Director of Income Tax (International Taxation) vs Income Tax Settlement Commission and Others

By this petition under Art. 226 of the Constitution of India, the Director of IT (International Taxation), challenges the order dt. 11th Sept., 2007 passed by the income tax Settlement Commission (the Commission) under s. 245D(2C) of the IT Act, 1961 ("the Act"). The challenge is essentially on the ground that the impugned order dt. 11th Sept., 2007 of the Commission was passed ignoring the statutory requirement under the Act particularly the requirement of making full and true disclosure by respondent Nos. 2 to 11 herein as applicants before the Commission.

Brief facts leading to this petition are:

(i) Respondent Nos. 2 to 11 are part of Star Group of companies which is owned by News Corporation of United States of America. The respondent Nos. 2 and 5 to 10 are incorporated in British Virgin Islands while respondent Nos. 3 and 4 are incorporated in United Arab Emirates. All the respondents have their principal place of management at Hong Kong. Respondent Nos. 6 to 11 (channel companies) are the owners and operators of television channels. These channel companies own their brand and logo, while telecasting in India and by constant advertisement have become household names in India;

(ii) For operation of the channel companies, the programmes meant for telecasting are prepared in India either by themselves or acquired from other entities such as Star India (P.) Ltd. (SIPL) which is incorporated in India. As the programmes from the channel companies are to be telecast in India, the programmes are interspersed with advertisement placed by the advertisers. The channel companies in turn, inter alia enter into contract with companies for hiring of transponders. The cable operators in India for a prescribed fee charged by the SIPL are allowed to download the programmes and distribute the same to the final consumers from whom subscriptions are collected;

(iii) In view of the above business model, the sources of revenue of the Star Group are from:

(a) Advertisement revenue--The advertisement revenue is collected by SIPL from the advertisers in India. SIPL, thereafter retains a part of revenue as its commission and remits the balance to the Star Ltd. i.e. respondent No. 2. In turn, the respondent No. 2--Star Ltd. makes payment to the channel companies for the purchase of Airtime from channel companies and claim the same as expenses in its account; and

(b) Subscription revenue--The subscription revenue is collected by the cable operators from the final customers as viewers and after retaining their commission, the balance is remitted to SIPL. A part of the amount so received is retained by SIPL and the balance is remitted to respondent Nos. 3 and 4 which are companies operating outside India who retain a substantial part of subscription revenue and remit the balance to respondent No. 2 i.e. Star Ltd. The channel companies i.e. respondent Nos. 6 to 11 in turn receive a part of subscription amount from respondent No. 2 company.

(iv) Only respondent Nos. 2, 3 and 4 were filing its returns of income in India upto 2005. Respondent No. 2 i.e. Star Ltd. was filing its return on ''net basis'' i.e. after claiming expenses from gross revenue. In its return, it claimed expenses on purchase of ''Ad Airtime'' from the channel companies as well as expenditure against its advertisement revenue received from SIPL. Respondent Nos. 6 to 11 i.e. channel companies were not filing their returns of income on the ground that the same was not chargeable to tax in India. This on the basis that the agreement between them (channel companies) and Star Ltd. i.e. respondent No. 2 had been entered into outside India and payments for the same were also made and received outside India;

(v) The AO of respondent No. 2 i.e. Star Ltd. during the assessment for asst. yr. 2000-01 held that the income of channel companies is taxable in India since they have a business connection in India. Accordingly the AO disallowed the claim of expenditure for purchase of ''Ad Airtime; for failure to deduct tax under s. 40(a)(i) of the Act. This disallowance was carried in appeal to the Tribunal. On 18th Jan., 2006, the Tribunal by its order confirmed the order of the AO and upheld the disallowance of claim for expenditure in respect of payments made to the channel companies;

(vi) Respondent No. 2--Star Ltd. being aggrieved by the order dt. 18th Jan., 2006 filed an appeal in this Court being IT Appeal No. 43 of 2006. The above appeal has been admitted on 4th April, 2006 and is awaiting final disposal;

(vii) For asst. yrs. 2001-02 to 2004-05, the AO of respondent No. 2--Star Ltd. followed the order for the asst. yr. 2000-01. Respondent No. 2--i.e. Star Ltd. has filed appeals and the same are pending in appeal;

(viii) Consequent to the above orders, in June, 2004, the ITO issued notice under s. 148 of the Act to the channel companies requiring them to file their returns of income. The channel companies in response filed their return of income, showing nil income on the ground that their income is not chargeable to tax in India. However, the AO did not accept the contention of the channel companies and in view of the order dt. 18th Jan., 2006 of the Tribunal passed in case of respondent No. 2 held that the income of the channel companies was chargeable to tax in India. The channel companies have carried the matter in appeal and the appeals are awaiting disposal;

