ANDREW NETTIKKADAN vs. ASSISTANT COMMISSIONER OF INCOME TAX

WP(C)/36865/2004HC KeralaKLHC01069882200412 February 2018Author: HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE3 pages

AI SummaryRemanded

What did the High Court hold?

The High Court held that the Settlement Commission, in its order dated 29.01.2004, had not determined the tax liability of the petitioner. The order merely granted immunity from penalty and prosecution, subject to the condition of payment of the admitted tax liability within a specified period. The Court found that the Settlement Commission had not undertaken the exercise of determining the exact tax payable by the assessee. Therefore, the Settlement Commission was directed to proceed with the determination of the tax liability of the petitioner and pass appropriate orders. The Court clarified that the Settlement Commission's role was not to abdicate its duty of determining the tax liability, even if it granted immunity. The ratio decidendi is that the Settlement Commission must finalize the tax liability itself when it grants settlement, rather than remitting it back to the Assessing Officer for determination.

What were the facts?

The petitioner, Andrew Nettikkadan, proprietor of Joseph Thomas Sons & Company, filed a writ petition challenging the order passed by the Assistant Commissioner of Income Tax (Investigation), Circle-I, Ernakulam. The petitioner had approached the Settlement Commission for resolution of his tax matters. The Settlement Commission, by an order dated 29.01.2004, had granted immunity from penalty and prosecution, subject to the condition that the petitioner pays the admitted tax liability within a stipulated period. The petitioner contends that the Settlement Commission's order implicitly meant that the tax liability should be determined by the Settlement Commission itself, and not by the Assessing Officer. The petitioner seeks a direction to the Settlement Commission to finalize the proceedings and determine the tax liability.

What were the issues?

1. Whether the Settlement Commission, after granting immunity from penalty and prosecution, is obligated to determine the tax liability of the assessee, or can it leave this determination to the Assessing Officer? (Question of law and mixed fact and law, turning on the interpretation of the powers of the Settlement Commission under the Income Tax Act, 1961). Assessee's contention: The assessee argued that the Settlement Commission's order, which granted immunity subject to payment of admitted tax, implied that the Settlement Commission itself would determine the tax liability. They relied on the principle that once a settlement is reached, the matter should be concluded by the Settlement Commission. Revenue's contention: The revenue contended that the Settlement Commission's role is to facilitate settlement and grant immunity, but the final computation and assessment of tax liability remains with the Assessing Officer, especially when the settlement order refers to payment of 'admitted tax liability' without specifying the exact quantum determined by the Commission.

Which sections of the Income-tax Act were involved?

Income Tax Act, 1961

AI-generated summary — verify with the full judgment below

Heard together (3 matters)

WP(C).No. 36865 of 2004

W.P.(C) NO. 21216 OF 2003

W.P.(C) NO. 35550 OF 2003

Read from the judgment's own cause title. This page is filed under one of them.

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE MONDAY, THE 12TH DAY OF FEBRUARY 2018 / 23RD MAGHA, 1939 WP(C).No. 36865 of 2004 PETITIONER: ANDREW NETTIKKADAN, PROPRIETOR, JOSEPH THOMAS SONS & COMPANY, ANAND BAZAR, COCHIN-682 016.

RESPONDENT(S): 1. ASSISTANT COMMISSIONER OF INCOME TAX (INVESTIGATION), CIRCLE-I, DIVISION-I(1),ERNAKULAM. 2. THE SETTLEMENT COMMISSION (INCOME TAX AND WEALTH TAX), ADDITIONAL BENCH,488-489, ANNA SALAI, CHENNAI-600 035. 3. THE CENTRAL BOARD OF DIRECT TAXES, NEW DELHI, REPRESENTED BY ITS SECRETARY. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL,GOI(TAXES) SRI.GEORGE K. GEORGE, SC FOR IT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 12-02-2018,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: PBS

WP(C).No. 36865 of 2004 APPENDIX PETITIONER'S EXHIBITS EXHIBIT P1 TRUE COPY OF THE S.154 NOTICE DATED 6.2.2003 ISSUED BY THE SETTLEMENT COMMISSION, ANNASALAI, CHENNAI, TO THE PETITIONER. EXHIBIT P2 TRUE COPY OF THE ORDER DATED 3.7.2003 PASSED BY THE SUPREME COURT OF INDIA IN SLP(C) NO. 11160-11171 OF 2003 TO THE COMMISSIONER OF INCOME TAX STAYING THE FURTHER OPERATION OF THE ORDER OF THE SETTLEMENT COMMISSION. EXHIBIT P3 TRUE COPY OF THE ORDER OF THE HIGH COURT JUDICATURE AT MADRAS DATED 31.7.2003 IN W.P.(MISCELLANEOUS PETITION) NO. 26367 OF 2003 IN W.P.(C) NO. 21216 OF 2003. EXHIBIT P4 TRUE COPY OF THE JUDGMENT DATED 12.11.2003 IN W.P.(C) NO. 35550 OF 2003 OF THE HONOURABLE HIGH COURT OF KERALA. EXHIBIT P5 TRUE COPY OF THE RECTIFICATION ORDER DATED 15.3.2004 PASSED BY THE SETTLEMENT COMMISSION, CHENNAI. ADDL.EXHIBIT P6:TRUE COPY OF THE RELEVANT PAGES IN 273 ITR AT STATUTES PAGE NO. 236. ADDL.EXHIBIT P7: TRUE COPY OF THE AD-INTERIM ORDER IN THE WRIT PETITION DATED 19.7.2005. RESPONDENT'S EXHIBITS NIL /TRUE COPY/ PA TO JUDGE PBS

A.MUHAMED MUSTAQUE, J. --------------------------------------------- W.P (C) No. 36865 of 2004 ---------------------------------------------- Dated this the 12th day of February, 2018 JUDGMENT

The petitioner in this writ petition impugns an order passed by the Settlement Commission (Income tax and Wealth tax) rectifying the order passed under 245 D of the Income Tax Act, 1961. Challenge in this writ petition with regard to the power of the Settlement Commission to pass such order. In fact, the issue covered against the petitioner in the light of the judgment of the Division Bench of this Court in W.A No. 2133/ 2003. The assessee also had challenged it before the Honourable Supreme Court. SLP was also not admitted. In the light of the above, the writ petition is dismissed accordingly. No costs. A.MUHAMED MUSTAQUE Judge lsn

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