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2016 (9) TMI 555 - ORISSA HIGH COURT

2016 (9) TMI 555 - ORISSA HIGH COURT - TMI - Petition challenging the order of the Commission under the writ jurisdiction - settlement commission - whether the impugned order passed by the Commission has reached its finality? - Held that:- We are convinced that the Commission, after giving appropriate opportunity to the applicant and after going through the report of the Principal Commissioner/Commissioner made under Rule-9, has passed the order under Section 245D of the Act. Section 245D(3) of .....

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itional income of approximately ₹ 110 crores added finding thereby that there is no true and full disclosure income is untenable because the Commission has got not only power to decide the lis before them but also to find out if at all any income left out or could not be disclosed by the assessee to come to a mechanism of settlement. The settlement of lis is not only covered by the dispute arose before them but also for the dispute yet to come. So the Commission has got wide power to consi .....

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lare the said settlement as void. When the order of the Commission has been communicated to the Department, the Department could have agitated before the Commission to declare the same as void but instead as appears from the arguments of both sides that in terms of the settlement, the Assessing Officer has been directed to compute the tax as per law and charge the interest as directed at Para-7 of the report of the Commission and the applicant seeks direction to make payment and in fact it is ad .....

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the Commission has the power to declare the settlement void. - Where the settlement is found to be void as per sub-section 6 of the Act, all the proceedings would be heard de novo and the Commission has to complete the proceedings within a period of two years from the date of the final order in which the settlement became void. In the instant case, when the tax under Sub-section-6A of the Act has been paid by the assessee as per the demand by the Assessing Officer in consequence of the orde .....

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finality and the same has already been implemented by collecting tax from the assessee-opposite parties 2 to 6 and the writ jurisdiction is not maintainable in view of the reasons as stated above - W. P. (C) No. 1199 of 2015 - Dated:- 31-8-2016 - I. Mahanty And D. P. Choudhury, JJ. For the Petitioner : Mr.S.K.Acharya For Opp. Parties : Mr.Manas Mohapatra, Sr. Adv M/s.Shisir Routray, S.Mohanty, L.Mohapatra & S.P.Pattnaik, JUDGMENT Dr. D.P.Choudhury, J. In the captioned writ petition, the fina .....

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ljeet Singh Ahluwalia and group and several incriminating documents, cash and other material were seized. The search operation was made by opposite parties 2 to 6 for the assessment years ranging from 2004-05 to 2010-11. The Ahluwalia group has got business in iron ore mining, sponge iron ore plant and rolling mill. This group has also business of manufacturing of cement. The statement of Sri Kamaljeet Singh Ahluwalia was recorded under Section 132(4) of the Act. During the search and seizure op .....

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plication before the Commission, have admitted that income amounting to ₹ 141.30 crores was not disclosed before the Assessing Officer under Section 153A of the Act relating to the above assessment years. 4. It is also stated that the opposite parties 2 to 6, for the assessment years 2004-05 to 2010-11, have got additional disclosed income of ₹ 99.20 crores, 2.00 crores, 25.40 crores,12.70 crores and 2.00 crores respectively. After receipt of the application, the Commission directed .....

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09 Transportation charges of rejects Port Handling Charges Machinery Hire Charges Suppression of Sales Unaccounted cash Expenditure 92.36 4.19 8.46 151.35 0.34 Sub Total (A) 256.7 2009-10 Transportation charges of rejects 87.37 Suppression of Sales Unaccounted cash Expenditure 151.90 0.96 Sub Total (B) 240.23 2010-11 Suppression of Sales Unexplained Cash Fund 29.84 0.40 Sub Total (C) 30.24 Grand Total (A+B+C) 527.17 ii. M/s.KJS Ahluwalia Assessment Years Particulars Amount (In Rs.Cr) 2007-08 Rem .....

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A+B+C+D) 63.27 iv. Prashan Kumar Ahluwalia Assessment Years Particulars Amount (In Rs.Cr) 2008-09 Transportation charges of rejects Machinery Hire Charges Amount transferred to dummy accounts 66.44 3.78 4.78 Sub Total (A) 75.00 2009-10 Transportation charges of rejects (B) 63.00 2010-11 Unaccounted investment in immoveable property Unaccounted cash found 1.50 0.14 Sub Total (C) 1.64 Grand Total (A+B+C) 139.64 v. M/s.Kaypee Enterprises Assessment Years Particulars Amount (In Rs.Cr) 2006-07 Unacco .....

