TMI Blog2017 (5) TMI 1692X X X X Extracts X X X X X X X X Extracts X X X X ..... eral circumstances in which the case before the Settlement Commission would abate; whereas in section 32L(1) non - cooperation of the petitioner is the only ground. The Central Excise Officer derives its power its power to assess such abated proceeding vide section 32L(2) of the Central Excise Act. This is identical to powers vested with an AO under section 245HA(2) and 245HA(3) under the Income Tax Act. It is therefore very clear that the provisions of Central Excise Settlement Commission and that for Income Tax settlement Commission are identical. Therefore, the judgment of Hon ble Gujarat High Court in the case of Maruti Fabrics although pertaining to Central Excise should be applied to cases abated under section 245HA of the Income Tax Act also. Therefore, we are of the view that the judgment of MARUTI FABRICS [ 2014 (7) TMI 926 - GUJARAT HIGH COURT] is applicable to the facts of the assessee s case. We find that Hon ble Gujarat High Court has held that if the petition filed before the Settlement Commission wherein assessee has made declaration but proves that assessee has neither earned such income nor any incriminating material was found during the search relating to und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under: The assessee i.e. M/s. Aasthavinayak Estate Company Private Limited filed Return of income for A.Y. 2008-09 on 10/06/2008, declaring a loss of ₹ 139654. An application for settlement was filed by M/s Aasthavinayak Estate Company Private Limited before the Hon'ble income Tax Settlement Commission u/s 245C of Income Tax Act, 1961 on 30.01.2013 vide application No. MH/MUCC-4/127/2012-13/IT. The application before the Settlement Commission included a prayer made by M/S Aasthavinayak Estate Company Private Limited for A.Y 2008-09 also wherein an additional income of ₹ 501,049 was disclosed before the Commission, which was earlier, not disclosed before the assessing officer. The application of M/S Aasthavinayak Estate Company Private Limited before the Settlement Commission for A Y 2008-09 has not been allowed to be proceeded with vide order u/s 245D(1) dated 12.02.2013 of the Hon'ble Settlement Commission. In view of rejection of the application of the assessee for AY 2008-09 by the Hon'ble Commission, and the fact that the declaration of the assessee before the Settlement Commission clearly shows evidence of undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise and definite information as regard to escapement of income of ₹ 5,01,049/- since the said income was declared as additional income before Settlement Commission. The assessee has not disclosed its amount in the return of income. The AO had sufficient information regarding reopening the order and moreover assessee s writ petition before the High Court was also dismissed and the department was free to initiate the proceedings under section 147 of the Act. Therefore, we are of the view that Revenue is justified in reopening the assessment order. The ground No.1 is dismissed. Ground No.2 7. This ground relates to addition of ₹ 5,01,049/-. By relying on application under section 245C of the Act filed by the assessee before Settlement Commission, the AO has made the addition on account of brokerage and disallowance under section 35D on the ground that a search in the case of Lodha Group was conducted by investigation wing of department on 10.01.2011 and during the search proceedings Shri Abhinandan Lodha, the key person of Lodha made a declaration of additional income on 12.10.11 in the hands of various entities of the group amounting to ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the restriction and AO or any authority shall be entitled to use this material or information produced by the assessee before the Settlement Commission or the result of inquiry held or evidence recorded by Settlement Commission in the course of proceeding before it as if such material or information has been produced before AO. That amendment has come from 01.06.15. Therefore, the AO has no authority to use this material. Therefore, this reopening is not justified. The Ld. A.R. has relied upon the decision of Hon ble Gujarat High Court in the case of CIT vs. Maruti Fabrics47 taxman.com 298 (Guj) wherein the Hon ble Gujarat High Court has considered the evidence which was filed before the Settlement Commission. The Settlement Commission is in respect of 32L of the Custom Excise Act but the sub section 2 of Section 32L of Settlement Commission and the Settlement Commission in the Income Tax Act are similar and the proceeding before the Settlement Commission are as per section 245C are similar. Therefore, the judgment of Hon ble Gujarat High Court is applicable and the Hon ble Gujarat High Court has held that if any admission made before Settlement Commission is not binding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose. The assessee has made a disclosure and such disclosure ultimately ended in settlement order under section 245D(4) of the Act. The disclosure came to the possession of AO. The fact that the disclosure made under section 245D(1) of the Act even if constructed as if no order under section 245D(4) has been passed it will not give a license to the AO to use the confidential information disclosed in an annexure to the application of the Settlement Commission. If the application is treated as not admitted under 245D(1) of the Act, then the provisions are clear that confidential information can never be passed on to the AO nor can it be used in evidence against the assessee. Section 245D(4) has clearly held that admission of assessee s application under section 245(1) was incorrect. We find that any confidential information disclosed in annexure to the settlement application before Income Tax Settlement Commission can never be the basis to make the addition. We find that in the instant case, the AO has reopened the assessment under section 147. Thereafter, AO has not brought any evidence or made any inquiry that assessee has earned additional income of ₹ 5 lakhs as b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the adjudicating authority as if such materials, information, inquiry and evidence has been produced before such Central Excise Officer, while adjudicating the show cause notice and the proceedings. If the contention on behalf of the appellant is accepted, in that case, there is no question of further adjudication by the Central Excise Officer with respect to the amount admitted by the assessee while submitting the application before the Settlement Commission submitted under Section 32E(1) of the Act. Once the application or proceedings before the Settlement Commission fails, the Central Excise Officer is required to adjudicate the entire proceedings and show cause notice. Under the circumstances, so far as proposed question of law No.1 is concerned, the present Tax Appeals deserve to be dismissed and are, accordingly, dismissed by answering the proposed question of law No.1 against the Revenue. 14. Respectfully following the same, we hold that Hon ble Gujarat High Court s judgment in the case of Maruti Fabrics pertains to Central Excise but if we compare central excise under section 32E of the Central Excise Act this section is parallel to section 245C of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. Therefore, we are of the view that the judgment of Hon ble Gujarat High Court is applicable to the facts of the assessee s case. We find that Hon ble Gujarat High Court has held that if the petition filed before the Settlement Commission wherein assessee has made declaration but proves that assessee has neither earned such income nor any incriminating material was found during the search relating to undisclosed income then no addition can be made. 17. We have also gone through the judgment of ITAT, Mumbai in the case of Dolat Investment vs. Dy. Commissioner of Income Tax wherein the ITAT has specifically held in para 22 which reads as under: 22. The first issue is whether the case of the assessee for assessment year 2005-06 was admitted by the Settlement Commission under section 245D(1) of the Act? On this issue, we have already seen that in the order dated 30-11-2007 under section 245D(4) of the Act, the Settlement Commission has clearly held that the assessee for assessment year 2005-06 does not satisfy the criteria of offering income on which at least an income-tax payable should exceed ₹ 1 lakh. The Settlement Commission h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder under sub-section (4) of section 245D has not been passed within the time or period specified under sub-section (4A) of section 245D, the proceedings before the Settlement Commission shall abate on the specified date. Specified date would be (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 1st day of June, 2007 within nine months from the end of the month in which the application was made. (2) Where a proceeding before the Settlement Commission abates, the Assessing Officer or as the case may be any other income-tax authority before whom the proceeding at the time of making the application was pending, shall dispose of the case in accordance with the provisions of this Act as if no application under section 245C had been made. (3) For the purposes of sub-section (2), the Assessing Officer or as the case may be, other income-tax authority, shall be entitled to use all the material and other information produced by the assessee before the Settlement Commission or the results of the inquiry held or evidence recorded by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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