TMI Blog2009 (8) TMI 834X X X X Extracts X X X X X X X X Extracts X X X X ..... ion has made it clear that if the petitioner is of the opinion that there is computational error in determination of the quantum of interest under section 220(2) leviable in its case, appropriate remedy may have to be sought by way of rectification/ revisional proceedings before the income-tax authority. - Decided against the assessee. Regarding undervaluation of closing stock – Held that:- There was no change in the method of valuation of raw material/closing stock and the same was uniformly and consistently followed as in the earlier years and the issue of valuation of closing stock should be taken up in regular assessment proceedings and not in block assessment proceedings - Matter remanded to the Settlement Commission with a direction to re-examine this issue - 10109 of 2008 - - - Dated:- 17-8-2009 - DAVE A. L., PUJ K. A. JJ. JUDGMENT K. A. Puj J.- 1. Rule. Mrs. Mauna M. Bhatt waives service of notice of rule. With joint request of parties, the petition is taken up for final hearing. 2. The petitioner has filed this petition under articles 226 and 227 of the Constitution of India praying for quashing and setting aside the orders of the Settlement Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act, 1961. The petitioner also filed miscellaneous application/rectification application before the Settlement Commission on April 4, 2007, for rectifying the mistakes apparent on record. The Settlement Commission rejected the application of the petitioner, vide its order dated January 2, 2008, which is also being challenged in the present petition. 6. Mr. R. K. Patel, learned advocate appearing for the petitioner, has submitted that on the issue of excess stock due to inflated burning loss, there is disparity of treatment of telescoping in the case of the petitioner and the director on the similar facts though in both the cases excess burning loss of 0.90 percent. has been accepted by the Settlement Commission. He has further submitted that telescoping in the case of the director Shri K. K. Bansal is granted and only separate addition of unexplained investment in Vasantkunj Society is made whereas in the case of the petitioner entitlement of benefit of telescoping is only partially granted. He has further submitted that the entire approach and finding of the Settlement Commission is contrary to the provisions of section 158BB(1) of the Act, 1961, relating to the computat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad with section 158BC of the Income-tax Act, 1961, what is assessed is the undisclosed income of the block period and not the total income or loss of the previous year required to be assessed in the normal regular assess- ment under section 143(3). This exercise under section 143(2) and (3) for regular assessment stands in contrast to the exercise of the Assessing Officer under section 158BB read with section 158BC(b), where he has to assess only the undisclosed income of the block period on the basis of the evidence found and material available as a result of the search conducted under section 132 of the Act. The regular assessment is to assess the total income or loss of the previous year where a return is filed under section 139 and the Assessing Officer considers it necessary or expedient under section 143(2) to ensure that the assessee had not understated the income or has not computed excessive loss or has not underpaid tax in any manner. 8. Mr. Patel further relied on the decision of the Delhi High Court in CIT v. Mahavir Alluminium Ltd. reported in [2008] 297 ITR 77 (Delhi) wherein it is held that whenever there is a change in the valuation at one end, then there must n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of levy of interest in the direction in spite of the fact that several provisions are not applicable to the facts of the case. Levy of interest was also challenged on the ground of disparity shown by the Commission in granting specific direction in the case of directors of the company on similar facts and circumstances of the case. Mr. Patel further submitted that the Assessing Officer could not have charged interest under section 220(2) of the Act from the date of expiry of the statutory time limit of issuance of demand notice along with block assessment order but he should have charged interest considering the demand notice issued as a result of order of the Settlement Commission passed under section 245D(4) of the Act. In support of this submission, he relied on the decision of the apex court in the case of Vikrant Tyres Ltd. v. First ITO reported in [2001] 247 ITR 821 (SC) where it is held that the condition precedent under section 220 was that there should be a demand notice and there should be a default in paying the amount so demanded within the time stipulated in the notice. The assessee satisfied the demands under the notices issued under section 156 and nothing was du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ategory. 14. Apart from the limited scope of indulgence by this court in the decision of the Settlement Commission, Mr. Bhatt has invited the court's attention to the stand of the Department taken before the Settlement Commission in respect of points of dispute raised by the petitioner in the present petition. With regard to burning loss claimed by the petitioner Mr. Bhatt submitted that this claim is without any basis. The director of the petitioner-company Mr. K. K. Bansal in his statement recorded on November 17, 1995, had mentioned that since 1989 the burning loss is being shown excessive by 1 per cent. to 1.25 per cent. The suppression of production and sale through excess burning loss claim is calculated on the basis of consumption of raw material. Since this process was going on for a number of years, it was but natural to make presumption that part of production has been sold outside the books of account. In relation to the issue on unaccounted stock of finished goods, Mr. Bhatt has submitted that Mr. Bansal in his statement has accepted unaccounted stock of 651 MT. Even an affidavit to this effect was filed before the Settlement Commission along with reconciliation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in different fields. Interest is payable under section 234B when there is default in payment of advance tax. Liability to pay interest under section 245D(2C) arises when the additional amount of tax is not paid within the time specified under section 245D(2A). Section 245D(6A) fastens liability to pay interest when tax payable pursuant to an order under section 245D(4) is not paid within the specified time. Therefore, when interest is charged in respect of those provisions, it does not amount to double levy of interest, as the infractions are different. 17. Mr. Bhatt has, therefore, submitted that none of the issues raised by the petitioner in the present petition deserves any consideration by this court while exercising its extraordinary writ jurisdiction under article 226 of the Constitution of India and hence the petition deserves to be dismissed. 18. We have heard learned counsel appearing for the parties and considered their rival submissions. We have also perused the order passed by the Settlement Commission and considered the relevant statutory provisions as well as the case law cited before the court. In light of the ratio laid down by the apex court in C. A. Abra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment Commis- sion has directed to charge interest under section 220(2) up to the date of order under section 245D(4) of the Act. While disposing of the rectification application, the Settlement Commission has made it clear that if the petitioner is of the opinion that there is computational error in determination of the quantum of interest under section 220(2) leviable in its case, appropriate remedy may have to be sought by way of rectification/ revisional proceedings before the income-tax authority. Thus, there is no substance in the submission of Mr. Patel with regard to the petitioner's challenge against levy of interest under section 220(2) of the Act. The petitioner's challenge to non-waiver of interest on the ground of alleged discrimination does not persuade us to take any different view than the view taken by the Settlement Commission. 19. As far as the issue regarding undervaluation of closing stock of raw- material and finished goods is concerned, there is much substance in the submission of Mr. Patel that the same is not covered within the definition of undisclosed income. It is an admitted position that there was no change in the method of valuation of raw material ..... X X X X Extracts X X X X X X X X Extracts X X X X
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