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and above the income disclosed by the assessee before the Commission. The petitioner challenges such order of the Commission by stating that the assesee has understated their income on following categories: (i) Booking of fictitious/bogus expenditure; (ii) Suppression of sales; (iii) Unexplained cash expenditure; and (iv) Unexplained cash found 8. While explaining the booking of fictitious/bogus expenditure, it is stated that the assessee have booked fictitious expenditure under the head of tra .....

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d of different managers who clarified that nothing except statutory payment of Government over and above the contractual payment is borne by the mines owners and all other expenses relating to the entire mining process are incurred by the mining contractors. It is stated that M/s.Triveni Earth Movers (P) Limited at iron ore mines of opposite party no.3 at Guali in Keonjhar was engaged by later as mining contractor and said contractor, i.e., M/s.Triveni Earth Movers (P) Limited did all work inclu .....

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rders for big amount in future. 9. The CIT also found when the vendors have not provided any service to assessee group, the payments were made to the alleged vendors through account payee cheques and tax has also been deducted thereby. It is also reported by the CIT to the Commission that opposite parties 2 to 6 have routed the money through share applications and by this, it is clear that bogus expenditure which was claimed by the assessee group in profit and loss account under the head transpo .....

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never been deployed and most of their names have not been heard by the assessee group. 11. The CIT also found that M/s.Merlin Tie Up (P) Limited, M/s.Mistrose Commerce (P) Limited, M/s.Mudra Vyapaar (P) Limited, M/s.Sun Suppliers (P) Limited and M/s.Upasana Vyapar (P) Limited were alleged to have rendered service for removal of rejects, but none of the company was formed and inducted as tenants in the said building at their respective address place. The CIT found that the assessee group has eng .....

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termination of the total bogus expenditure in the hands of the assessee group at ₹ 534.91 crores. 13. With regard to suppression of sales, the CIT has reported under Rule 9 that opposite parties 2 to 4 have systematically suppressed their sales year after year by under invoicing the sales. According to the CIT, Odisha Mining Corporation (OMC), a Public Sector Undertaking is also engaged in the same group as the assessee group is engage. But the OMC is following the tender process for sale .....

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if their grade of course is +3 which is +63FE by suppressing the sales because the CIT found that the assessee have sold product to M/s.P.K.Ores Pvt. Limited and M/s.TTL Minerals Export Pvt. Limited at higher rate whereas they have sold the same product to M/s.Shree Metaliks Limited at lower rate by understating the rate and in most of the cases, it is understood that difference between the final price and recorded price has been received in cash. Thus, the CIT found the suppression of sales. 1 .....

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d M/s.Thakur Prasad Sao & Sons. Thus, the CIT has found lot of undisclosed income on the part of the assessee group on the grounds stated above. 15. It is stated that the Commission in its order has not considered the report of the CIT, Sambalpur with proper perspective. It is alleged inter alia that the Commission has not taken the investigation of the CIT/Department in correct manner, rather it has felt that the investigation, wherever it is shallow, does not help in coming to a right conc .....

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regard to the examination of the documents or books of accounts may lead to inquiry, although the said power lies with the Commission who had opined in its order that the Department must have adequate material to support the contention and should have extensively examined with reference to contract documents and other documents, but all these observations of the Commission would lead to inquiry and the powers of conducting such inquiry only lies with the Commission during the settlement proceed .....

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s alleged that no formal opportunity was given to the Department when the assessee filed the self serving affidavit before the Commission to retracted the statement of different witnesses examined by the Department. Had it been given, the persons could have stated before the Department about the statutory payment of Government over and above the contractual payment made by the mines owners. 17. It is stated that the Commission has not applied its mind while explaining the turnover of the assesse .....

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for assessment year 2007-08 where ₹ 218.67 crores only was admitted as against ₹ 222.55 crores admitted in the returns of income filed before the Assessing Officer which is reflected in the report of CIT under Rule-9. Thus, the order of the Commission suffers from gross illegality since it is not legally or factually possible to reduce the turn-over that has been admitted by the assessee in their returns. 18. It is stated that the Commission, in its order, has listed the outstanding .....

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.2 at ₹ 333.09 crores, in the hands of M/s.KJS Ahluwalia at ₹ 49.44 crores, in the hands of opposite party no.4 at ₹ 19.95 crores totaling to ₹ 402.48 crores is totally unjustified and incorrect. However, it is stated that the Commission has not resolved the issue with regard to the transfer of the amount from the account of opposite party no.3, the assessee to the dummy account. 19. With regard to unexplained cash expenditure as submitted by CIT, the Commission estimated .....

