, learned Senior Advocate for petitioners has submitted that, Settlement Commission did not adhere to Section 245D(4) or Section 245D(5) of Act of 1961 in passing impugned order. Firstly, Settlement Commission did not examine records and reports of Commissioner. Not having done so, it could not pass order either rejecting or accepting settlement. It ought to have called for records and report from Principal Commissioner. Relying upon 2011 Volume 1 Supreme Court Cases page 1 (Brij Lal & Ors. v. Commissioner of Income Tax, Jalandhar) learned Senior Advocate for petitioners has submitted that, Supreme Court had noted various provisions of of Income Tax Act, 1961 including provisions relating to Chapter XIXA of Act of 1961. He has submitted that, Supreme Court has noted that, Section 245D has two distinct stages. He has submitted that, assessment in law is different from assessment by way of settlement. procedure under Sections 245C and 245D in Chapter XIXA of Act of 1961 is special procedure. It requires special type of computation of total income. Settlement Commission is empowered to do so. Learned Senior Advocate for petitioners has referred to various provisions of Chapter XIXA of Income Tax Act, 1961 particularly to Sections 245D(2C) and 245D(3) of Income Tax Act, 1961. He has submitted, in reference to various sections of Chapter XIXA that, Settlement Commission is required to conduct proceedings as prescribed by statute and failure of Settlement Commission to do so, in settlement proceedings resulting in impugned order. On failure of Settlement Commission to adhere to scheme of Chapter XIXA of Act of 1961, learned Senior Advocate for petitioners has submitted that, once Settlement Commission had declared application for settlement to be valid in terms of Section 245D(2C) of Act of 1961, Settlement Commission is required to call for records from department. In present case, Settlement Commission did not call for such records as required under Section 245D(3). Settlement Commission is required to examine such records produced by department. Since Settlement Commission did call for records, question of examination of such records did not arise. Settlement Commission is required to examine records and to form opinion whether or not further enquiry or investigation in matter is necessary. As records were not called for, Settlement Commission could not form such opinion. Settlement Commission is required to direct Principal Commissioner or Commissioner, as case may be, to make or cause to be made further enquiry or investigation after formation of opinion. In present case, since no opinion was formed, such direction was not given by Settlement Commission. None of orders of Settlement Commission can be construed in manner to have given such direction. order dated September 2, 2016 does not give such direction. It refers to letter dated November 25, 2016 which was not disclosed to petitioners at material point of time. Since Settlement Commission is required to form opinion as envisaged in Act and Settlement Commission not having done so, Settlement Commission has failed to exercise jurisdiction vested upon it in law. Settlement Commission, therefore, misconducted proceedings subsequent to its failure to form opinion as envisaged under Section 245D. Learned Senior Advocate for petitioners has submitted that, after Principal Commissioner or Commissioner, as case may be, submits its report on further enquiry or investigation, Settlement Commission has to proceed to pass order under Section 245D(4). He has referred to order of Settlement Commission passed under Section 245D(3) and has submitted that, such order does not say that, records were called for. Such order refers to letter dated November 26, 2015 by which Principal Commissioner was requested to submit report under Rule 9. Moreover, such letter was not disclosed to petitioners at relevant point of time. report under Rule 9 called for is not same as envisaged under Section 245D(3) of Act of 1961. He has referred to sequence of events happening before Settlement Commission and has submitted that, report under Rule 9 was also not furnished within time stipulated by statute. In any event, it cannot be construed to be one under Section 245D(3). Adverting to facts of present case, learned Senior Advocate for petitioners has submitted that, Settlement Commission has found that, petitioners allegedly have come with unclean hands and did not make true and full disclosure of its income. Settlement Commission had identified three transactions in impugned order. He has referred to three transactions individually and has submitted that, Settlement Commission could have undertaken further inquiry or investigation into those three transactions, if it was not satisfied with explanations given. Settlement Commission could have quantified tax liability of petitioners in each of three accounts. On such tax liability being found it was for petitioners to accept or to reject