(ix) Respondent Nos. 3 and 4 were filing their returns of income, claiming their income to be nil. This was on the basis that that the subscription income received by them is not taxable in view of the Double Taxation Avoidance Agreement (DTAA) between India and UAE. The AO held that respondent Nos. 3 and 4 are not entitled to the benefit of DTAA and therefore, brought the subscription income to tax. Being aggrieved, respondent Nos. 3 and 4 have filed appeals and the appeals are still awaiting disposal;

(x) Respondent No. 5 was an intermediary company engaged in acquiring contents from Indian and foreign sources to provide them to the channel companies. This was also brought to tax by the AO for the first time during asst. yr. 2004-05. Being aggrieved, respondent No. 5 has carried the matter in appeal and the appeal is awaiting disposal;

(xi) Respondent No. 11 has started its business only during the asst. yr. 2005-06. Consequently, no assessment has been done in its case till the filing of application for settlement before the Commission;

(xii) On 5th March, 2007, respondent Nos. 2 to 11 filed their application for settlement before the Commission for different assessment years seeking to settle its income tax dues under the Act as under:

(xiii) Thereafter, the petitioner filed its return on 17th May, 2007 under the erstwhile s. 245D(1) of the Act, opposing the admission of application for settlement filed by respondent Nos. 2 to 11. On 1st June, 2007, the provisions of Chapter XIX-A of the Act dealing with the settlement were amended by the Finance Act, 2007. Consequently, the above applications for settlement filed by respondent Nos. 2 to 11 were deemed to have been allowed to be proceeded with under the amended provisions of s. 245D(2A) of the Act, subject to payment of additional taxes along with interest thereon on the income disclosed in such application on or before 31st July, 2007;

(xiv) On 9th Aug., 2007, in response to the query from the Commission, the petitioner indicated the position with regard to the payment of taxes and interest in respect of each of the respondent Nos. 2 to 11. This was indicated on the basis of the additional income disclosed in their application for settlement to the Commission;

(xv) On 24th Aug., 2007, the petitioner submitted his report to the Commission under the amended s. 245D(2B) of the Act. In his report, the petitioner submitted:

(a) the Commission cannot determine the income taxable in the hands of respondent No. 2 i.e. Star Ltd. as it cannot rule on its liability to deduct tax at source of s. 245C(1) of the Act as held by the Calcutta High Court in Shaw Wallace and Co. Ltd. Vs. Settlement Commission and Others, ,

(b) this very issue viz. whether Star Ltd. was required to deduct tax at source before making the payment to the channel companies is a question of law raised before the High Court for the asst. yr. 2000-01 as a substantial question of law and is awaiting consideration. The decision therein would govern the assessment year under consideration; and

(c) there has been no full and true disclosure of income by respondent Nos. 2 to 11. The income disclosed before the Commission must be compared with the account submitted by the assessee along with its return and the additional income disclosed by way of undisclosed receipts or inflated expenses which had not been earlier disclosed before the AO are being offered for taxation. Further, India specific accounts were not produced before the AO by the respondent even when called, making it necessary for the AO to apply r. 10 of the IT Rules. In view of the above, it was submitted that the application for settlement by respondent Nos. 2 to 11 (Star Group) be declared invalid under s. 245D(2C) of the Act.

(xvi) In the meantime on 21st Aug., 2007, the Chairman of the Commission constituted a Special Bench consisting of five Members of the Commission for deciding the following issues:

(i) Whether on the facts and in the circumstances of these cases, the applicants have made full and true disclosure of income as is assessable to tax in their respective cases?

(ii) Whether on the facts and in the circumstances, of these cases, the legal issues raised by the applicants for consideration by the Settlement Commission ought to be taken up for consideration and assume jurisdiction over these cases when those very legal issues have been admitted for consideration in these cases by the High Court of Bombay and the matters are sub judice before them?

(iii) Whether on the facts and in the circumstances of these cases, the Settlement Commission should adjudicate upon issues which are purely legal, whether or not they involve complexities of investigation?

(xvii) Thereafter on 29th Aug., 2007, the Chairman of the Commission passed a further order in partial modification of its earlier order dt. 21st Aug., 2007 as under:

(a) The Special Bench as constituted under the said order, shall in addition to the issues delineated thereunder consider all such issues as would be relevant for passing order under s. 245D(2C) of the IT Act in the said Star Group of cases as to the validity, or otherwise; of the applications filed in all those cases and shall pass appropriate orders in respect of these applications.

(b) The date and place for sitting of the Special Bench will be 29th Aug., 2007 at income tax Settlement Commission, Additional Bench, Mumbai in continuation of the hearing fixed as per the original order constituting the Special Bench or on such other date and place to which the matters may be adjourned.

(xviii) On 10th Sept., 2007, the application for settlement filed by respondent Nos. 2 to 11 was heard by the Commission. At the hearing, oral as well as written submissions were made on behalf of the petitioner as well as the respondents. At the conclusion of the hearing, the applicants made an additional offer of Rs. 150 crores in the spirit of settlement. In the above view, the Commission was of the view that the applications may not be treated as invalid.