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ission has not taken into account the income suppressed by the assessee as per the report of the CIT. 20. The order of the Commission is also erroneous as the mandatory provision of Section 245H(1) of the Act has not been complied when there is no full or true disclouser of the income of the assessee group. The Commission has also failed to quantify the undisclosed income on the basis of the report of the CIT as well as other materials brought before it. It is stated that when the applicants hav .....

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the decision of the Hon ble Madrass High Court in the case of Mr.G.Jayaraman -V- The Settlement Commission, (2011) 196 TAXMANN 552 (Mad). The petitioner has summed up the illegality in the impugned order in the following manner: A. The order passed by the Ld. ITSC is without jurisdiction as the assessee had failed to comply with the statutory requirements u/s 245-C which stipulates that there must be full and true disclosure in the Settlement Applications by the Assessees for exercise of jurisdi .....

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since the assesses have never mentioned anything about the sham transactions undertaken by them by way of the aforesaid accommodations entries in the pretext of transportation expenditure; C. The ITSC has not given adequate opportunity to the Department to rebut the claim of the assessee, in particular, the affidavits filed by the assessee from the witnesses retracting from the statements given earlier; D. The Ld. ITSC has made further addition of income while allowing the application of the as .....

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amount of ₹ 534.91 crores ought to have been disallowed. It is submitted that estimation of income has to be done on the basis of facts available on record, and not be merely a pure guess work, on the pretext that Department has not made proper investigation; G. The ITSC has failed in its duty to investigate the claim of the assessee or to direct investigation u/s 245D(3) by the Commissioner of Income Tax and has merely avoided its responsibility by observing that the Department has not e .....

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ue, and was fraught with patent misrepresentation of facts; J. The Ld. ITSC has erred in law and in facts by failing to get the case thoroughly investigated even after the companies to which the assesses/applicants have made payments have confessed that they rendered no services to the assessee group and that they have issued cheques in favour of Kolkata based companies which are mre accommodation entry operators; K. The Ld.ITSC has erred in law and in facts by not resolving the issues mentioned .....

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able to make full and true disclosure of income amounting to patent misrepresentation of facts in their Settlement Applications which should entail nullification, and in such view, the ITSC ought not have granted immunity to the assesses. 21. It is stated that in view of the decision of Hon ble Supreme Court in the case of Jyotendrasinhji -V- S.I.Tripathi, AIR 1993 SC 1991, this Court has got power of review for which the writ petition under Articles 226 and 227 of the Constitution of India has .....

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order passed by the Income Tax Settlement Commissioner under Section 245D of the Act. The writ petition was filed on 20.1.2015 although the Commission has passed the order on 28.3.2013 and in the meantime, as per the order of the Commissioner, the Deputy Commissioner of Income Tax, Rourkela Circle, has made assessment and raised the respective demand under Section 245D(4) of the Act against the opposite parties 2 to 6 and opposite parties 2 to 6 have already paid such tax and penalty demanded as .....

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tion of the assessee where according to him no full and true disclosure income was mentioned properly. If there is no full and true disclosure of the income, the pre-conditions of exercising powers under Section 245C will not be made available. He submitted that the preconditions for settlement of the application as per Section 245C are: I. There must be a full and true disclosure of the income which has not been disclosed before the Assessing Officer; I. The manner in which such income has been .....

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ome. 25. Mr.Acharya further submitted that the form prescribed under Rule-44C and 44CA of the I.T.Rule in Part-C, item-3 of the application has not been properly filled up to prove the manner in which such income has been derived. The assessee, without disclosing the manner in which the income has been derived, has proceeded further and has come before the Commission which has the wide experience and wisdom in settling the tax disputes to intervene in the matter and determine and settle the corr .....

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cy of disclosure and the same can be considered at the time 245D(4) proceeding and, therefore, the Commission held that the application submitted by the assessee group as not valid. The Commission has no jurisdiction to entertain the application. Surprisingly ignoring the objection raised by the petitioner because when there is no foundation, the super structure cannot stand on it and, therefore, the order of the Commission is bad in law. 26. Mr.Acharya, leaned Senior Standing Counsel for the In .....

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y the opposite parties 2 to 6. Had there been consideration of the report of the CIT prepared under Rule-9 explaining about all above four issues, the order of the Commission could have come otherwise. In support of his contention, he relied upon the decision of the Madras High Court rendered in the case of Canara Bank Jewellers -V- Settlement Commission; 315 ITR 328 (Madras) wherein it has been held that the Commission has no jurisdiction to pass an order enhancing the income of the assessee an .....