same. Settlement Commission is empowered to undertake such exercise. He has submitted that, petitioners are not guilty of suppression of any income before Settlement Commission. With regard to first issue noted in impugned order, learned Senior Advocate for petitioners had submitted that, partner of firm had brought in capital to partnership firm. Such partner is non-resident Indian. Income Tax authority including Settlement Commission has no business to look into source of fund of NRI partner. Settlement Commission ought to have taken note of such fact. It should have proceeded on basis of fund being brought into firm for purpose of computation of income of firm. Moreover, Settlement Commission is sufficiently empowered under provisions of Chapter XIXA of Income Tax Act, 1961 to make further investigation into affairs of firm, in event, Settlement Commission is of view that, it requires further investigation as to source of fund. It ought not to have decided such issue on basis that, Settlement Commission was not in position to decide genuineness and sources of fund brought into firm by partner, as returned in impugned order. Referring to second issue, learned Senior Advocate for petitioners has submitted that, Settlement Commission again could have entered into genuineness of claim made by assessee with regard to transactions concerned. So far as third issue is concerned, he has submitted that, transaction with Bharat Heavy Electricals Limited (BHEL) is not disputed. Again Settlement Commission could have entered into details of transactions, if necessary, rather than returning finding that, assessee did not come with clean hands. purpose of going to Settlement Commission was to have issues settled rather than have Settlement Commission return findings as noted in impugned order. Learned Senior Advocate for petitioners has submitted that, on three issues Settlement Commission could have adjudicated tax liability of assessee and could have called upon assessee to pay such tax in manner as directed rather than coming to finding that transactions cannot be adjudicated upon. In such view, he has submitted that, impugned order of Settlement Commission should be set aside. matter may be remanded to Settlement Commission for decision afresh. Learned Advocate appearing for department has submitted that, assessee approaching Settlement Commission is required to make true and full disclosure of his income. In present case, assessee did not do so. According to him, every reference to Settlement Commission need not result in order of settlement being passed. It is open to Settlement Commission to accept proposal for settlement, give orders on such settlement or to reject application for settlement. In present case, Settlement Commission on appreciation of facts and materials made available to it, has come to finding that, assessee did not make true and full disclosure of its income, therefore, preventing settlement process and order of settlement to be passed. Consequently, impugned order of Settlement Commission cannot be faulted. impugned order is reasoned. It goes into proposal for settlement in details. It gives reasons as to why proposal for settlement as mooted by assessee cannot be accepted. findings arrived at by Settlement Commission cannot be said to be perverse. It is plausible view of facts. It is not for Writ Court to reapprise evidence before Settlement Commission as appellate authority to come to different finding. On scope of interference of Writ Court in respect of orders passed by Settlement Commission, learned Advocate for department has relied upon 1993 (201) Income Tax Reports page 611 (SC) (Jyotendrasinhji v. S.I. Tripathi & Ors.), 2017 (78) taxmann.com page 85 (Bombay) (Rashmi Infrastructure Developers Ltd. v. Income tax Settlement Commission), All India Reporter 1993 Supreme Court page 2212 (Shriyans Prasad Jain v. Income-tax Officer), 1999 (236) Income Tax Reports page 581 (Madras) (V.M. Shaik Mohammed Rowther v. Settlement Commissioner (IT & WT) & Ors.), 1999 (235) Income Tax Reports page 118 (SC) (Appropriate Authority & Anr. v. Smt. Sudha Patil & Anr.) and 2011 Volume 4 Supreme Court Cases page 635 (Union of India & Ors. v. M/s. Ind- Swift Laboratories Ltd.). On aspect of procedural violation learned Advocate for department has submitted that, in event so-called procedural violations do not go to root of matter interference by way of Writ Court is not called for. Moreover, in facts of present case, he has submitted that, assessee has allowed settlement proceedings to continue without pointing out so-called procedural infractions. assessee has accepted procedural infractions, if any, alleged to be committed by Settlement Commission unconditionally. It cannot be allowed to challenge such procedural infractions, if any, in impugned order. assessee is deemed to have waived infractions, if any. In support of such contentions he has relied upon 2002 Volume 4 Supreme Court Cases page 316 (Commissioner