NDLI: Kotak Mahindra Bank Limited Vs. Commissioner of Income Tax Bangalore and Anr.

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Income Tax Act
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Case(s) Referred	Referred Case 0 Referred Case 1 Referred Case 2 Referred Case 3 Referred Case 4
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Allowed
Headnote	Issue for consideration:Whether the Division Bench of the High Court was right in affirmingthe findings of the Single Judge, to the effect that the SettlementCommission ought not to have exercised discretion u/s. 245H ofthe Income Tax Act, 1961 and granted immunity to the assesseede hors any material to demonstrate that there was no wilfulconcealment on the part of the assessee to evade tax and onthat ground, remanding the matter to the Commission for freshconsideration.Income Tax Act, 1961 – s. 245H – Power of SettlementCommission to grant immunity from prosecution and penalty –Exercise of – Assessee placed material and particulars beforethe Commission as to the manner in which income pertainingto certain activities was derived and has sought to offer suchadditional income to tax – On basis thereof, the SettlementCommission proceeded to grant immunity from prosecutionand penalty as contemplated u/s. 245H – Correctness:Held: Settlement Commission rightly considered the relevantfacts and material and, decided to grant immunity to the assesseefrom prosecution and penalty – Settlement Commission appliedits mind to the aspect of whether there was wilful concealment ofincome by the assessee – Having noted that non-disclosure wason account of RBI guidelines, the Commission decided to grantimmunity to the assessee from prosecution and penalty – SingleJudge of the High Court erred in holding that the reasoning ofthe Settlement Commission was vague, unsound and contraryto established principles – Division Bench also not justified inaffirming the said view – Commission adequately applied itsmind to the circumstances of the case, as well as to the relevantlaw and accordingly exercised its discretion to proceed with theapplication for settlement and grant immunity to the assessee frompenalty and prosecution – Thus, the order of the Commission didnot suffer from such infirmity as would warrant interference by theHigh Court, by passing an order of remand – Judgment passed bythe High Court is set aside and that of the Settlement Commissionis restored. [Paras 7.4, 7.5, 9, and 14]Income Tax Act, 1961 – s. 245H – Power of SettlementCommission to grant immunity from prosecution and penalty– Exercise of – Necessary ingredients:Held: Under s. 245H(1), if the Settlement Commission is satisfiedthat assessee has co-operated with the Settlement Commission inthe proceedings before it and has made a full and true disclosure ofits income and the manner in which such income has been derived,it may grant immunity from prosecution or from the imposition ofpenalty – Even if the pre-conditions prescribed u/s. 245C are tobe read into s. 245H, it cannot be said that in every case, thematerial “disclosed” by the assessee before the Commission mustbe something apart from what was discovered by the AssessingOfficer – What is relevant that the assessee offered to tax, income,in addition to the income recorded in the return of income – s.245C r/w s. 245H only contemplates full and true disclosure ofincome to be made before the Settlement Commission, regardlessof the disclosures or discoveries made before/by the AssessingOfficer. [Paras 6 and 7.1]Income Tax Act, 1961 – s. 245H – Power of SettlementCommission to grant immunity from prosecution and penalty– Nature of:Held: Power vested with the Settlement Commission u/s. 245H is adiscretionary power to be exercised if the Settlement Commissionis satisfied that an applicant has complied with the preconditionsspecified therein – Any judicial, quasi-judicial or administrativeauthority must while exercising discretion, direct itself properlyin law and consider all the facts and material that it is bound toconsider. [Para 7.3]Income Tax Act, 1961 – s. 245H – Settlement Commission’sorder – Judicial Review – Scope of:Held: The scope is very narrow – It is only when the ordercontravenes provisions of the Act or has caused prejudice to theopposite party – Interference may also be open on the groundsof fraud, bias or malice. [Para 10]Income Tax Act, 1961 – s. 245H – Proceedings of the SettlementCommission – Legislative intent:Held: Is to avoid frequent interference with the orders orproceedings of the Settlement Commission – Order or proceedingof the Settlement Commission can be judicially reviewed on limitedgrounds, and not to be scrutinized as an appellate court – Unsettlingreasoned orders of the Commission may erode the confidence ofthe bonafide assessees, leading to multiplicity of litigation wheresettlement is possible. [Para 13]
Judge	Hon'ble Ms. Justice B.V. Nagarathna
Neutral Citation	2023 INSC 855
Petitioner	Kotak Mahindra Bank Limited
Respondent	Commissioner Of Income Tax Bangalore And Anr.
SCR	[2023] 14 S.C.R. 1
Judgement Date	2023-09-25
Case Number	9720

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