Court shall consider decision making process than Merit of decision while Applying Judicial Review: Calcutta HC dismisses Income Tax Dept’s Plea [Read Order]

A single-judge bench of Calcutta High Court while invoking its power under Article 226 dismissed the writ petition filed by the principal commissioner of Income Tax against the order passed by settlement commission (Income Tax & Wealth Tax) on 29th July 2016.

Hon’ble Mr. Justice Md. Nizamuddin after considering many judgments regarding the judicial review of an order of a Tribunals under Article 226, dismissed the writ petition filed by the principal commissioner of income tax against the order passed by the settlement commission since the petitioners were not able to prove that there was illegality, irrationality or procedural impropriety while considering the prayer for revocation of the impugned order.

UTC Marketing Pvt. Ltd. filed a settlement application relating to Assessment Year 2012-13 before the Income Tax Settlement Commission on 8th April 2015 for settlement of its Income Tax matters by disclosing an income of Rs. 3,93,93,544/-. The aforesaid application was proceeded with under Section 245 D(1) of the Income Tax Act, 1961 by an order dated 21st April 2015.

After hearing under Section 245 D (2C) of the Act, the Settlement application was held to be “not invalid”. Thereafter, a Report under Rule 9 of Income Tax Settlement Commission (Procedure) Rules, 1997 was called from the Principal Commissioner of Income Tax concerned. Principal Commissioner of Income Tax objected to the settlement of the case of UTC Marketing Pvt. Ltd by alleging that it has not at all made true and correct disclosure of its undisclosed income and they have a  habit of not disclosing its true and correct income before the department and now they have disclosed before the settlement Commission its undisclosed income may be under compulsion.

Against the aforesaid Report under Rule 9 of Income Tax Settlement

Commission (Procedure) Rules, 1997 UTC Pvt. Ltd filed an objection by submitting that the Commissioner of Income Tax concerned has not cited any instance which could raise a bona fide doubt on the intention of them or its application under Section 245 C (1) of the Act for settlement. And contends that petitioner could not produce any material to contradict the claim of the aforesaid application for settlement, and also contended that it has fulfilled the criteria required for availing itself of immunity from penalty and prosecution and it has cooperated with the Settlement Commission and also extended full co-operation at every stage of the proceeding right from the survey operation conducted under Section 133A of the Act.

The Writ Petition was dismissed by  Justice Md. Nizamuddin after Considering the submission of the parties, findings, and reasons recorded and taking into consideration the law laid down by the Hon’ble Delhi High Court and the Hon’ble Supreme regarding the writ jurisdiction under Article 226 of the Constitution of India, in the income tax settlement proceedings before the Settlement Commission. Especially sitting courts view on  In Union of India &ors V. Ind-swift laboratories Limited {(2011)4 SCC 635} on which the Hon’ble supreme court held, an order passed by the Settlement Commission could be interfered with only if the said order is found to be contrary to any provisions of the Act. So far as the findings of fact recorded by the Commission or question of facts are concerned, the same is not open for examination either by the High Court or by the Supreme Court.

The Court also stated that the Income Tax authorities have failed to make out any case in this Writ Petition that the learned Settlement Commission has acted in any manner contrary to or in violation of any provision of law in course of impugned settlement proceeding or in passing the impugned order or that the same is not legal and valid or without jurisdiction and in disregard to the materials available before the  Income Tax Settlement Commission.

To Read the full text of the Order CLICK HERE

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