of Customs, Mumbai v. Virgo Steels, Bombay & Anr.). He has sought dismissal of writ petition. following issues have arisen for consideration in present writ petition:- (i) Is impugned order of Settlement Commission dated January 24, 2017 vitiated due to jurisdictional errors in conduct of proceedings before Settlement Commission? (ii) To what relief or reliefs, if any, are parties entitled to? partnership firm, being first petitioner herein, had made application for settlement before Settlement Commission for assessment years 2013-2014, 2014-2015 and 2015-2016 on September 9, 2015. same was taken up for consideration by Settlement Commission on September 15, 2015. By Order dated September 15, 2015, Settlement Commission had found requirements of provisions of Section 245C to be fulfilled. application for settlement was allowed to be proceeded with under Section 245D(1) of Act for three assessment years concerned. Principal Commissioner was required to submit report under Section 245D(2B) to Settlement Commission. Principal Commissioner had submitted report dated October 9, 2015 under Section 245D(2B) before Settlement Commission. In report, various issues were raised, including non-disclosure of manner in which disclosed income was derived by assessee. assessee through its Advocate s letter dated October 27, 2015 had dealt with such report. Another report was also placed before Settlement Commission. petitioners have claimed not to have received copy of this report. Settlement Commission had, thereafter, passed Order dated October 28, 2015 under Section 245D(2C) after considering two reports and after hearing parties. At such hearing, petitioners did not raise issue of second report being not made available to them. By such order Settlement Commission had discussed issue of full and true disclosure of income by assessee concerned. Settlement Commission had returned prima facie satisfaction that, disclosures made by assessee at that stage, to be full and true. It went on to say that, correctness of alleged additional income would, however, be considered in course of Section 245D(4) proceedings. It had held that, application filed by assessee was not invalid. It had called for report under Rule 9 from Principal Commission. petitioners being aware of Order dated October 28, 2015 did not challenge same. They did not object to Settlement Commission deciding on correctness of full and true disclosure of income at Section 245D(4) stage. They did not object to Settlement Commission asking for report under Rule 9. They did not contend before Settlement Commission that, report under Rule 9 was not contemplated under provisions of Section 245D(2B) of Act. report under Rule 9 of Income Tax Settlement Commission Rules dated January 16, 2016 was submitted by Principal Commissioner with Settlement Commissioner. assessee had received opportunity to deal with report dated January 7, 2016 under Rule 9 of Settlement Rules. assessee had filed reply dated August 2, 2016 with regard thereto. Commissioner of Income Tax had made few comments and submissions with regard to report and reply thereto of assessee. Settlement Commission, thereafter, had issued Order dated September 2, 2016 under Section 245D(3). By such Order, Principal Commissioner was requested to make enquiries on issues noted therein. month s time was allowed to complete enquiry. report of enquiry was directed to reach Settlement Commission by October 4, 2016. assessee had participated in enquiry. assessee did not raise any objections to enquiry conducted or subject matter of enquiry. Principal Commissioner had submitted report dated October 10, 2016 with regard to enquiry. assessee through its Advocate s letter dated October 9, 2016 had responded to queries raised by Settlement Commission. Principal Commissioner by report dated October 24, 2016 had stated before Settlement Commission that, enquiry directed by Order dated September 2, 2016 could not be completed as various details called from diverse parties were not made available to it within time. It had sought another three months time to complete enquiry. assessee through its Advocate s letter dated October 25, 2016 had dealt with report of Principal Commissioner dated October 4, 2016. It had sought to explain queries raised by Principal Commissioner. Principal Commissioner by its report dated December 26, 2016 had submitted its views on enquiry directed by Order dated September 2, 2016. assessee through its Advocate s letter dated January 5, 2017 had dealt with various queries raised on December 14, 2016. Settlement Commission after consideration of materials placed before it, and after hearing parties has passed impugned Order dated January 24, 2017. By its order, Settlement Commission has returned finding that, assessee did not come with clean hands to it. assessee did not make full and true disclosure of all material facts and income. prerequisites for settlement proceedings not being fulfilled by