TaxTMI 
TaxTMI 
2011 (11) TMI 374
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....n business as a Civil Engineering Contractor. The petitioner herein originally filed an application for settlement of its case before the Income Tax Settlement Commission, relating to the assessment years 1989-90 to 1993-94. The petitioner offered additional income consequent on a search made in the petitioner's premises. The Settlement Commission pointed out, after analysing the various materials, that the income in respect of the above-said assessment years have to be arrived at on an estimated basis, despite the fact that the regular books of accounts have been maintained for the construction business and that the assessee firm had attempted to reconcile the notings in the seized materials with the figures appearing in the regular books ....
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....to quote from the words of the Settlement Commission, "The applicant is not entitled to any further deduction from this net income. The above will be added to the additional income disclosed in the S.O.F.". In respect of the income from lorry business, the Settlement Commission also arrived at the computation of income. Considering the co-operation extended by the assessee, the Settlement Commission granted immunity under Section 254H(1) of the Income Tax Act from imposition of penalty and prosecution under the provisions of the Income Tax Act and relevant Sections of the Indian Penal Code. 3. After the receipt of the order dated 11.11.1997, the petitioner filed an application on 27.2.1998 seeking rectification of its order, particularly a....
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.... earlier Miscellaneous Application dated 12th April, 2002. The Settlement Commission considered the contention of the assessee that the Commission had rejected the Miscellaneous Application without considering the arguments put forth in its application and pointed out that the first issue raised by the counsel for the petitioner related to the allowance of depreciation and other admissible reductions in estimating the business income. In support of the contention made based on the reliance on the Circular of Central Board of Direct Taxes No.29D(XIX)-14 dated 31.8.1965, wherein, it was held that in a case where a profit was to be estimated and prescribed particulars had been furnished by the tax payer, depreciation allowance should be separa....
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....inted out that the Settlement Commission, invested with the powers as that of the Assessing Officer in the matter of computation of additional income, should have taken note of the Board's Circular dated 31.8.1965. Going by the decision of the Apex Court reported in Anjum M.H. Ghaswala (supra), the circular being of a binding character, the Settlement Commission committed a serious error in rejecting the petition. He also placed reliance on the decision reported in Brij Bhushan Lal Parduman Kumar v. CIT [1978] 115 ITR 524 (SC) Haryana, Himachal Pradesh and New Delhi - III) that the value of materials used in the execution of work should have been taken in the matter of computation of profits. 6. Per contra, learned Standing Counsel appeari....
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....ted in Anjum M.H. Ghaswala (supra) was that, while exercising the power, the Settlement Commission, although does not act as a subordinate authority to the Central Board of Direct Taxes, yet, it would be enforcing the relevant provisions of the circulars for the benefit of the assessee in the process of settlement. Thus while holding that the circulars of the Board are legally binding on the Revenue, the beneficial circulars can be a subject matter of fair consideration at the hands of the Settlement Commission, on the assessee approaching the Settlement Commission under Section 245C of the Act. The Apex Court pointed out that Section 245F of the Act empowers the Settlement Commission to exercise the power of the Income Tax Authority under ....