Facts of the Case:


  • The petitions were directed against the orders passed by the Income Tax Settlement Commission dated 01.11.2013 and 19.12.2013.
  • The case involved a huge amount of cash amounting to approximately 20.42 crores.
  • An earlier order was passed by the Customs and Central Excise Settlement Commission on 15.02.2007.
  • That earlier order was challenged before the court in W.P.(C) No. 4410/2007, which was ultimately dismissed on 17.09.2010.
  • The cash seized from the petitioners in the earlier round was permitted to be paid towards excise duty concerning the clandestine removal of manufactured goods.

Issues Involved:


  • Whether the respondents provided an explanation regarding the source of the 20.42 crores in cash.
  • Whether the respondents made a full and true disclosure in their applications before the Income Tax Settlement Commission.
  • Whether the High Court has the jurisdiction to interfere with the merits of the Settlement Commission's order under Article 226 of the Constitution of India.

Petitioner’s Arguments:


  • The counsel for the petitioner/revenue argued that the respondents offered no explanation for the huge cash amount of approximately 20.42 crores.
  • The petitioner submitted that using the seized cash for the payment of excise duty did not absolve the respondents from explaining the source of the said cash.
  • The petitioner further contended that the respondents had not made a full and true disclosure.

Respondent’s Arguments:


  • The respondents explained in their application before the Income Tax Settlement Commission that the cash represented revenue generated from unaccounted sales regarding the clandestine removal of chewing tobacco.
  • The counsel for the respondents placed the applications before the court to demonstrate that this fact had been clearly disclosed.

Court Order / FINDINGS:


  • The Income Tax Settlement Commission had already accepted the explanation offered by the respondents regarding the source of the cash.
  • The court found from the applications that the facts regarding the cash had been clearly disclosed by the respondents.
  • The court noted that when exercising its jurisdiction under Article 226 of the Constitution of India, it does not sit in appeal over the order passed by the Settlement Commission.
  • Due to the limitations of its jurisdiction, the court stated it would not go into the merits of the matter.
  • Finding no reason to interfere with the orders passed by the Settlement Commission, the court dismissed the writ petitions.

Important Clarification:


  • The High Court explicitly clarified that its writ jurisdiction under Article 226 of the Constitution of India cannot be used to act as an appellate body over decisions made by the Settlement Commission, which prevents the court from re-evaluating the merits of accepted settlements.

Section Involved:


  • Article 226 of the Constitution of India

Link to download the order: https://delhihighcourt.nic.in/app/case_number_pdf/2015:DHC:11352-DB/BDA09032015CW21682015_111734.pdf


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