assessee, Settlement Commission, by impugned order, has considered proceedings to be abated. It has identified three principal heads where assessee did not make full and true disclosure of its income. In proceedings before Settlement Commission, assessee was represented by its Advocates. At no point of time before Settlement Commission, did assessee raise any jurisdictional issue with regard to conduct of proceedings by Settlement Commission. It did not complain to Settlement Commission as to alleged infractions of any statute made by Settlement Commission in conduct of settlement proceedings, at all. It has been contended on behalf of petitioners that, petitioners having offered settlement, they had considered it prudent not to raise any jurisdictional issues with regard to conduct of proceedings by Settlement Commission during its process on apprehension that such issues may derail settlement proceedings. In facts of present case and particularly in view of conduct of parties before Settlement Commission, I am afraid that, I am not in position to accept such contention. infraction, if any, was not pointed out to Settlement Commission by petitioners at relevant point of time. petitioners had filed detailed replies before Settlement Commission at various stages. They were heard at every stage and before any of four orders were passed by Settlement Commission. None of these replies show that, petitioners did raise point of judicial errors in conduct of proceedings by Settlement Commission or issue of jurisdiction as sought to be agitated now, at first instance. Not having done so, plausible inference of such conduct is that, such party has waived its rights with regard to such jurisdictional issues and has submitted to jurisdiction unconditionally. It is not case of inherent lack of jurisdiction. complaint of petitioners is limited to procedural irregularities which had allegedly infringed upon jurisdiction propriety of conduct of proceedings by Settlement Commission. Virgo Steels, Bombay & Anr. (supra) has held that, mandatory requirement of statute can be waived by party concerned, if statute seeks to confer privilege on party. It has noted four Supreme Court decisions and decision of Privy Council on issue. It has held that, even though provision of law is mandatory in its operation, if such provision is one which deals with individual rights of person concerned and is for his benefit, such person can always waive such right. Johri Mal (supra) has held that, while exercising power of judicial review, Court is more concerned with decision making process rather than merit of decision itself. It has also held that, while examining and scrutinizing decision making process, it becomes inevitable to also appreciate facts of given case, as otherwise, decision cannot be tested under grounds of illegality, irrationality or procedural impropriety. Brij Lal & Ors. (supra) has considered issues referred to it. issues that have been considered are summarized in paragraph 2 of report. Such issues relate to whether Section 235B applies to proceedings of Settlement Commission under Chapter XIXA of Income Tax Act, 1961 and if answer to such question is in affirmative, what is terminal point for levy of interest and whether Settlement Commission could reopen its concluded proceedings by invoking Section 154 so as to levy interest under Section 234B though not done in original proceedings. While discussing such issues, provisions for settlement under Chapter XIXA of Act of 1961 have been discussed. It has also held that, provisions for settlement are different to provisions for regular assessment. On scope and ambit of judicial review of order passed by Settlement Commission, Jyotendrasinhji (supra) has held that, although there is no bar to writ jurisdiction of High Court under Article 226 of Constitution of India to scrutinize order of Settlement Commission, scope of judicial review under Article 226 of Constitution of India is to consider whether order of Settlement Commission is contrary to provisions of Income Tax Act, 1961 and if so, whether it has prejudiced petitioner and whether impugned order suffers from bias, fraud or malice. Similar view has been expressed in Ind-Swift Laboratories Ltd. (supra). It has also held that, so far as findings of fact recorded by Settlement Commission or questions of facts are concerned, same is not open for examination either by High Court or by Supreme Court. Shriyans Prasad Jain (supra) has held that, findings of fact recorded by Settlement Commission cannot be reviewed by Court. V.M. Shaik Mohammed Rowther (supra) has held that, assessee has to satisfy essential condition of making full and true disclosure before Settlement Commission. Settlement Commission is not meant to be optional forum chosen by assessee for settlement of tax liability and other liability while such assessee continues to be dishonest and deliberately fails to make full and true disclosure of its income. Smt. Sudha