(xix) On 10th Sept., 2007, the applicants filed a hand written application before the Commission wherein it was stated that they are offering a sum of Rs. 150 crores in addition to the income already disclosed only with an intention to buy peace and avoid protracted litigation. It was particularly mentioned in their above application that "it is submitted that the income disclosed in the applications represents true and full disclosures. The additional income is offered for tax without any evidence against the applicant and with an intention to put a quietus to the matter".

The Special Bench of the Commission by its order dt. 11th Sept., 2007 declared the application as valid. The Commission by its order held as under:

Issue No. 1: The Bench is of the view that prima facie (after revision of SOF) the disclosure made appears to be true and full.

Issue No. 2: The Bench observed that the matter pending before the Hon''ble Bombay High Court is only in the case of M/s. Satellite Television Asia Region Ltd. No proceedings are pending before the Hon''ble Bombay High Court in respect of other applicants. We are aware that ratio decidendi of jurisdictional High Court is binding on all authorities subordinate to it. Needless to say that we do not consider pendency of legal issues before Hon''ble Bombay High Court as impediment for other assessment years particularly when there is no res judicata in respect of income tax proceedings and each assessment year has to be considered as a separate proceeding. Hence in our view there is no bar for the Commission to consider the applications for other assessment years.

Issue No. 3: We are in agreement with the proposition that normally the income tax Settlement Commission will not adjudicate on issues which are purely legal.

Issue No. 4: We have to decide the 4th issue to bring the proceedings to a conclusion and the same is answered as below:

We are satisfied that there are complexities of investigations of various issues which require finalization. Complex facts are involved for decision. Considering the entire proceedings including the further offer of additional income made by the applicants taking the total offer of additional income to Rs. 1,500 crores, the Special Bench decided not to pass any order declaring the applications as ''invalid''.

(xx) On 14th Sept., 2007, the respondent Nos. 2 to 11 in a communication addressed to the Commission disclosed the distribution of additional income of Rs. 150 crores between respondent Nos. 2 to 11. The additional income offered by respondent Nos. 2 to 11 cumulatively aggregated to Rs. 1,39,837 crores for the asst. yrs. 2000-01 to 2006-07.

Mr. Pinto, learned counsel appearing for the petitioner in support of the petition submits as under:

(a) The impugned order dt. 11th Sept., 2007 of the Commission allowing the applications to be proceeded with after the applicants i.e. respondent Nos. 2 to 11 had revised its income by further Rs. 150 crores before the Commission. It is on the revision of income that it was held that the applicants have made a true and full disclosure for the purposes of it being declared valid under s. 245D(2C) of the Act. This it is submitted is in the face of the decision of the apex Court in Ajmera Housing Corporation and Another Vs. Commissioner of Income Tax, wherein it has been held that true and full disclosures of undisclosed income and the manner in which the said income has been derived are pre-requisites for a valid application before the Settlement Commission and held that settlement proceedings under Chapter XIX-A of the Act do not contemplate revision of income as disclosed in the application. It was held that any revision of income in the application amounts to withdrawing of the original application and making a fresh application. Therefore, it falls foul of the condition precedent on the part of applicant to make a full and true disclosure in its original application to the Commission;

(b) Sec. 245D(1) as it stood at the relevant time required the Commission to consider an application only if complexities of investigation are involved. In this case, the mere distribution of income amongst the various companies within the Star Group does not involve any complex investigation. Thus, the Settlement Commission should not have entertained the application;

(c) The applications for settlements were filed by respondent Nos. 2 to 11 on 5th March, 2007 under provisions of Chapter XIX-A of the Act as then existing. However, the applications were not admitted till much after 1st June, 2007, when Chapter XIX-A was amended by the Finance Act, 2007. Therefore, w.e.f. 1st June, 2007, only those applications could be entertained by the Commission which were pending before the AO. In this case, as many as 41 proceedings were not pending before the AO but before various authorities under the Act. Therefore by the time, applications were admitted, the amendment came into force on 1st June, 2007 and it would apply in this case. Thus respondent Nos. 2 to 11 do not satisfy s. 245A(b) of the Act requiring the proceedings to be pending only before the AO for being entertained by the Settlement Commission;

(d) The application for settlement before the Commission is to be accompanied by payment of taxes and interest. Further in terms of the provisions to s. 245C of the Act, the proof of payment of such tax and interest on the income disclosed must also be attached to the application. In this case, admittedly, on 5th March, 2007, when the application for settlement was filed by respondent Nos. 2 to 11, the tax payable in respect of additional amount of Rs. 150 crores was not paid into the Treasury as the same was declared subsequently only on 10th Sept., 2007. Consequently, the application for settlement did not satisfy the statutory requirement of the proviso to s. 245C(1) of the Act to be a valid application;

(e) The application for settlement filed by respondent Nos. 2 to 11 is not maintainable, as no new source of income has been declared by the respondents in their applications before the Settlement Commission. The petitioners were always aware of the two streams of revenue/income available to the respondent namely, advertisement and subscription. In view of the above, as no new source of income has been disclosed, the application for settlement before the Commission is not maintainable; and

(f) The application for settlement by respondent Nos. 2 to 11 seeking settlement was on the issue of allowing of expenditure in the absence of tax being deducted at source. This issue has been decided by the Tribunal for the asst. yr. 2000-01 and appeal in respect thereof was pending for final disposal before this Court. The decision of this Court rendered in the above appeal would be binding upon the petitioner and the respondent No. 1 even in respect of other years as held by the Supreme Court in M/s. Radhasoami Satsang Saomi Bagh, Agra Vs. Commissioner of Income Tax, . Therefore, on the above ground also, the application for settlement filed by respondent Nos. 2 to 11 ought not to have been entertained by the Commission.

