Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2014 (11) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (11) TMI 734 - HC - Income TaxInterference made in the order of Settlement Commission u/s 245D - Nature of jurisdiction exercised - Whether the exercise of its jurisdiction under Article 226 of the Constitution of India, will interfere with orders passed by the Settlement Commission under Section 245D of the Income Tax Act, 1961 and if so, to what extent – Held that:- This court would be concerned with the decision making process, adopted by the Commission, and not the decision itself – in Jyotendrasinhji v. S. I. Tripathi and Others - [1993 (4) TMI 1 - SUPREME Court] it has been held that the scope of enquiry, whether by the High Court under article 226 or by this Court under article 136, is also the same - the power of judicial review is not to be exercised to decide the issue on facts or on an interpretation of the documents available - the enquiry by this Court can only be with regard to whether or not the Settlement Commission exercised a jurisdiction that it did not have or, alternatively, if it did have the jurisdiction, whether it erred in the exercise of that jurisdiction. Full and true disclosure of income made or not – Jurisdiction of Commission – opportunity to conduct further investigation refused by Settlement Commission - Held that:- The department had not adduced cogent evidence to substantiate their contentions with regard to alleged unaccounted transactions of the assessees with goldsmiths/manufacturers - there was no instance of unaccounted sales or purchases detected - There was also no difference noticed in the quantitative stock in any of the branches of the assessees - There was only the uncorroborated deposition of two employee goldsmiths of the assessees that pointed to a possibility of some transactions having been unaccounted - the offer of additional amounts made by the assessees was only to put a quietus to the litigation with the department and in the spirit of settlement - The suggestions by the Settlement Commission, and the acceptance of the offer of additional amounts from the assessee for the purposes of settlement, cannot be seen as having rendered invalid the original declaration made by the assessees before the Commission either for the purposes of settlement of the tax liabilities or for the grant of immunity from penalty and prosecution under the Act, especially when the Commission finds that the assessees had co-operated in the proceedings before it - there was no requirement of any further investigation and that a verification, of the material already available, would suffice for the purposes of determining whether the assessees had failed to disclose any income for the purposes of settlement - The department, which did not participate in the verification proceedings, or raise any timely objection to it before the Settlement Commission, cannot be heard to complain of any violation of procedure by the Settlement Commission, at this belated stage - the order of the Settlement Commission to be legal and valid in all respects, including the grant of immunity to the assessees, and not liable to be interfered. Undervaluation of closing stock - Whether the findings of the Settlement Commission with regard to the alleged undervaluation of closing stock by two of the assessees is liable to be interfered with – Held that:- The settlement commission found that the accounting method was followed consistently for many years in the past and, had been accepted by the department as well - the AS-2 accounting standard did not prohibit the LIFO method, and further, the AS-2 accounting standard was not mandatory for the purposes of the IT Act, the assessees had not committed any irregularity by following the LIFO method - it has dealt with the objections of the department at some length and given reasons as to why it felt that there was no merit in the contention of the department that the adoption of the LIFO method of valuation of closing stock did not have the effect of distorting the real profits earned by the assessees - the commission found that the declaration of the assessees, vis-a-vis this objection of the department, was full and true disclosure for the purposes of settlement – the order of the Commission is upheld – Decided against revenue.
|