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submitted that the Hon ble Supreme Court, in the case of Ajmera Housing Corporation and another -V- CIT, 326 ITR 462, has held that when the Settlement Commission decides to proceed with the application, it will not be denuded of its power to examine as to whether the assessee has made a full and true disclosure of his undisclosed income. When the Commission has added ₹ 110.28 crores in addition to the total disclosure of the income by the opposite parties 2 to 6 of ₹ 141.30 crores, .....

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f the impugned order. He further submitted that the officer of the Income Tax Department, believing the present impugned order as conclusive, did not challenge the order of the Settlement Commission immediately. But after the lacunae in the Commission s order were discovered, the same has been filed with delay challenging in this writ petition. He also submitted that CIT (DR) who appears before the Commissioner happens to be the only officer who is acquainted with the day to day affairs of the p .....

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revenue involved, the delay may be condoned and the writ petition may be allowed in view of the decision of the Hon ble Supreme Court rendered in the case of State of U.P. - V- Rai Bahadu Singh & Another; (1988) 8 SCC 685 wherein it has been held that there is no time limit for filing writ petition. According to him, the same view has been taken in the case of State of Karnataka -V- Y.Moideenkunhi (2009) 13 SCC 192. He also submitted that in the decision of BS Sheshagiri Shetty -V- State of .....

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he opposite parties that the assessment has been completed in view of the order of settlement commission is not correct because they are not assessment but only follow up action, that does not mean that the order of the Commission attains its finality. It is, therefore, prayed by Mr.Acharya to quash the impugned order of the Commission by giving finding the same as void one. 29. Countering the arguments of the learned Senior Advocate for the opposite parties 2 to 6, Mr.Acharya submitted that the .....

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n-compliance of the provisions of Section 245C(1) of the Act. He submitted that rather in the case of Ace Investment Ltd. -V- CIT, (2003) 264 ITR 571 (Madras), Madras High Court has held that once the Settlement Commission found that the applicant has not made full and true disclosure, the application itself is non-maintainable for which the contention of the learned counsel for the petitioner has no merit. He further submitted that counter in the arguments of the learned Senior Advocate for the .....

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ttlement order had been obtained by fraud or misrepresentation of facts. Relying on the decision of the Gujarat High Court in the case of Vishnubhai Mafatlal Patel - V- Asst. CIT; (2013) 31 Taxman.com 99 (Guj), he submitted that when there is no manner of the income derived, the Settlement Commission should have held that the mandatory pre-conditions of settlement having not been fulfilled, the Commission cannot entertain such application. 30. Mr.Acharya relied on the decision of Haryana High Co .....

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Jagannath, AIR 1994 SC 853, it has been held that Section 44 of the Evidence Act attracted whereas the previous decision is obtained by fraud and, therefore, the Court has got right to adjudicate the matter. He also relied on the decisions in the case of Lazarus Estates Limited -V- Beasley; (1956) 1 QB 702, Rex -V- Recorder of Leicester; 1947 (1) KB 726; Bahadur Dagdu Paralkar -V- State of Maharashtra, AIR 2005 SC 3330, Ram Preeti Yadav -V- U.P.Board of High School & Intermediate Education, .....

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by fraud or misrepresentation of facts by the opposite parties, the Commission lacks jurisdiction and its decision cannot be addressed on law. Hence, it is submitted to quash the impugned order dated 28.3.2013. 31. Mr.Mohapatra, learned Senior Advocate for the opposite parties submitted by supporting the counter affidavit as per Section 245I of the Act that the order of the Commission, being final, cannot be challenged. He further submitted that after the declaration of ₹ 150.00 crores by .....

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ission did not find out any fraud but further made assessment through the Deputy Commissioner and necessary payment has been made by the opposite parties 2 to 6. He further submitted that as per Section 245D(6-B) of the Act after necessary deposit, the order of the Commission becomes final. If at all the Department has any objection, it could have been ventilated through review to the Commission itself who may reopen the case if it finds the grounds tenable. The Department have not raised any ob .....

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there is a matter settled and reached its finality. 32. Mr.Mohapatra, learned Senior Advocate further submitted that fraud in Civil Procedure Code cannot be comparable the fraud as in Section 245D(6) of the Act. He further submitted that the delay in filing the writ petition also goes to the route of the case because after the order of the Commission, there has been assessment of the opposite parties 2 to 6 by the Income Tax Authority and they have already paid the required taxes. On the other .....