On the all aforesaid grounds, it is submitted that the order dt. 11th Sept., 2007 passed by the Commission be quashed and set aside.

As against the above, Mr. Porus Kaka, learned senior counsel appearing for respondent Nos. 2 to 11 in support of the order dt. 11th Sept., 2007 submits as under:

(i) This Court should not exercise its writ jurisdiction from orders of the Settlement Commission in the present facts, as the scope of judicial review in respect of orders passed by the Settlement Commission is extremely limited. In judicial review, the Court has only to examine whether the order being challenged is contrary to the provisions of the Act or it suffers from an error of law apparent on the face of the record. This Court should not exercise its extraordinary jurisdiction as the Commission has considered all the evidence before it and has passed the impugned order in accordance with the provisions of the Act;

(ii) There has been a full and true disclosure on the part of respondent Nos. 2 to 11 in their application before the Settlement Commission and also the manner in which the additional income has been derived. The revision or additional offer of Rs. 150 Crores made to the Commission at the hearing under s. 245D(2C) of the Act was made in good faith so as only to buy peace and end unwanted protracted litigation. In fact, attention was invited to the handwritten application dt. 10th Sept., 2007 filed by the petitioner with the Commission wherein it is specifically stated that the applicants have disclosed their true and full income and that the additional offer of Rs. 150 crores as income was being made only with an intention to buy peace and avoid protracted litigation;

(iii) It was further submitted that the reliance upon the decision of the apex Court in the matter of Ajmera Housing Corporation (supra) is inappropriate considering the fact involved in this case. The reliance by the petitioner on the decision of the apex Court in Ajmera Housing Corporation (supra) is inappropriate for the reason that the observations being relied upon are in the nature of obiter. Further the observations of the Supreme Court were made in the context of facts existing in Ajmera Housing Corporation (supra). In particular, he submits that there were multiple disclosures by Ajmera Housing Corporation (supra) by revising their Annexure filed along with their applications. In these applications filed by the respondents, there has been no revision to the Annexure to the statement of facts. Besides, in Ajmera''s case (supra), additional income of Rs. 11.41 crores was disclosed by Ajmera on its own account and not as an evidence of good faith as in this case on a suggestion by the Commission. The additional offer of Rs. 150 crores was only made to buy peace and avoid protracted litigation. Therefore, the decision of the apex Court in Ajmera Housing Corporation (supra) is inapplicable to the present facts;

(iv) Full and true disclosure of income would require the petitioner to only disclose all primary facts. In this case, the respondents have disclosed all primary facts particularly the remittances made and also the two sources of income namely--advertisement revenue and subscription revenue. Even today after seven years after filing of the petition, the petitioner has not alleged or established that any primary fact has not been disclosed by respondent Nos. 2 to 11 in their application for settlement. In support of the aforesaid submissions, reliance was placed upon the decision of this Court in the matter of Centurion Bank of Punjab Ltd. (Earlier Known as Centurion Bank Ltd.) Vs. The Income Tax Settlement Commission and Others, and Calcutta Discount Company Limited Vs. Income Tax Officer, Companies District, I and Another, ;

(v) The complexities of facts involved is evident from the facts that there were over 40 assessment proceedings pending before the authorities at various stages out of which 16 were pending before the AO. However, the distribution of income between the various entities was a matter which requires investigation and these are issues which are complex and in any case, once the Commission has come to a conclusion that the issues are complex, this Court in its writ jurisdiction would not interfere with the finding of fact arrived at by the Commission;

(vi) It is an undisputed position that when the application for settlement was filed on 5th March, 2007, the, respondents had satisfied the requirements of Chapter IX-A of the Act as then existing. Therefore though it is accepted that the application for settlement was filed prior to 1st June, 2007 when Chapter IX-A of the Act the amendment itself provided in s. 245D(2A) of the Act that when an application for settlement is made before 1st June, 2007, then such an application would be deemed to have been proceeded with. Therefore, there is no requirement as suggested by the petitioner that the assessment proceedings should have been pending before the AO before the Commission can have jurisdiction over an application even if in respect of application filed prior to 1st June, 2007;

