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2021 (9) TMI 164 - HC - Income TaxValidity of order passed by the Income Tax Settlement Commission [ITSC] u/s 245D(4) - proof of procedural error committed by the ITSC or any error with regard to the decision making process - full and true disclosure - Whether assessees having satisfied the requisite conditions provided under Section 245H and having cooperated with the proceedings before the ITSC and made full and true disclosure of their income, they were granted immunity from penalty and prosecution under the Act? - whether the filing of applications by the assessees for settling the cases is a genuine attempt of the assessees wherein the assessees fully and truly disclosed all material particulars bearing in mind that it is they who approached the ITSC to settle the dispute? - HELD THAT:- The proper method of reading the common order passed by the ITSC is to read the order in its entirety - proper books of accounts were not maintained in all the three cases and the assessees do not, at any point of time, state that they have maintained books of accounts. This is precisely the reason for which the matter has gone before the ITSC and the assessees made full and true disclosure and also offered additional income to tax and regarding valuation of the properties, etc., additions have been made. So far as the method of valuation is concerned, unless and until the Department had prima facie material to show that there was gross undervaluation, the valuation adopted by the assessees, based on the guideline value issued by the Government, cannot be faulted. ITSC was right in finding that the Revenue could not offer any evidence in their defence with regard to valuation of the properties. Even while examining the issue regarding cost of construction of the building, the ITSC took note of certain seized documents, which showed the cost of construction of two buildings at ₹ 1.90 Crores and the said shortfall should be added. We need not labour much on the other issues, as the ITSC examined each of the issues and wherever required, it has added the shortfall. Therefore, by referring to one sentence in paragraph 7.1.2 of the common order passed by the ITSC, it cannot be stated that there was no full and true disclosure. The findings in paragraph 7 have to be read in its entirety, which had several sub-paragraphs and which considered the case of the assessees on various heads culminating in paragraph 7.7, which deals with withdrawals or drawals of the assessees from bank accounts. The ITSC found that the drawals were inadequate and therefore, ordered ₹ 5 lakhs to be added in the hands of both the individual assessees for the relevant assessment years. Therefore, we find that there is no perversity in the approach of the ITSC and bearing in mind the conduct of the assessees that they approached the ITSC with true spirit of settlement, the ITSC granted relief. Learned Single Judge ought not to have set aside the common order passed by the ITSC and remanded the matter to the Assessing Officer to follow the consequential assessment procedure without recording any finding as to whether there was any procedural error committed by the ITSC or any error with regard to the decision making process. Single Judge, in the impugned order, has not recorded any finding that the ITSC contravened the provisions of the Act nor there is any finding recorded duly supported by material that the common order passed by the ITSC suffers from patent illegality. In such circumstances, we are of the clear view that the common order passed by the ITSC ought not to have been interfered with.
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