TMI Blog2020 (5) TMI 518X X X X Extracts X X X X X X X X Extracts X X X X ..... There are several discrepancies in the manner in which the case has been allowed to be settled by the 1st respondent settlement commission. The calculations has been accepted without any deliberations do not inspire confidence. There are several disputed questions of fact which have been glossed over by the 1st respondent Settlement Commission while settling be case of the 2nd respondent vide impugned order. This court is not sitting in appeal against the impugned order of the 1st respondent Settlement Commission, find sufficient reasons to interfere with the impugned order as there are several contradictions and the 2nd respondent appears to have not disclosed truly all facts that are required for settling the case. The impugned order has accepted cases without any discussions, therefore of the view that the impugned order is not sustainable. The impugned order passed by the 1st respondent is quashed and the case is remanded back to the 1st respondent Settlement Commission to pass a fresh order after considering the objections of the petitioner filed under rule 9 of the Settlement Commission (Procedure) Rules 1997. Since the dispute pertains to the assessment years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,91,445 Total Refund due 20,61,963 Balance payable 5,94,196 Amount actually paid by the applicant 5,23,800 Amount of shortfall in tax 70,396 3. Operative portion of the impugned order reads as under:- 3. The applicant had entered into agreement with BSAL for carrying out a turn-key project for ₹ 102 Crores. For execution in the project, initially an amount of ₹ 20.14 crores was required for import of machinery from Germany. This amount was directly paid by the BSAL by opening L.C. In favour of the German company and this amount was not received by the applicant but was paid on behalf of the applicant by BSAL. 4. The applicant received, in addition to the amount paid to Germany Company, amount of ₹ 35,77 crores which was booked as contract receipts. The applicant fairly stated that out of this amount of ₹ 35.77 crores, an amount of ₹ 12.24 crores was received in A.Yr.1998-99 and was duly accounted for as income in 1007-98. Hence the same is not a par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by First Leasing Company of India Ltd. (FLCIL). The CIT in Rule-9 report has stated that FLCIL claimed to have purchased 13 windmills from the applicant for ₹ 13 Crores (In A.Yr.1997-98 which is not before the Commission). He further stated that in case of FLCIL, lease rent has been disallowed. 10. The A/R stated that the applicant had never sold any mills to FLCIL. The applicant had agreed to construct windmissls for FLCIL for which the applicant received ₹ 3.32 crores as advance. Subsepuently, the contract was cancelled and the FLCIL encashed the bank guarantee given to the applicant and recovered back the advance. Since the contract was cancelled, we do not see any reason to make adjustment on this account. We would also like to add that if the applicant had leased windmills then it would have been entitled to deduct the lease rent paid. Such payment has not been claimed by the applicant either in original assessment or before the Commission. Hence in our opinion, no adjustment is required on this account. 11. The CIT has stated that the entire transaction for BSAL is bogus and profit cannot be estimated on bogus transaction. There is merely an issue which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8-1999 and 1999 -2000. 6. Since assessment orders were passed which called upon the 2ndthe 2nd respondent to pay differential tax, the 2nd respondent filed application to settle the case under the provisions of the Income Tax Act, 1961 before the 1st respondent Income Tax Settlement Commission by not correctly declaring the tax liability. 7. According to the petitioner, despite the petitioner filing of a report on 12.10.2005 under Rule 6 and 9 of the Income-tax Settlement Commission (Procedure) Rules, 1997 ,the 1st respondent proceeded to admit the case of the 2nd respondent contrary to section 245D Income Tax Act, 1961 after its amendment by Finance Act, 2007. 8. According to the petitioner the 1st respondent ought not to have proceeded with the aforesaid application filed by the 2nd respondent in as much as the 2nd respondent failed to comply with the mandatory requirement of the amended section 245D Income Tax Act, 1961 as amended by Finance Act, 2007. 9. According to the petitioner, there shall be deemed admission in respect of applications filed before 1.6.2007 which were pending before the amendment provided the applicant (the 2nd respondent has by the 2nd respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r nor without jurisdiction as the 2nd respondent had paid the admitted tax liability on 23.7.2007 which was much before the cut off date as per the amended Section 245D of the Income Tax Act, 1961 in the year 2007. 16. 2nd respondent further submits that the present writ petition is nothing but an abuse of court proceedings in as much as the petitioner is re agitating the issues on merits and that same is impermissible under article 226 of the Constitution of India as this court is not sitting as an appellate court. 17. It is submitted that this court is not really concerned with the decision of the 1st respondent but with the decision making process adopted by the 1st respondent and since there is no error in the decision-making process, there is no scope for interference. It is therefore the present writ petition is liable to be dismissed with cost. 18. It is further submitted that there is also no perversity in the impugned order passed by the 1st respondent for this court to interfere and therefore the present writ petition is liable to be dismissed with costs. 19. It is further submitted that the 1st respondent had examined the issue at length and it is only after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed in the application and shall furnish proof of such payment to the Settlement Commission. 25. However, after amendment, Sub-clause (ii) to sub-section (2A) was substituted. An application filed under sub-section (1) of section 245C before the 1st day of June, 2007shall be deemed to have been allowed to be proceeded with if the additional tax on the income disclosed in such application and the interest was paid on or before the 31st day of July, 2007 if an order under the provisions of subsection (1) of the said section as it stood prior to their amendment by the Finance Act, 2007 was not made before the 1st day of June, 2007. 26. Since no order of admission was passed prior to the aforesaid date, the application shall be deemed to have been admitted if the an applicant pays the additional amount of tax on the additional amount admitted in the application before 31st day of July, 2007. In the present case, there is payment of additional amount of tax before 31st 27. Therefore, the 1st respondent Settlement Commission had jurisdiction to proceed further with the application filed by the 2nd respondent under Section 245 of the Income Tax Act,1961. Therefore to that exte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it encountered difficulty in sourcing of materials required for additional work. Therefore, the 2nd respondent agreed with BSAL for latter to directly identify the suppliers of materials for the additional work. 36. At the same time in paragraph 7 of the application, the 2nd respondent has stated that up to 31.3.1999, the said BSAL had transferred an amount of ₹ 35.77 crores through banking channels and these amounts were paid for contractual payments. 37. According to the 2nd respondent, the value of such additional materials were agreed, identified by BSAL which amounted to ₹ 43.05 crores. Since procurements were directly made by BSAL, the expenses aggregating to the aforesaid sum of ₹ 43.05 crores were debited towards such purchases and credit was given in the account of BSAL. 38. The 2nd respondent has also stated that as against the total invoice value of ₹ 72.43 crores, a sum of ₹ 21.05 represents the value of machineries imported directly by BSAL which was paid by BSAL directly and a ₹ 22.05 crores was invoiced fictitious transactions totaling to ₹ 44.05 crores out of The Aforesaid Amount of ₹ 72.43 Crores. 39.Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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