(vii) The requirement of submitting proof of payment of tax and interest on the amount disclosed along with the application for settlement under s. 245C(1) of the Act, existed at all times relevant to this petition i.e. both before and after the amendment to Chapter XIX-A of the Act on 1st June, 2007. It is submitted that the application filed by the respondents on 5th March, 2007 did make a full and true disclosure of tax and interest payable along with proof of its payment. The further amount of Rs. 150 crores disclosed by the respondents before the Commission was an amount disclosed out of a desire to put a quietus to the disputes with the Revenue. This is evident from the fact that the application dt. 10th Sept., 2007 wherein it was declared by the respondents that the disclosure in their application represents true and full disclosure of its income. Therefore, tax and interest payable on the further amount of Rs. 150 crores was an additional amount over and above the amount which represented the true and full disclosure for the purposes of making an application under s. 245C of the Act;

(viii) The requirement for making an application for settlement before the Commission is not conditional upon the application declaring a new source of income. Attention was drawn to s. 245C of the Act wherein the precondition is to a make a full and true disclosure of income not disclosed earlier before the AO. It is, therefore, submitted that the petitioner''s contention that there must be a new source of income declared in the application for settlement is not sustainable; and

(ix) The decisions to be rendered in the future by the Bombay High Court in the appeal filed by Star Ltd. for asst. yr. 2000-01 would only govern it and only for that year and would not stop the Commission from exercising jurisdiction. Moreover the decision to be rendered by this Court in respect of asst. yr. 2000-01 can have no application in respect of other respondents or for years other than asst. yr. 2000-01 in case of respondent No. 2.

Before dealing with the rival contentions, it would be appropriate to dispose of the objection of the respondents that in the present facts, this Court should not exercise its writ jurisdiction for the purpose of judicial review in respect of the orders passed by the Settlement Commission. This it is submitted is particularly on the ground that the Commission has considered all the evidence before it and has passed the impugned order in accordance with the provisions of the Act. Undoubtedly, the scope of judicial review from orders of Settlement Commission is extremely limited. The Supreme Court in the matter of Jyotendrasinhji Vs. S.I. Tripathi and others, , has held that jurisdiction for judicial review of the orders passed by the Commission is extremely limited. The scope of enquiry in judicial review, the Court observed, is only to consider whether the order of the Commission complies with the statutory provisions of Chapter XIX-A of the Act. Similarly, in the case of Union of India (UOI) and Others Vs. Ind-Swift Laboratories Ltd., , it has been held that order of Settlement Commission could only be interfered with when the same is contrary to or in ignorance of the statutory provisions of the Central Excise Act, 1944. Power of judicial review would not extend to a decision on facts or on interpretation of documents before it. However, both the aforesaid decisions of the apex Court were rendered in the context of the final order passed by the Settlement Commission and such orders are protected from the challenge in any other proceedings by virtue of s. 245I of the Act and s. 32M of the Central Excise Act, 1944. This is because the final orders of the Commission are conclusive. However our Court in Mr. Hassan Ali Khan Vs. Settlement Commission, The Commissioner of Income Tax, The Deputy Commissioner of Income Tax and Union of India (UOI), has held even the orders passed at the stage of admission have very limited scope to be interfered with in writ proceedings. Thus it cannot be disputed that the Court would be slow to exercise its power of judicial review from orders of Commission interim or final unless there has been a basic flaw in the decision-making process which would include ignoring the statutory provisions. Therefore, while exercising the power of judicial review, even from an interim order, we would be concerned with examining whether or not, the impugned order of the Commission has been passed in accordance with the statutory provisions of the Act and is not ex facie unsustainable in law. Keeping in mind the above boundaries prescribed by the apex Court, we shall now consider the objections of the petitioner to the impugned order dt. 11th Sept., 2007 of the Commission.

In this case, the primary objection of the petitioner as urged before us is that the application for settlement filed by the respondents does not meet the jurisdictional requirement of full and true disclosure of their income as required under s. 245C of the Act. This according to the petitioner is a statutory jurisdictional precondition that has to be satisfied before the application can be entertained by the Commission. The failure on the part of the respondent to make full and true disclosure in its application is established, according to the petitioner, by the fact that an additional income of Rs. 150 crores was declared before the Commission on 10th Sept., 2007 i.e. over and above, the income declared in their application dt. 5th March, 2007. This additional disclosure of income on the part of the respondent itself, without anything more is a tacit admission that the original application filed on 5th March, 2007 did not make a full and true disclosure of the respondents'' income. According to the petitioner, the issue stands concluded by the decision of the apex Court in Ajmera Housing (supra) wherein it has been held that the Chapter XIX-A of the Act does not contemplate the revision of income as disclosed in the original application. It is submitted that such revision of income amounts to withdrawing of original application and making a fresh application. The apex Court in the matter of Ajmera Housing (supra) has observed as under:

A bare reading of the provision would reveal that besides such other particulars, as may be prescribed, in an application for settlement, the assessee is required to disclose: (i) a full and true disclosure of the income which has not been disclosed before the AO; (ii) the manner in which such income has been derived; and (iii) the additional amount of income tax payable on such income.

