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MAHESHBHAI SHANTILAL PATEL Versus INCOME TAX SETTLEMENT COMMISSION AND 1

2016 (6) TMI 702 - GUJARAT HIGH COURT

Settlement on account of non-compliance with the provisions of Section 245D(2D) - undeposited tax of the assessee in terms of the amended provisions of Section 245B - Held that:- The department was not correct in raising shortfall of ₹ 48,086/- in case of the assessee. The assessee, way back in the year 1994, had surrendered the entire amount of ₹ 1,60,000/- unconditionally and had also authorized the department to adjust the same against any of his tax dues. The contention of the co .....

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made by the assessee in his letter dated 10.01.1994. The contention that since no final assessment was framed, there was no question of adjustment of the amount towards any assessed income tax liability of the assessee also would not change the position. The question of depositing the tax in the context of the settlement proceedings arose by virtue of amended Section 245D of the Act. The amount of ₹ 1,60,000/- lying with the department had to be adjusted towards such liability. - SPECIAL .....

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e provisions of Section 245D(2D) of the Income Tax Act, 1961 ['the Act' for short]. 2. Briefly stated the facts are that, search operations were carried out concerning the petitioner between 15.09.1993 and 20.10.1993. Besides other valuable articles, things and documents, a cash of ₹ 10,000/- was sized from the premises of the petitioner and ₹ 1,50,000/- was recovered from the premises of the neighbour of the petitioner, one Vikram Pandya. On 10.01.1994, the petitioner wrote .....

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sted to be applied against the taxes, the order for retention of such cash under Section 132(5) of the Act need not be passed as the title of the cash would vest in the department. He stated as under: As regard the seizure of cash, there is seizure of cash amounting to ₹ 10,000/-as well as ₹ 1,50,000/- aggregating to ₹ 1,60,000/-. The said cash are covered under the disclosure pursuant to Explanation 5 to Section 271(1)(c) read with Section 132(4) of the Income Tax Act. It is u .....

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ion 132(5) of the Act, in which, with respect to the seized cash of ₹ 10,000/- and ₹ 1,50,000/- respectively, he provided as under: 12. On 20.09.1993, assessee was having cash of ₹ 14,740/- at his residence, out of which cash of ₹ 10,000/- was seized. Assessee was asked to explain source out of which the cash has been acquired. Assessee vide his reply dated 1.10.1994 has not given any explanation regrading source of acquisition of this amount. Assessee has stated that the .....

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amrai P. Pandya on 15.9.1993. Shri Vikramrai P. Pandya stated that the cash belongs to Shri Maheshbhai Shantitlal Patel. Shri Maheshbhai Shantilal Patel was asked vide this office letter dated 10.12.1993 to explain the source out of which the cash of ₹ 1,50,000/- was acquired. Assessee vide his letter dated 10.1.1994 has stated that cash of ₹ 1,50,000/- may be adjusted against the tax liability which may arise in his case. In view of the above explanation of the assessee, it is clear .....

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by the Department in the case of Shri Vikramrai P.Pandya. 4. On 27.10.1995, the petitioner applied for settlement of his case in terms of the provisions contained in Chapter XIX-A of the Act. Section 245D (2D) of the Act was amended w.e.f. 01.06.2007 imposing liability for payment of certain taxes on the persons applying for settlement. With respect to those applications which are already made before the amendment, it was provided that, shortfall, if any, in depositing the tax as per the amended .....

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h amount with the department on 18.08.2008. Since, however, such deposit was after the date of 31.07.2007, the Settlement Commission, by the impugned order, decided to terminate the settlement proceedings. It was held that: 3. In the case of Shri Mahesh S. Patel, the Commissioner of Income Tax, Central I, Ahmedabad has reported that the applicant had paid tax of ₹ 16,44,539/- against ₹ 16,61,713/-. It was reported by the Commissioner of Income Tax that the short payment of ₹ 17 .....

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amined in light of such facts. The Settlement Commission, however, did not advert to such issue. 6. Having heard learned counsel for the parties and having perused the documents on record, it clearly emerges that a cash of total of ₹ 1,60,000/- was found during search operation by the departmental authority and seized. ₹ 10,000/- were found from the premises of the petitioner. ₹ 1,50,000/- from his neighbour Vikram Pandya. At the very outset, the petitioner made a disclosure th .....

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cedes to such amount vesting absolutely in the department. Even in the order under Section 132(5) of the Act passed by the Assistant Commissioner on 17.01.1994, he took cognizance against all these disclosures of the petitioner. He also noted that in the letter dated 10.01.1994, the assessee had requested that such cash be adjusted against the tax liability which may arise in his case. It was, in this background, he recorded that in view of the explanation of the assessee, it is clear that he is .....

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/- though substantial part thereof i.e. ₹ 1,50,000/- was seized from the premises of his neighbour. Secondly, the department had also accepted such disclosure statement insofar as it related to the assessee owning up such seized cash. The Assistant Commissioner found that the assessee had offered no explanation for the source of the cash and therefore, at the stage of seizure of the cash under Section 131(5) of the Act, treated it as undisclosed income of the assessee for the assessment ye .....

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