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nder subSection 4 of Section 245D shall be conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwsie provided in this Chapter, be reopened in any proceeding under the Act or under any other law for the time being in force. When the order of the Commission has been accepted by the opposite parties 2 to 6, there is no reason as to challenge the assessment order passed under Section 245D of the Act by the Commission. The writ petition has been filed es .....

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od of six months from the end of month in which order was passed or at any time within a period of six months from the end of the month in which the application for rectification has been made by the Principal Commissioner or the Commissioner. Since no such petition has been filed by the Principal Commissioner or Commissioner, the writ petition lacks maintainability under Article 226 of the Constitution of India. Hence, it is prayed to dismiss the same. POINTS FOR CONSIDERATON 34. The main point .....

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re of the undisclosed income by the assessee, the order of the Commission had not reached its finality. On the other hand, the contention of the learned Senior Advocate for the opposite parties 2 to 6 is that the order of the Commission having been reached its finality, the same has been acted upon by the Department. 36. It is admitted fact that the opposite parties 2 to 6 are the assessee-group and they have applied the Commission by disclosing their true and full disclosure of the disclosed in .....

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ssion headed by Mr. Justice K.N.Wanchoo, the former Chief Justice of India who was intrusted with the task of considering indepth and comprehensively the problem pertaining to the amendment of the provision of the Income-tax Act, and that the said Commission has already made an exhaustive report in that behalf. 39. In Chapter-2, on the title Black money and tax evasion , the committee recommended about the settlement machinery at Paragraph-32 to 34 which is quoted hereunder: Settlement machinery .....

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to revenue, while needlessly proliferating litigation and holding up collections. We would, therefore, suggest that there should be a provision in the law for a settlement with the taxpayer at any stage of the proceedings. In the United Kingdom, the confession method has been in vogue since 1923. In the U.S. law also, there is a provision for compromise with the taxpayer as to his tax liabilities. A provision of this type facilitating settlement in individual cases will have this advantage over .....

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nistering the provisions, which would also incidentally relieve the field officer of an onerous responsibility at the risk of having to face adverse criticism which, we are told, has been responsible for the slow rate of disposal of disclosure petitions. We would, therefore, recommend that settlements may be entrusted to a separate body within the Department, to be called the Direct Taxes Settlement Tribunal. It will be a permanent body with three Members. To strength of the Tribunal can be incr .....

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for cases being referred to the Tribunal by the Department. However, we wish to emphasize that the Tribunal will proceed with the petition filed by a taxpayer only if the Department raises no objection on its being so entertained. We consider that this will be a salutary safeguard, because otherwise the Tribunal might become an escape route for tax evaders who have been caught and who are likely to be heavily penalized or prosecuted. Once a case is admitted for adjudication, the Tribunal will h .....

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investigation carried out on any specific point or generally, in any case through the Incometax Department. The terms of the award will be set down in writing and it will be open to the Tribunal to determine not only the amount of tax, penalty or interest but also to fix date or dates of payment. The quantum of penalty and interest will be in the discretion of the Tribunal. Similarly, the Tribunal may also in its discretion grant immunity from criminal prosecution in suitable cases. The award wi .....

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e minds of the taxpayers as to its fairness and impartiality. For this reasons, we consider it to be of paramount importance that only persons who are known for their integrity and high sense of justice and fairness are selected for appointment on the Tribunal. 40. Keeping in mind the above recommendation, Chapter XIX-A providing forum and procedure for "settlement of cases" was introduced in the IT Act by Taxation Laws (Amendment) Act 1975 published in the Gazette of India Extraordina .....

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der the relevant enactments, and to streamline the administrative set-up and make it functionally efficient". 41. Clause 58 of the Bill introduced in Parliament to introduce separate Chapter in the IT Act for "settlement of cases" reads thus :- "Clause 58 : This clause seeks to insert a new Chapter XIXA in the act, making provision for settlement of cases. 42. The provisions proposed in this Chapter are mainly intended to give a statutory basis for settlement of cases which a .....

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ion. Unless it is an independent body, there cannot be fair, prompt and independent settlement mechanism. What is emphasized by the committee that the Tribunal under that report (Commission) would only proceed with the petition filed by the tax borrower, if the Department raise no objection so being entrusted. Besides the Committee has recommended that only person of high integrity and sense of justice and fairness should be the members of the Tribunal. Accordingly, Section 245B onwards till Sec .....

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of income-tax payable on such income and such other particulars as may be prescribed, to the Settlement Commission to have the case settled and any such application shall be disposed of in the manner hereinafter provided : [Provided that no such application shall be made unless,- Xx xx xx xx (1A) For the purposes of sub-section (1) of this section, the additional amount of income-tax payable in respect of the income disclosed in an application made under sub-section (1) of this section shall be .....