It is clear that disclosure of ''full and true'' particulars of undisclosed income and ''the manner'' in which such income had been derived are the prerequisites for a valid application under s. 245C(1) of the Act. Additionally, the amount of income tax payable on such undisclosed income is to be computed and mentioned in the application. It needs little emphasis that s. 245C(1) of the Act mandates ''full and true'' disclosure of the particulars of undisclosed income and ''the manner'' in which such income was derived and, therefore, unless the Settlement Commission records its satisfaction on this aspect, it will not have the jurisdiction to pass any order on the manner covered by the application.

It further held that:

A ''full and true'' disclosure of income, which had not been previously disclosed by the assessee, being a precondition for a valid application under s. 245C(1) of the Act, the scheme of Chapter XIX-A does not contemplate revision of the income so disclosed in the application against item No. 11 of the Form. Moreover, if an assessee is permitted to revise his disclosure, in essence, he would be making a fresh application. In this regard, s. 245C(3) of the Act which prohibits the withdrawal of an application once made under sub-s. (1) of the said section is instructive in as much as it manifests that an assessee cannot be permitted to resile from his stand at any stage during the proceedings. Therefore, by revising the application, the applicant would be achieving something indirectly what he cannot otherwise achieve directly and in the process rendering the provision of sub-s. (3) of s. 245C of the Act otiose and meaningless. In our opinion, the scheme of the said chapter is clear and admits of no ambiguity.

The above observations of the apex Court may at first blush seem to cover the petitioner''s case completely. However before the above observations being relied upon by the petitioner can be applied to the present facts the following further observations of the apex Court should be taken note of which read as under:

We are convinced that, in the instant case, the disclosure of Rs. 11.41 crores as additional undisclosed income in the revised Annexure, filed on 9th Sept., 1994 alone was sufficient to establish that the application made by the assessee on 30th Sept., 1993 under s. 245C(1) of the Act could not be entertained as it did not contain a ''true and full'' disclosure of their undisclosed income and ''the manner'' in which such income had been derived. However, we say nothing more on this aspect of the matter as the CIT, for reasons best known to him, has chosen not to challenge this part of the impugned order.

It would, therefore be noted that the aforesaid issue of whether or not by virtue of disclosure of additional income, there was a failure to make a true and full disclosure was not an issue for consideration before the Apex Court. This is so as it was not a subject matter of challenge by the revenue either before the High Court or before the Supreme Court. In view of the above, the above observations of the Apex Court in the Ajmera Housing (supra), cannot be said to be a ratio-decidendi of the decision. It is trite law that a decision of a Court is not to be read as a statutory provision. The observation of Court must be read in the context of the facts before the Court.

It is relevant to note that the Apex Court in the case of Ambica Quarry Works Vs. State of Gujarat and Others, has quoted with approval the decision of Lord Halsbury in Quinn vs. Lenthen 1901 AC page 495 and observed that "The ratio of a decision must be understood in the back ground of the facts of that case. It has been said a long time ago that a case is only an authority for what it actually decides and not what logically follows from it." Applying the aforesaid test, it would be noticed that the decision of the Apex Court in the case of Ajmera Housing (supra) is inapplicable to the present facts as they are very different from each other as would be evident from juxtaposing the facts of the two cases.

(i) In Ajmera Housing (supra), the application for settlement had its origin in a search conducted on them while that is not so in the case of the respondents;

(ii) In Ajmera�s case there were multiple disclosures with revision of annexure filed along with application i.e. revision of receipts. While in this case, there was no such application by revising of annexure or receipts;

(iii) In Ajmera Housing (supra), there was no full and true disclosure of all facts regarding the receipts. However, in this case, there was full and true disclosure of all receipts and all facts in the very first application;

(iv) In Ajmera''s case, additional amount of Rs. 11.40 Crores was made voluntarily by Ajmera Housing on its own account and unlike in this case, where the additional income of Rs. 150 Crores was made only with a view to put an end to the dispute at the instance of the Commission;

(v) The CBDT Circular No. 742 dated 2 May1996 had provided that where India Specific accounts were not maintained by the assessee, income should be computed at the rate of 10% of the gross receipts and the respondent declared before the Commission its income at approximately 27% of the gross receipts.

(vi) In fairness to the Commission, it must be stated that the Commission appears to have made suggestion to the respondents to re-compute income at the higher rate on the same receipts looking to the 30% rate applied by the Assessing Officer in the Assessment Order dated 28 December 2006 relating to respondent No. 2 for Assessment Year 2004-05. This suggestion was made by the Commission and was accepted by the respondents on 10 September 2007 i.e. before the Supreme Court rendered its decision in Ajmera Housing Corporation (supra). Therefore, on application of the aforesaid rate, at the instance of the Commission, without altering the gross receipts, the respondent assessee offered to compute income at the rate of approximately 30% and rounded off the additional income to Rs. 150 Crores;

(vii) Accordingly, on 10 September 2007, when the application of the respondents were being heard by the Commission, the respondents offered additional income of Rs. 150 Crores only with an intention to buy peace and avoid protracted litigation. It is very important to note that in their hand written letter/application filed before the Commission on 10 September 2007, they specifically stated that:

It is submitted that the income disclosed in the application represented true and full disclosure. Additional income is offered for tax without any evidence against applicant and with an intention to put a quietus to the matter.

