Ajay Mahendrakumar Shah vs Commissioner of Income Tax and Others

B.C. Patel, J.—Special Civil Applns. No. 10200/95 and 10201/95 are preferred against the order of rejection passed by the Settlement

Commission under s. 245D(1) of the IT Act, 1961, whereas Special Civil Applns. Nos. 10202/95 and 10203/95 are preferred against order of

rejection passed by the Settlement Commission under s. 22D(1) of the WT Act.

Minors Manan and Alin have preferred these four petitions. These minors, their father Ajaybhai, their uncle Amitbhai and their mother

Kokilaben, in all five, were the beneficiaries in equal share in a family trust known as Mayabhai Family Trust, which carried out business for the

asst. yr. 1984-85. Sometime in the year 1989, business and residential premises of Ajaybhai and Amitbhai were raided. Subsequently,

applications were preferred before the Settlement Commission. These two minors also preferred applications as aforesaid. It is contended that

nothing in regard to the business of Mayabhai Family Trust was found out in the raid. However, three majors voluntarily disclosed income before

the Settlement Commission. Income from the Trust was the only includible income. It is averred in the petition that during the course of hearing, it

was stated that out of the income of the trust so disclosed, proportionate shares of the two minors, without any objection from them, can also be

taxed. It is averred in the petition that when the members of the family made applications to the Settlement Commission, these two minors were not

eligible to make applications because there were no pending assessment for any year and the only year in which they had any income to be

disclosed before the Commission was asst. yr. 1984-85, for which they were already assessed on income other than voluntarily disclosed income.

It appears that under s. 148, notice came to be issued in respect of asst. yr. 1984-85, making them eligible to apply, and the petitioners made an

application to the Settlement Commission. It is also averred in the petition that before the Settlement Commission, it was submitted that the

Settlement Commission having accepted the additionally disclosed income of Rs. 27,89,410, the share of each of the petitioner would be Rs.

5,57,882 and it was prayed to the Settlement Commission to pass an order giving immunity from interest, penalty and prosecution in identical

manner as is given in case of other major beneficiaries. The Settlement Commission, after receipt of a report from the CIT under s. 245D(1),

passed an order on 26th Sept., 1995 rejecting the application of the petitioner at the very admission stage. Copy of the order is produced at

Annexure ''E'' to this petition. Similar orders are also produced in other petitions.

We have taken these facts from Spl. C. A. No. 10200/95. Similar are the facts in the other petitions also, and, therefore, we do not repeat the

same.

We have heard the learned counsel at length. Looking to the peculiar facts and circumstances of these cases, it appears that the applications

ought to have been admitted and the Settlement Commission should have proceeded with the applications and should have disposed of the

applications in accordance with law. Orders passed by the Commission is hereto quashed and set aside and we direct the Settlement Commission

to admit the applications and decide the same in accordance with law.

We have not discussed the merits of the case as it has been rightly pointed out by the learned advocates that if any observations are made by

this Court, it might affect either the petitioners or the respondents. We, therefore, do not express an opinion about the merits of these cases.

These applications are allowed accordingly, with the aforesaid directions. Rule made absolute accordingly.