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he aggregate of the total income returned and the income disclosed in the application as if such aggregate were the total income.] [(1C) The additional amount of income-tax payable in respect of the income disclosed in the application relating to the previous year referred to in sub-section (1B) shall be,- (a) in a case referred to in clause (i) of that sub-section, the amount of tax calculated under that clause; (b) in a case referred to in clause (ii) of that sub-section, the amount of tax cal .....

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pplication has been made under sub-section (1) shall be the additional amount of income-tax payable in respect of the income disclosed in the application. (1E) [***] (2) Every application made under sub-section (1) shall be accompanied by such fees as may be prescribed. (3) An application made under sub-section (1) shall not be allowed to be withdrawn by the applicant. (4) An assessee shall, on the date on which he makes an application under sub-section (1) to the Settlement Commission, also int .....

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ome. Not only this, but also according to Sub-section 4 of Section 245C of the Act, the assessee, on the date he makes an application under Subsection 1 would intimate the Assessing Officer in a prescribed manner which is prescribed in Rule-44C(1) and the same is to be made under in Form No.34B. 46. It is profitable to quote sub-sections-2 to 4A of Section 245D of the Act which is reproduced below: 245D. Procedure on receipt of an application under section 245C Xx xx xx xx (2) A copy of every or .....

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ication and the interest thereon is paid on or before the 31st day of July, 2007. Explanation.-In respect of the applications referred to in this sub-section, the 31st day of July, 2007 shall be deemed to be the date of the order of rejection or allowing the application to be proceeded with under sub-section (1). (2B) The Settlement Commission shall,- (i) in respect of an application which is allowed to be proceeded with under sub-section (1), within thirty days from the date on which the applic .....

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d specified therein, the Settlement Commission may, on the basis of the report and within a period of fifteen days of the receipt of the report, by an order in writing, declare the application in question as invalid, and shall send the copy of such order to the applicant and the Commissioner: Provided that an application shall not be declared invalid unless an opportunity has been given to the applicant of being heard: Provided further that where the Commissioner has not furnished the report wit .....

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r the provisions of sub-section (4), as they stood immediately before their amendment by the Finance Act, 2007, was not passed before the 1st day of June, 2007, such application shall not be allowed to be further proceeded with unless the additional tax on the income disclosed in such application and the interest thereon, is, notwithstanding any extension of time already granted by the Settlement Commission, paid on or before the 31st day of July, 2007.] (3)The Settlement Commission, in respect .....

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nvestigation and furnish a report on the matters covered by the application and any other matter relating to the case, and the Commissioner shall furnish the report within a period of ninety days of the receipt of communication from the Settlement Commission: Provided that where the Commissioner does not furnish the report within the aforesaid period, the Settlement Commission may proceed to pass an order under sub-section (4) without such report. (4) After examination of the records and the rep .....

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ance with the provisions of this Act, pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the Commissioner. (4A) The Settlement Commission shall pass an order under sub-section (4),- (i) in respect of an application referred to in sub-section (2A) or sub-section (2D), on or before the 31st day of March, 2008; (ii) in respect of an application made on or after the 1st .....

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Commission shall call for a report from the Principal Commissioner or the Commissioner to furnish the report within a period of thirty days. After going through the report furnished and the application, the Commission may declare the application invalid. If the Commission does not declare the application invalid under Sub-section-2(C) of Section 245D of the Act, the Commission will proceed further and may call for the records from the Principal Commissioner or the Commission, as the case may be, .....

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assed under Sub-section 4. 49. Keeping in mind all these provisions, it is found from Annexure-4 that vide communication dated 26.9.2011 the Commission has passed the order to proceed with the matter as per Section 245D(1) of the Act. From the records, it appears that the Commission has submitted its report under Section 245D(1) revealing about the income disclosed and additional income. With regard to the income disclosed of different assessment years of respective individual and the firm, the .....

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nts towards transportation of rejects. The words bogus and fictitious are of great impost. The Department did collect evidences in the form of statement of the parties in support of the version that the transportation of rejects was either sham or the payments were made either for no services reasons or for inadequate service or for extra commercial consideration or for no commercial essence. The dictionary meaning of the word bogus is not genuine or true , pretending to be real or genuine. The .....

