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TMI Blog2022 (5) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome was allowable as deduction while computing the income of the appellant. 4. The appellant craves leave to add to, alter, amend and/or delete in all the foregoing grounds of appeal." 3. With regard to grounds 1 and 2 of grounds of appeal, the relevant facts are, the search and seizure action u/s. 132 of Income-tax Act, 1961 (in short "Act") was carried in the case of Hisaria Group on 16.11.2017. Assessee is one of the Flagship concerns of the group, Shri Sandeep Kumar Hisaria and Shri Sawarmal Hisaria are the partners of the assessee firm. Subsequent to the search, assessee filed application before settlement commission u/s. 245C of the Act on 27-12-2019. ITSC passed order u/s.245D(1) of the Act in which it had rejected application of assessee because of not fulfilling of conditions mentioned in section 245C of the Act. The Assessing Officer observed in his order that as per section 245HA(3) of the Act, whenever an abated proceeding gets restored back, the Assessing Officer is entitled to use all-the material filed by the assessee before settlement commission for determining the true income of assessee. Accordingly, assessee was asked to submit all the material filed by it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no benefit could be given to the assessee in this regard. Further, I would like to clarify that no other addition has been made by the AO during this year, against which any set-off could be granted for miscellaneous business income offered by the assessee in the settlement application. So this contention of the assessee is also not acceptable." 6. Aggrieved assessee is in appeal before us and at the time of hearing Ld. AR brought to our notice statement of facts filed before ITSC on 27.12.2019 and he brought to our notice Page No. 51 of the Paper Book in which assessee has clearly submitted before ITSC that all the expenses are genuine and that no evidences have been found as a result of search, with the view to buy peace of mind and to cover any possible deficiency and/or omission in any of these evidences with respect to these expenses incurred , the assessee has agreed for adhoc addition of Rs..51,50,000/- for this assessment year. In this regard he submitted that Assessing Officer cannot make any addition relying on voluntary disclosure of adhoc income before ITSC without there being any incriminating material. In this regard he relied on the decision of the Anantnadh Constru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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. 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 wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under sub-section (1) of section 245D; (ii) an application made under section 245C has not been allowed to be proceeded with under sub-section (2A) or further proceeded with under sub-section (2D) of section 245D; (iii) an application made under section 245C has been declared as invalid under sub-section (2C) of section 245D; (iv) in respect of any other application made under section 245C, an order 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut basis. Hence, the addition made by the AO and Ld. CIT(A) is deleted." 9. Respectfully following the above said decision, we are inclined to delete the additions made by the Assessing Officer by solely relying on the information submitted before ITSC without there being any material in support of proposed addition. Accordingly, ground No. 1 and 2 are allowed. 10. With regard to ground No. 3 of grounds of appeal which is in respect of the issue of deduction on account of education cess on the tax payable by the assessee, the assessee had relied upon the decision of Hon'ble Bombay High Court in the case of Sesa Goa v. JCIT [423 ITR 426] [Page 155-162 of PB 2] wherein it has been held that the education cess cannot be disallowed by invoking s. 40(a)(ii) of the Act and consequently the education cess payable by the assessee is an allowable deduction. The assessee has also filed a copy of the decision of the Hon'ble Mumbai Tribunal in the case of Overseas Polymers Pvt. Ltd. V. ACIT PTA No. 6754/Mum/20181 dated 17.12.2020[Page 163-166 of PB 2] which is has decided the issue following the aforesaid decision of the Hon'ble Bombay High Court. 11. During the course of hearin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Bombay High Court and Hon'ble Rajasthan High Court were rendered directly on the issue involved and hence the same could not have distinguished based on the decision of Hon'ble Supreme Court rendered in a different context. 15. Further, he submitted in any case, as held by Hon'ble Bombay High Court in the case of CIT v. Thana Electricity Supply Co. Ltd. [206 ITR 727], the decision rendered by Hon'ble Bombay High Court in the case of Sesa Goa (Supra), being the decision directly on the issue involved, was binding on the coordinate benches of Tribunal at Mumbai. 16. Further, a reference is invited to an old circular wherein CBDT, vide Circular No. 91/58/66 - 111(19) dated 18.05.1967 explained the scope of provisions of s. 40(a)(ii) of the Act. The relevant extract of the said circular is reproduced below: "Interpretation of provisions of Section 40(a)(ii) of the I.T Act - clarification regarding. Section 40(a)(ii) - Recently a case has come to the notice of the Board where the ITO has disallowed the 'cess' paid by the assessee on the ground that there has been no material change in the provisions of Section 10(4) of the old Act and Section 40 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evied by the Central Acts from time to time; (iv) Education Cess on income-tax, if any, as levied by the Central Acts from time to time; and (v) Secondary and Higher Education Cess on income-tax, if any, as levied by the Central Acts from time to time" 20. He submitted that the perusal of the aforesaid provisions clearly shows that wherever the legislature wanted to include education cess to be part of the income tax, it has specifically defined under the relevant provisions. If the Education Cess was presumed to be part of Income Tax as defined in s. 2(43) of the Act, there was no need for enacting Explanation 2 to s.115JB(2) and specifically stating that education cess to be included in the amount of income tax. Based on the above, it can be said that since the word 'Cess' is not specifically included in the definition, it cannot be considered a part of tax, and accordingly, it should not be disallowed in u/s 40(a)(ii) of the Act. 21. He further submitted that the said issue has been subject matter of dispute before the Hon'ble Bombay High Court in the case of Sesa Goa v. JCIT [423 ITR 426] [Page 151-162 of PB 21] wherein the court was required to address the sp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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