If, therefore, one juxtaposes, the facts in the Ajmera Housing case (supra) and the facts of the respondents in the present case and the context in which the additional income of Rs. 150 Crores was offered to tax, the decision rendered and observations made in the Ajmera Housing (supra) may have no application to the present facts. None the less, the observations of the Apex Court in Ajmera Housing (supra) would have to be followed by us as this would ensure certainty of the legal position. However, we note that the additional income offered on 10 September 2007 by the respondents in no way detracted from their earlier application representing full and true disclosure of its income. This further amount was offered more as a gesture of bona fide good faith as indicated above and with a desire to bring the dispute between the revenue and the respondents to an early end.

In the above context, the additional offer of Rs. 150 Crores of income in no way establishes that the original application did not contain a full and true disclosure of its income by the respondents. The petitioner before us has not led any evidence to show that there has not been a full and true disclosure by the respondents before the Commission of its income in its application dated 5 March 2007. In the context in which the additional offer of Rs. 150 Crores was made and particularly the statements made in their application dated 10 September 2007, it cannot be said that there was a failure to make full and true disclosure of its income on the part of the respondents when they filed their application on 5 March 2007. This additional income offered does not disclose any variance from the manner in which the additional income had been earned. This also lends credence to the respondents'' submission that the same was made at the instance of the Commission as evidence of its bona fides. Therefore, at one stage in view of the above facts, we were contemplating setting aside the impugned order dt. 11th Sept., 2007 of the Commission to the extent it holds that on revision of income by Rs. 150 crores, there is full and true disclosure of income for purpose of s. 245D(2C) of the Act and directing the Commission to consider the application for settlement, ignoring the additional offer of Rs. 150 crores for the purpose of s. 245D(2C) of the Act.

However, on further consideration taking into account the following facts:

(i) In this case, the application for settlement was not made as a consequence of search proceedings as in the case of Ajmera Housing (supra).

(ii) Application for settlement is still awaiting disposal since 2007 at the stage of admission before the Commission;

(iii) At the time when the impugned order dt. 11th Sept., 2007 of the Commission was passed, the benefit of the decision of the apex Court in Ajmera Housing (supra) rendered on 20th Aug., 2010 was not available to the Commission;

(iv) It has been consistent case of the respondent-assessee that the original application for settlement contained a full and true disclosure of its undisclosed income;

(v) Further disclosure of Rs. 150 crores was made only with a view to put an end to the dispute at the earliest without altering the gross receipts; and

(vi) Mr. Porus Kaka, learned senior counsel appearing for the respondent states that in deference to the Settlement Commission, the respondents do not wish to retract the offer made before the Commission on 10th Sept., 2007.

Keeping the above factors in view particularly, this being a pre-Ajmera Housing (supra) decision, at this stage by setting aside the impugned order and remanding it to the Commission would only delay the proceedings. We are conscious of the decision of Division Bench in Commissioner of Income Tax (Central) Vs. Income Tax Settlement Commission (ITSC), and also the decision being rendered by us today in CIT vs. ITSC in Writ Petn. No. 2135 of 2013. In both the above decisions, a view has been taken that at the stage of admission under s. 245D(2C) of the Act, the Commission must decide on the validity of the application for settlement and the issue cannot be postponed to the stage of final hearing under s. 245D(4) of the Act, even though the requirement of making a true and full disclosure is a continuous requirement to be satisfied at all times in a settlement proceeding. Therefore, even post the stage of s. 245(2C) of the Act, the Commission could throw out an application for failure to make a true and full disclosure therein. The difference in both the cases of the Division Bench referred to hereinabove from this case is that no additional income was offered as in this case, at the instance of the Commission with a view to end the dispute. Besides, in both the above cases, the decisions were rendered by the Commission at the stage of admission post Ajmera Housing Corporation (supra).

We wish to reiterate that the law set out by the above two decisions of the Division Bench is the correct law. However, it is only in the peculiar facts and circumstances of this case, particularly the additional disclosure of income of Rs. 150 crores made at the instance/suggestion of the Commission, with a view to end litigation at the earliest, that we do not interfere with the order dt. 11th Sept., 2007 at this stage. This finds support in the legal maxim actus curiae neminem gravabit i.e. the act of Court shall prejudice no man. However, we make it clear that at the stage of s. 245D(4) of the Act, also the Commission would consider whether or not, the assessee''s application for settlement as originally made did fully and truly disclose the additional income. This view is being taken by us in this case only in the context of the peculiar and special facts of this case as cumulatively pointed at hereinabove in para 13.