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it is absent. 36.11 In the applicant s cases, the existence of recipients of the transportation expenses of rejects has not been disproved. As to the payments, the statements recorded do constitute evidence against the applicants though rebuttable, but that is not the end of it. The Department must have adequate material to support its contention. It is a fact that during post search period further evidence was not gathered to know inter-alia as to which of vehicles were used by the applicants .....

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eport was made to allow further investigation. The Department s reliance on the statements recorded of the responsible officers of the management/parties, would not lead to an inference of bogus/fictitious transaction. In case the CIT/Department still felt that payments were not genuine, the recipient must have been intensively examined with reference to contract documents, if any, and having enquired what machineries/plants, human resources were deployed and for how much period? In case, the CI .....

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of rejects , it would at best lead to a conclusion of inflation of expenses and call for rejection of books and hence appropriate disallowance of the claim of the applicant in respect of transportation of rejects. 37. As to the routing of the money paid/claimed as aforesaid as share application money of sister/associate concerns, we must say, this does constitute evidence and leads to above said conclusion of books being unreliable and fit for rejection. 50. After considering the report of the P .....

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91,437 2006-07 2,37,66,951 5,00,000 - 2,42,66,951 2007-08 4,49,698 64,00,00,000 12,96,00,000 9,49,698 2008-09 1,21,66,14,990 17,50,00,000 13,06,00,000 1,98,62,14,990 2009-10 1,90,16,42,940 17,50,00,000 10,51,00,000 2,20,72,42,940 2010-11 1,72,71,93,210 99,20,00,000 36,53,00,000 624,90,28,933 Total 4,89,17,28,933 99,20,00,000 36,53,00,000 624,90,28,933 (II) M/s.Kamaljeet Singh Ahluwalia (Firm) Assessment Years Income returned u/s 153A Additional amount disclosed (in Rs.) Additions made by the Ben .....

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0,000 - 8,44,68,851 2006-07 4,96,33,234 10,00,000 - 5,06,33,234 2007-08 15,34,15,140 10,00,000 83,00,000 16,27,15,140 2008-09 11,56,41,280 14,50,00,000 76,00,000 26,82,41,280 2009-10 12,68,21,660 4,00,00,000 1,09,00,000 17,77,21,660 2010-11 23,00,73,860 6,50,00,000 1,80,00,000 31,30,73,860 Total 79,21,69,196 25,40,00,000 4,48,00,000 109,09,69,196 (I) Shri Prasant Kumar Ahluwalia Assessment Years Income returned u/s 153A Additional amount disclosed (in Rs.) Additions made by the Bench. (Rs.) Tota .....

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A Additional amount disclosed (in Rs.) Additions made by the Bench. (Rs.) Total (Rs.) 2004-05 2,92,65,330 50,00,000 - 3,42,65,330 2005-06 3,74,37,669 50,00,000 - 4,24,37,669 2006-07 16,57,35,877 50,00,000 - 17,07,35,877 2007-08 30,34,10,000 50,00,000 65,00,000 31,49,10,000 Total 53,58,48,876 2,00,00,000 65,00,000 56,23,48,876 CHARGE/WAIVER OF INTEREST: Prayer for waiver of interest is not accepted and the same will be charged as per Income Tax law. While calculating the interest, the Assessing O .....

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herefore, direct that interest u/s 234B & 234C be charged only up to the date of applications made by the applicants for adjustment thereof before the Department. CAPITALIZATION: During the course of hearing the A.R. of the applicant group has prayed for capitalization of income settled before the Commission. Capitalization is allowed in respect of amounts paid towards income tax liabilities for the years in question. IMMUNITY: The applicants have made prayer for granting immunity from penal .....

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interest within 35 (thirty-five) days from the date of receipt of the order of the Assessing Officer giving effect to this order. The order is passed u/s 245D(4) as above. The order shall be void if it is subsequently found that it has been obtained by fraud or misrepresentation of facts. 51. After considering the impugned order, we are convinced that the Commission, after giving appropriate opportunity to the applicant and after going through the report of the Principal Commissioner/Commission .....

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nt, etc. It shall also provide that the settlement shall be void if it is subsequently found to have been obtained by fraud or mis-representation of facts. The Committee may, if it is satisfied that the applicant has co-operated with it in the proceedings before it and has made full and true disclosure of his income and the manner in which it has been derived, grant to the applicant immunity from prosecution and penalty. Such immunity can, however, be withdrawn later under certain circumstances. .....

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ding the additional income to determine the liability of the assessee towards tax, penalty and interest and also the Commission under Section 245F(I) of the Act has all the powers vested in the Income Tax Authority under the Act. 54. So the allegation of the petitioner that the Commissioner made additional income of approximately ₹ 110 crores added finding thereby that there is no true and full disclosure income is untenable because the Commission has got not only power to decide the lis b .....