Patil & Anr. (supra) has held that, merely because no appeal has been provided against order of Settlement Commission, same does not enlarge scope of supervisory power of High Court nor can High Court exercise powers as appellate authority. Rashmi Infrastructure Developers Ltd. (supra) on facts of that case has found that, petitioner is not in position to substantiate that finding of Settlement Commission that, assessee did not make full and true disclosure, was perverse. writ petition was not entertained. assessee is entitled to approach Settlement Commission for purpose of settlement of tax liability or any other liability that may arise under provisions of Income Tax Act, 1961. assessee is, however, required to make full and true disclosure of its income, manner in which income has been derived, additional amount of income tax payable on such income and such other particulars as may be prescribed to Settlement Commission. Principal Commissioner immediately on receipt of Order dated September 15, 2015 passed under section 245D(1) by Settlement Commission has by its report dated October 9, 2015 raised issues with regard to assessee not making full and true disclosure of its income and source from which such income had been derived. Settlement Commission by Order dated October 28, 2015 passed under Section 245D(2C) had postponed decision on correctness of disclosure of additional income by assessee to be considered in course of Section 245D(4) proceedings. This order has not been assailed by assessee at relevant point of time. assessee has allowed settlement proceedings to continue on basis of such premise as recorded in Order dated October 28, 2015. assessee has unconditionally participated in settlement proceedings subsequently. correctness of disclosures made by assessee was taken up for consideration by Settlement Commission on different occasions. assessee could not satisfy Settlement Commission as to correctness of disclosures made to it. assessee was found not to have made full and true disclosure of its income. finding of fact made by Settlement Commission is not open to judicial review unless it is established that, such finding of fact suffers from perversity or is vitiated due to bias or malice. None of grounds known to law to upset finding of fact returned by Settlement Commission has been substantiated in facts of present case. findings of Settlement Commission on correctness of disclosures made by assessee before it have not been substantiated to be perverse. contention that, Settlement Commission ought to have arrived at tax liability on materials disclosed before it, is unacceptable. For Settlement Commission to assume jurisdiction, it must return finding that, assessee before it has made full and true disclosure of its income and other matters referred to Section 245C(1). In present case, assessee did not made full and true disclosure of its income before Settlement Commission. Such is finding of Settlement Commission. Such finding has not been substantiated to be perverse or to be suffering from such legal infirmity so as to warrant interference by Writ Count. It is not for Writ Court to exercise appellate jurisdiction over order passed by Settlement Commission. Writ Court is not called upon to reapprise evidence placed before Settlement Commission. It is also not called upon to enlarge its jurisdiction under Article 226 to have more detailed scrutiny of order of Settlement Commission in view of non- availability of appellate forum. order of Settlement Commission has not been established to be contrary to provisions of Income Tax Act, 1961. In present case, impugned order is well-reasoned. It is not alleged that, impugned order suffers from vice of bias or is vitiated by fraud or is actuated by malice. No part of impugned order has been substantiated to be perverse. impugned order has been passed after affording reasonable opportunity of hearing to assessee. It cannot be said that, impugned order suffers from breach of principles of natural justice. That case has not been argued also. petitioners having not been able to establish that, finding of Settlement Commission that assessee is guilty in not making full and true disclosure of its income is perverse, interference is not called for. Settlement Commission has noted three instances where petitioner did not make full and true disclosures of its income. Even before High Court, petitioners have not come clean with regard to three issues noted by Settlement Commission. petitioners have not improved on facts made available to Settlement Commission. In such circumstances, first issue is answered in negative and against petitioners. In view of answer to first issue second issue is answered by holding that, petitioners are not entitled to any relief. W.P. No. 126 of 2017 is dismissed. In facts of present case, however, there will be no order as to costs. [DEBANGSU BASAK, J.] ABC Dubash Mining & Anr. v. Income-tax Settlement Commission & Or