HC rules on settlement of I-T disputes

Settlement body cannot force dept. to settle if assessees have not disclosed true income during proceedings

The Income Tax Settlement Commission (ITSC) cannot force the Income Tax Department to settle disputes with assessees if the latter have not disclosed full and true income during any stage of the assessment proceedings, the Madras High Court has ruled. The court has held that the disclosure of full and true income is a sine qua non for a settlement and the Department should be satisfied of it before arriving at a settlement. Justice S.M. Subramaniam said Section 245C of the Income Tax Act is a special provision that enables assessees to settle disputes in a peaceful manner if they come out with full and true disclosure of income. Such a provision was enacted with the intention of providing an opportunity to the assessee to rectify certain omissions, commissions and mistakes that might have crept in while filing of Income Tax returns. “Thus, an application for the settlement of cases cannot be construed as an absolute right… The very concept of a settlement depends on mutual consensus and in the absence of the element of mutual consensus between the parties, the settlement by the settlement commission cannot be unilateral, and in such an event, the settlement commission will be usurping the powers of the assessing o fficer,” the judge observed.