TMI Blog2005 (7) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, there is no illegality in the orders impugned in this writ petition. – petition dismissed - - - - - Dated:- 19-7-2005 - Judge(s) : THOTTATHIL B. RADHAKRISHNAN. JUDGMENT Thottathil B. Radhakrishnan J.- The business premises of the petitioner, a firm, a dealer in gold ornaments and an assessee under the Kerala General Sales Tax Act, 1963, hereinafter, the "KGST Act", for short, and the residence of its managing partner, were searched on November 20, 1990, by the competent authorities under section 132(1) of the Income-tax Act, 1961, for short, the "IT Act", resulting in the seizure of certain documents, including two slips showing unaccounted sales. On the basis of the said slips, the Assessing Officer under the Income-tax Act inferred an average daily unaccounted sale at Rs. 1,50,000 and worked out the unaccounted sales for the year ending March 31, 1991, at Rs. 4.50 crores, since the showroom worked for 300 days. The profit on the turnover was worked out and the assessment under the Income-tax Act for the year 1991-92 was made under section 143(3) of the said Act by making an addition of Rs. 38,74,500, on account of unaccounted sales. The petitioner raised various obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal, only the revisional order, reopening exhibit P2 assessment order on the sole ground of suppressed turnover, determinable on the basis of the suppressed business income finalized as per exhibit PI order of the Settlement Commission, the effect, of which, if any, on the KGST liability, is urged and is being examined in this writ petition. Hence T.A. No. 376/2000, pending before the Tribunal, will depend upon the decision in this writ petition. As already noticed, the reopening of the assessment under the KGST Act in exercise of the suo motu power under that Act was made only on the basis of the suppressed assessment as detected by the income-tax authorities and statutorily concluded, in so far as the petitioner is concerned, as per exhibit P1 order of the Settlement Commission. It is the admitted situation that the authorities under the KGST Act have not taken into account any other suppression of materials. All that has been done, as per exhibits P2 and P9 orders, is the rational redetermination of the total turnover on the basis of the suppressed business profits determined as suppressed business income, as settled by the Settlement Commission. In fact, there is no dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orised in this behalf, and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission may, in accordance 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 under sub-section (1) or sub-section (3)." This means that the conclusiveness prescribed by section 245-I is as regards the matters covered by the order of the Settlement Commission on the matters covered by the application of the assessee and such matters relating to the case, not covered by the application, but referred to in the report of the Commissioner under sub-sections (1) and (3) of section 245D of the Income-tax Act. So much so, the conclusiveness provided by section 245-I is only regarding such matters as are determined by the Settlement Officer, meaning thereby, the matters regarding the liability of the assessee under the Income-tax Act for the undisclosed income, which becomes the subject-matter of consideration before the Settlement Commission. By the provision in section 245-I that n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes for the assessment year, as regards the assessee in question, and his suppressed turnover for authorized reassessment of commercial taxes, particularly when the undisclosed income that has been determined by the Settlement Commission is part of the business income only and not referable to any other source. The admitted situation is so in this case, though the liability arising out of the Settlement Commission's order would have been satisfied by the petitioner from out of its income from "other sources". So much so, the authorities under the KGST Act cannot be found fault with for having relied on exhibit P1 older of the Settlement Commission to determine the suppressed turnover for re-determination of the tax liability under the KGST Act. The action taken under the KGST Act is only to bring the suppressed turnover of the petitioner into the tax net of the State, legitimately, under the KGST Act, by basing such proceedings on the insurmountable fact situation, as to suppressed business income, lawfully determined and settled by the order of the Settlement Commission under the Income-tax Act and determining the suppressed turnover on the basis of such, determination of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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