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the tax payable by the assessee. 55. The main contention of the learned Senior Standing Counsel that the Department was not given appropriate opportunity of hearing by the Commission and the Commission also had not directed to submit further report are not found from the impugned order passed by the Commission under Section 245D(4) of the Act. 56. The decisions cited by Mr.Acharya, learned Senior Standing Counsel for the Department with regard to true and full disclosure of the statement, being .....

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Standing Counsel is that report of the Commission has been obtained by fraud or misrepresentation. 58. It is profitable to quote sub-sections 6 to 6(B) of Section 245D of the Act: 245D. Procedure on receipt of an application under section 245C Xx xx xx xx (6) Every order passed under sub-section (4) shall provide for the terms of settlement including any demand by way of 10[tax, penalty or interest9], the manner in which any sum due under the settlement9 shall be paid and all other matters to ma .....

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eof by instalments, the assessee shall be liable to pay simple interest at 12[one and one-fourth per cent for every month or part of a month] on the amount remaining unpaid from the date of expiry of the period of thirty-five days aforesaid. (6B) The Settlement Commission may, at any time within a period of six months from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-section (4): Provided that an amendment which has .....

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by the Settlement Commission that it has been obtained by fraud and misrepresentation, the Commission has power to declare the said settlement as void. When the order of the Commission has been communicated to the Department, the Department could have agitated before the Commission to declare the same as void but instead as appears from the arguments of both sides that in terms of the settlement, the Assessing Officer has been directed to compute the tax as per law and charge the interest as di .....

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subsequently it is found by the Settlement Commission that the order has been obtained by fraud or misrepresentation, the Commission has the power to declare the settlement void. 61. Not only this but also under Section 6A of the Act, if the assessee does not pay the tax payable as ordered under Sub-section-4 within 35 days, the assessee is liable to pay the same with simple interest. Similarly, under Section-6B, the Settlement Commission has got power to rectify its mistake within six months fr .....

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ts of both sides that the Assessing Officer has been directed to compute the tax as per law and charge the interest as available from paragraph-7 of the impugned order of the Commission and the assessee have also paid tax as per demand made by the Assessing Officer under the order of the Commission. 62. It is profitable to quote sub-section-7 of Section 245D of the Act which is as follows: where a settlement becomes void as provided under Sub-Section(6), the proceedings with respect to the matte .....

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found to be void as per sub-section 6 of the Act, all the proceedings would be heard de novo and the Commission has to complete the proceedings within a period of two years from the date of the final order in which the settlement became void. In the instant case, when the tax under Sub-section-6A of the Act has been paid by the assessee as per the demand by the Assessing Officer in consequence of the order of the Commission, it appears that the Commission has not found the order void obtained b .....

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Paragraph-6 that in exercise of our power of judicial review of the decision of the Settlement Commission, we are concerned of the legality of the procedure followed or not with the validity of the order. It has been followed by the Hon ble Apex Court in the case of Jyotendrasinjhi -V- S.I.Tripathi and others; AIR 1993 SC 1991 where their Lordships, at paragraph-16, had observed as follows: The sole overall limitation upon the Commission thus appears to be that it should act in accordance with t .....

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e followed by the Commission or if the same is contrary to the provisions of the Act causing prejudice to the appellant. In the instant case, it has been already observed in the aforesaid paragraphs that the Commission has provided proper opportunity to both sides and after that passed the order under Sub-section 4 of Section 245D of the Act. Not only this but also the order has been implemented and the assessees have already paid the tax in view of the terms of the settlement as observed earlie .....

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rovision will be otiose. 65. From the foregoing discussions, we are of the view that opportunity was given to the petitioner to agitate about the matter relating to true and full disclosure of the income by the opposite parties 2 to 6 and also there being no order of the Settlement Commission to find the settlement as void or finding any mistake to rectify the impugned order, it must be held that the impugned order has reached its finality. Issue no.1 is answered accordingly. ISSUE NO.2 66. In t .....

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d to agitate that rule of natural justice has not been followed in this case. Moreover in view of the Judgment of R.B.Shreeram Durga Prasad (supra), the writ jurisdiction is being only limited to decide the manner of procedure of being followed by the Commission but not the decision thereto. We, therefore, are of the considered view that the writ jurisdiction to vary or set aside the impugned order of the Commission in view of the facts and circumstances of the case is not maintainable. 67. Sect .....

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