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2017 (1) TMI 775 - KERALA HIGH COURT

2017 (1) TMI 775 - KERALA HIGH COURT - [2017] 391 ITR 374 - Unexplained creditors - Refusal of the Settlement Commission to make any additions on the basis of the entries in the Cash Flow Statement [CFS] of the alleged advances taken by the assessee - Held that:- The manner in which additions have been refused to be made, is without any reasoning especially when the Commissioner of Income Tax had specifically, in his report, stated that the details of the creditors were not furnished and there w .....

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manded to the Settlement Commission for consideration of the particular aspect which this Court has interfered with. - W.P.(C) No.34690 of 2007-D - Dated:- 10-1-2017 - K. Vinod Chandran, J FOR THE PETITIONER : STANDING COUNSEL FOR GOVT. OF INDIA TAXES SRI.JOSE JOSEPH. FOR THE RESPONDENT : CENTRAL GOVERNMENT COUNSEL SRI.M.A.VINOD., ADVS.SRI.E.K.NANDAKUMAR, SRI.P.BENNY THOMAS, SRI.P.GOPINATH, SRI.K.JOHN MATHAI, SRI.RAMESH CHERIAN JOHN JUDGMENT The Commissioner of Income-tax (Central) impugn Exhibi .....

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nt Commission on the assessee comes to only less than ₹ 65,00,000/-. 2. The assessee-respondent raises a preliminary objection that the Commissioner of Income Tax is not entitled to file a writ petition challenging the order of the Settlement Commission going by the scheme of Chapter XIX A of the Income Tax Act, 1961 [for brevity the Act ], being a statutory authority under the Act. The specific contention raised is based on the judgment of the Hon ble Supreme Court reported in Mohtesham M .....

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contention is based on the conclusive nature of the orders passed by the Settlement Commission as has been specified by Section 245-I, for which reliance is placed on Dhampur Sugar (Kashipur) Ltd. v. State of Uttaranchal and Others [2007 (8) SCC 418]. 3. The learned Standing Counsel appearing for the Department, however, would draw a distinction as to the facts and the respective material provisions of law, in this case and Mohtesham Mohd. Ismail. It is also contended that Dhampur Sugar has not .....

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], for contravention of its provisions; with respect to foreign remittances made. The appellant was successful in the first appeal, which order was challenged before the High Court under Article 226, by the adjudicating authority itself. The Hon'ble Supreme Court found that the writ petition was filed by the adjudicating authority who was specifically conferred with powers to adjudicate cases of contravention of any of the provisions of the statute. Section 54 of FERA, which provided for an .....

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cer to adjudicate upon the dispute. There was also no notification pointed out as to any empowerment or authorisation with respect to filing of an appeal on behalf of the Central Government. The material provisions so noticed are distinctively different from that in the present case. 5. The writ petition is not filed from an order passed by the petitioner herein, who per-chance happens to be also an adjudicatory authority under the Act. Chapter XIXA provides for a totally different scheme of ass .....

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. A Constitution Bench of the Hon'ble Supreme Court in Brij Lal v. CIT [(2011) 1 SCC 1] held that assessment in law is different from assessment by way of settlemnent (sic. - para 23). All the same, it was held that from a reading of the provisions of Section 245C and Section 245D it is clear that the various provisions of the Act and the concepts of self-assessment, assessment, regular assessment and computation of total income have been engrafted in Chapter XIX-A. Hence, the assessment by .....

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45D speaks of calling for the records from the Commissioner when the Settlement Commission decides to proceed on the application filed by the assessee. The said sub-section also confers power on the Settlement Commission to direct the Commissioner to make or cause to be made such further enquiry or investigation and furnish a report on the matters covered by the application and any other matter relating to the case. The Commissioner, on such direction, is also obliged to furnish a report within .....

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f the records and the report of the Commissioner and also affording an opportunity of hearing to the applicant and to the Commissioner. 8. Chapter XIXA is a code by itself and the Settlement Commission is the authority empowered to pass the order of assessment. The Commissioner does not have any adjudicatory power under Chapter XIXA and the role is more adversarial. The Commissioner is entitled to make a report on the matters specified in the application and even those not specified therein, on .....

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ommission. 9. The further contention with respect to the conclusiveness obviously cannot oust the jurisdiction of the High Court under Article 226 or Article 227 of the Constitution. Dhampur Sugar specifically held that statutory finality does not oust the jurisdiction of a High Court under Articles 226/227 of the Constitution . More in point is Jyotendrasinhji, wherein the finality of orders passed by the Settlement Commission under Chapter XIXA itself came up for consideration. The finality wa .....

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om the CFS. 10. The advances from other sources originally shown at ₹ 3,54,59,150/- in the CFSs were revised to ₹ 4,13,52,150/-. It is pertinent that the report of the Commissioner had merely been referred to and the contention with respect to the advances said to have been obtained from others was accepted by the Settlement Commission without any discussion. As is evident from the report no details of the creditors; who are said to have advanced the loans, as per the CFS, was reveal .....

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resentations; which was refused to be entertained by the Commission finding that there is no power of review conferred on the Commission. The Hon'ble Supreme Court found that the Commission had missed the true scope and ambit of Section 245D(6) and if the Commissioner was able to establish that the order of the Commission was obtained on misrepresentation of facts, then it was open to the Commission to decide the issue and the same would not lead to any review of the earlier orders. It was a .....

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77; 3,54,59,150/- in the original CFSs have been revised to ₹ 4,13,52,150/-. The AR pointed out that the details of these loans were available in the seized records and that the relevant Promissory Notes were also seized during the course of search. Rate of interest on these loans is also mentioned in the seized records. Further, the confirmation letters from the creditors have also been filed before the Addl. DIT. The applicant pointed out that the relevant details are available at pages .....

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