The petitioner has also raised various other objections with regard to the Commission having no jurisdiction to entertain the application which we shall now deal with as under:

(a) One issue raised by the petitioner is that the Commission has no jurisdiction as there are no complex issues on facts arising in the application for settlement. The above issue is one which raises a question of appreciation of facts and the Commission on considering the issues involved has come to a conclusion that the proceedings before it involve complex facts. The aforesaid finding of the Commission is not shown to be perverse by the petitioner. Thus we see no reason to interfere with the findings of the Commission on the above issue.

(b) We also do not find merit in the petitioners contention that as Chapter XIX-A of the Act was amended w.e.f. 1st June, 2007 till which date according to the petitioner, the applications had not been admitted, the proceedings should have been pending before the AO in view of s. 245A(b) of the Act, for the Commission to have jurisdiction to entertain the application. This submission has no legs to stand on in view of s. 245D(2A) of the Act which clearly provides that application filed prior to 1st June, 2007 would be deemed to be admitted provided the requirements of Chapter XIX-A of the Act as then existing are complied with. It is not the case of the petitioner that the conditions as existing prior to 1st June, 2007 in Chapter XIX-A of the Act were not satisfied by the respondents. Thus, the requirement of an assessment pending before the AO as provided in the amended s. 245A(b) of the Act would have no application and the Commission would have jurisdiction to entertain and deal with an application filed prior to 1st June, 2007 on the conditions then existing.

(c) One more submission made on behalf of the petitioner was that the Commission had no jurisdiction to entertain the application as in terms of s. 245C of the Act, proof of payment of tax and interest must be attached to the application. In this case, the application for settlement was filed on 5th March, 2007. Admittedly the applications as filed on 5th March, 2007 did not have proof of payment of tax and interest payable on the additional amount of income of Rs. 150 crores declared on 10th Sept., 2007. This submission is not acceptable for the reason that the disclosure of additional income of Rs. 150 crores was according to the respondents only a goodwill measure so as to expedite the process of settlement of the dispute. This further income of Rs. 150 crores declared on 10th Sept., 2007 did not in any way detract from their original application dt. 5th March, 2007 containing true and full disclosure of its income. In fact, if the Commission at the final hearing under s. 245D(4) of the Act determines higher income than that disclosed in the original application, the entire process will not be rendered bad only on account of failure to pay the tax along with the application as is subsequently determined by the Commission at the final hearing stage. Therefore, the requirement is only to pay the tax on the full and true disclosure of income made at the time of filing the application. Thus, the further amounts disclosed as income by way of goodwill measure or for any other reasons such as a particular expenditure being disallowed at the final hearing will not be hit by s. 245C of the Act to make the entire exercise bad for failure to make a full and true disclosure of income unless of course a specific finding to that effect is arrived at by the Commission at the final hearing stage under s. 245D(4) of the Act.

(d) One more submission made on behalf of the petitioner was that the respondents'' source of income namely, advertisement and subscription was known to the Revenue at all times. Therefore, the application for settlement has not disclosed any additional/new source of income. Therefore it is submitted that the application for settlement is not maintainable. We find that s. 245C of the Act only requires full and true disclosure of income which has not been disclosed earlier. There is no requirement that for an application to be entertained by the Commission, the applicant must declare a new source of income from that disclosed earlier to the Department. The Act does not provide for any such requirement and it is not open to the Court to read such a requirement into the Act.

(e) We also do not find substance in the petitioner''s submission that as respondent No. 2--Star Ltd.''s appeal for asst. yr. 2000-01 is pending before this Court, it is not open to the Commission to entertain application for other assessment years as the decision of this Court would be binding upon the parties. It is very clear that the application for settlement has not been filed by the Star Ltd. for asst. yr. 2000-01, as it is an issue pending before this Court in an appeal from the order of the Tribunal. So far as the other parties are concerned, there is nothing in law which prohibits them from filing an application for settlement. Even respondent No. 2--Star Ltd. can file an application for settlement in respect of assessment year other than the assessment year for which the appeal is pending before this Court. In fact the definition of case as existing under s. 245A(b) of the Act, on 5th March, 2007 when the application for settlement was made, permitted an assessee to file an application for settlement in respect of all assessment/reassessment proceedings pending before any of the IT authorities under the Act. Therefore, all applications even pending before the Tribunal or in the appeal/revision before the authorities under the Act could be entertained by the Commission on the date when the respondents filed their application before the Commission on 5th March, 2007.

(f) One more submission made on behalf of the petitioner was that in terms of the decision of the Calcutta High Court in the matter Shaw Wallace (supra), an application for settlement cannot be made in respect of liability to deduct tax at source. At this prima facie stage before the Commission it appears that the application made by the respondents is not for the purpose of settling its liability to deduct tax at source but it is an application made, containing full and true disclosure of the petitioner''s income which has not been disclosed before the AO. Therefore, the aforesaid decision in the case of Shaw Wallace (supra) would have no application to the present facts at this stage. It could be appropriately considered at the stage of final hearing under s. 245D(4) of the Act.

Accordingly, petition is dismissed with no order as to costs.