S.R. Kailash vs The Settlement Commissioner (IT and WT)

L. Narasimha Reddy, J.—Since the writ petitions are filed by the same individual in relation to the same subject matter, they are disposed of through a common order.

The petitioner is an assessee under the Income Tax Act, 1961 (for short, ''the Act''). Apart from being an individual assessee, the petitioner is part of several establishments, mostly the family concerns, which are through independent assessees. A search was conducted between 03.12.1991 and 24.03.1992. Certain documents, including sale deeds, were seized therein. An order under Section 132(5) of the Act was passed by the Assessing Officer. Appeals were filed against the same before the Commissioner of Income Tax (Appeals). In respect of the assessment years 1989-90 to 1993-94, some disputes existed as regards computation of income, payment of interest and other allied matters. The petitioner approached the Income Tax Settlement Commission, Chennai, under Section 245C of the Act. After a detailed consideration of the matter, the Settlement Commission granted relief through order, dated 20.09.1999, subject to payment of certain amount. The petitioner paid the amount and availed the benefit of immunity from prosecution.

The respondents did not return the seized documents, even after the amount determined by the Settlement Commission, was paid. Therefore, the petitioner filed W.P. No. 22562 of 2011 with a prayer to direct the respondents to release the documents. An interim order was passed therein directing release of the documents on furnishing immovable security for Rs. 1.8 crores. The security was furnished and the documents have been released.

The Settlement Commission reopened the order passed by it on 20.09.1999 by invoking power under Section 154 of the Act. Through its order, dated 26.02.2004, the Settlement Commission held that the petitioner is liable to pay certain amounts towards interest under Sections 234A and 234B of the Act and fastened the corresponding liability. Challenging the said order, the petitioner filed W.P. No. 35657 of 2012.

Heard Sri B. Chandrasen Reddy, learned counsel for the petitioner, and Sri S.R. Ashok, learned Standing Counsel for the respondents.

Two aspects arise for consideration. The first is referable to the subject matter of W.P. No. 35657 of 2012, namely, whether it is competent for the Settlement Commission to reopen an order passed under Section 245D of the Act by invoking power under Section 154 of the Act. The second is as to whether the respondents were not under obligation to return the documents, once the Settlement Commission has decided the disputes and the order passed therein was complied with by the petitioner.

Taking the second aspect, first the very purpose of availing the benefit under Section 245C of the Act was to get the matter settled once for all. The Settlement Commission has determined the amounts to be paid by the petitioner and the amounts so determined have since been paid. With that, the Department ceases to have the right to withhold the documents. If the documents are withheld even after the settlement and compliance thereof, the very purpose of settlement is defeated. Therefore, the writ petition is liable to be allowed, since the documents are not released.

As regards the first aspect, an order of settlement was passed. However, the Settlement Commission reopened the matter on miscellaneous applications filed by the Department and passed an order on 26.02.2004 by fastening the additional liability. Obviously, on the basis of that, the respondents withheld a sum of about Rs. 1.8 crores, which was otherwise payable to the petitioner with reference to some other assessment years.

The question as to whether it is competent for a Settlement Commission to reopen the orders passed by it under Section 245D of the Act was pending consideration before the Supreme Court. At that stage, the petitioner filed W.P. Nos. 14807 of 2004 and 18853 of 2007. The writ petitions were disposed of directing the respondents to refund the amounts withheld from the petitioner, subject to their furnishing security to the satisfaction of the respondents. The petitioners have deposited the title deeds in respect of some items of immovable properties and the amounts have been deposited. In Brij Lal and Others Vs. Commissioner of Income Tax, Jalandhar, , the Supreme Court held that it is not competent for a Settlement Commission to reopen the order passed by it in exercise of power under Section 245D of the Act.

Hence, the writ petitions are disposed of directing the respondents to release the documents that have been deposited by the petitioner within a period of four weeks from today. There shall be no order as to costs.

The miscellaneous petitions filed in the writ petitions shall stand disposed of.