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TMI Blog2019 (2) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... ing aggrieved by the same order of the Settlement Commission dated 30.9.2015 in so far as it has awarded interest under section 234A, 234B and 234C of 'the Act', which is placed analogous for consideration. The facts of the case briefly stated is that respondent no.2 is a Company registered under the Companies Act, 1956 and as per their submission, has been filing their returns regularly under 'the Act'. The records of the proceeding transpire that a search and seizure operation was carried out in the business premises of the Company as well as on the residential premises of its Managing Director on 28.4.2011 and following which the Assessing Officer in the rank of the writ petitioner issued search notice in purported exercise of powers vested under section 153A and 153C of 'the Act', copies of which are enclosed in the writ petition filed on behalf of the assessee. The respondent- assessee filed his returns for the assessment years in question i.e. for the year 2011-12 on 9.9.2013 and for the assessment year 2012-13 on 15.10.2013. Despite the position a second notice was issued under section 153 of 'the Act' by the Department to the assessee for filing fresh returns. The respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egarding holding of a special audit. However, the Settlement Commission has passed final orders on 30.9.2015 without having regard to the objection raised by the Department and feeling aggrieved the Department is before this Court through the writ petition in question and alongside the assessee has followed suit to question the order of the Commission in so far as it awarded interest. Ms. Archana Sinha, learned counsel has appeared on behalf of the Department while Mr. Krishna Mohan Mishra, learned counsel has appeared for the assessee. The issues that have been framed in paragraph 2 of the writ petition by the Department is ornamental in nature save and except the issue of perversity, if any, so committed by the Settlement Commission while passing the impugned order. The other issue canvassed by Ms. Sinha is that the assesseee having failed to make true and full disclosure of his income in the manner prescribed, he was not entitled to the benefit of the remedy available under Chapter XIXA of 'the Act'. We have heard learned counsel for the parties and have perused the records. The two issues that we have noted above are the only issues which in our opinion may invite an examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-12. Therefore, it is strongly felt that the assessee has dodged the Department by not making true and full disclosure before the Hon'ble Settlement Commission." Similarly for the assessment year 2012-13 the operative portion of the report of the Commissioner of Income Tax runs under: " In the audited accounts submitted by the assessee itself, total expenses incurred by the assessee during the F.Y. 2011-12 were shown at Rs. 9,64,73,029/- as against a receipt from business of Rs. 10,14,84,111/-. Nowhere in his submission, the assessee has claimed any further expenses incurred for earning such additional revenue of Rs. 6,00,00,000/-. So, it can be undoubtedly said that the net profit of the assessee for the F.Y. 2011-12 should be enhanced to the extent of his additional receipts of Rs. 6,00,00,000/- keeping the total expenses at Rs. 9,64,73,029/-. This again reveals that the assessee has not make a true and full disclosure before the Hon'ble Settlement Commission, Hence, the amount of Rs. 6,00,00,000/- should be added to the total income of the assessee during the year under assessment." The main thrust of argument of Ms. Sinha, learned counsel appearing on behalf of the Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrust of objections taken by the Commissioner, Income Tax in his report in respect of each of the two assessment years 2011-12 and 2012-13 which we have reproduced hereinabove would confirm that in the opinion of the Commissioner there has been a discrepancy of Rs. 12,84,97,024/ and which needs to be added to the total undisclosed income for the assessment year 2011-12 which disclosure has not been made by the assessee before the Commission. In so far as the assessment year 2012-13 is concerned, according to the department a sum of Rs. 6,00,00,000/- is to be added to the total income for the assessment year in question. Before we would advert our attention to the finding on the Settlement Commission on the objection so taken, we deem it necessary to reproduce the submissions of the assessee before the Settlement Commission on the undisclosed income in respect of each of the two assessment years. In so far as the assessment year 2011-12 is concerned, a specific statement is made by the assessee in his settlement application after discussing the complexity of investigation so initiated by the Department following the search and seizure, wherein he has made the following disclosure: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-12. 5.17 The CIT has further submitted that during assessment year 2012-13 the applicant has accepted a receipt of Rs. 6 crore over and above the business receipt of Rs. 10,14,84,111/- as per books. This has taken his total business of Rs. 17 crore. In the audited accounts, total expenses incurred by the applicant during (FY 2011-12) A.Yr. 2012-13 were shown at Rs. 9,64,73,029/- and nowhere the applicant has claimed any further expenses incurred for earning such amount of Rs. 6 crore. Hence, the net profit of the applicant for this year should be enhanced to the additional receipt of Rs. 6 crore keeping the total expenses at Rs. 9,64,73,029/-. Thus, Rs. 6 crore should be added back to the additional income of the applicant." Paragraph 10 to 11.2 of the order passed by the Settlement Commission records the conclusion and runs under: "10. We have considered the facts carefully. We note that purchases and expenditure are omitted, in fact, the assessee did not maintain accounts in a proper manner, and incriminating loose sheets only confirm the accounts are not maintained in any complete manner. For a proper and fair estimate, on the basis of material before us, the 'inferable' i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11-12. In view of the above and considering the totality of the situation, we are of the considered view that a net profit rate of 10% on (Rs. 6 crore + Rs. 10 crore on disclosed receipts i.e. Rs. 16 crores) will be fair enough to be taken into account as income of the applicant company for the assessment year 2012-13. 11.2 In view of the discussion made above, the income of the applicant from real estate business is therfore computed assessment year-wise as under: Asstt. Years Disclosed Receipts as per applicant (Rs) Undisclosed receipts as per applicant (Rs) Undisclosed receipts as computed by Commission (Rs.) Income from business of construction on undisclosed receipt taking N.P. rate @ 10% 2011-12 5,83,79,117/- 10,85,25,511/- 15,00,00,000/- 2,08,37,911.70 2012-13 10,14,84,111/- 6,00,00,000/- 6,00,00,000/- 1,61,48,411.10 The Settlement Commission has also taken note of undisclosed amount of lease rent for the assessment year 2011-12 at paragraph 12 and has computed income of undisclosed notional rent to the tune of Rs. 9,54,630/- for the assessment period 2012- 13, whereupon the computation of total income has been made which accompanies the impugned order by wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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