TaxTMI 
TaxTMI 
2009 (8) TMI 834
X X X X Extracts X X X X
X X X X Extracts X X X X
....th the orders of directors on the similar facts and circumstances of the case. 3. This court has issued notice on August 7, 2008. By an order dated July 20, 2009, the petitioner was permitted to join the Assessing Officer as party respondent No. 2 and notice was issued to the newly joined respondent. Mr. M. R. Bhatt, learned senior counsel with Mrs. Mauna M. Bhatt, learned advocate appears on behalf of the respondent. 4. The brief facts giving rise to the present petition are that the petitioner had filed settlement application on September 27, 1996, pertaining to the block period from August 20, 1992, to September 20, 1995. The petitioner company was incorporated on August 28, 1992, and took over the proprietary running business of Shri K. K. Bansal on September 1, 1992. The petitioner company is engaged in the business of trading and manufacture of hot rolled steel products, namely, angles, channels, bars, etc. The Settlement Commission after hearing the petitioner as well as the Revenue passed final order on the issues raised by the petitioner in the settlement application. The petitioner is mainly aggrieved with the following findings and conclusions arrived at ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... proceedings on the basis of which an inference can be drawn that the stock so found is other than what can be relatable on the excess burning loss claimed by the petitioner-company. Such excess stock is on account of trading activity is merely a presumption of the Assessing Officer and the same does not fall within the ambit of undisclosed income as inferred by the Assessing Officer. 7. Mr. Patel has further submitted that on adjudicating upon the issue of unaccounted sales based on weighment slips of third parties the Settlement Commission has grievously erred in not considering the fact that the sales as recorded in the weighment slips were identified in the sales register of the third parties. On the issue of undervaluation of closing stock of finished goods and raw material the finding given by the Settlement Commission is erroneous on facts and in law, since there was no change in the method of valuation of raw materials/closing stock and the same was uniformly and consistently followed as in earlier years and the issue of valuation of closing stock as per the regular books of account should be taken up in regular assessment proceedings and not in block assessment pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ell as the closing stock. If any adjustment was required to be made by a statute, effect should be given to it irrespective of any consequences on the computation of income for tax purposes. Section 145A begins with a non obstante clause and, therefore, to give effect to section 145A, if there is a change in the opening stock as on March 31,1999, there must necessarily be a corresponding adjustment made in the opening stock as on April 1, 1998. Thus, the question of double deduction did not arise since no adjustment was made by the assessee in the profit and loss account for the year ending March 31, 1998. 9. Mr. Patel has further submitted that the decision of the Settlement Commission on the issue of unaccounted cash advances to employees is contrary to the facts and circumstances and evidence on record since the advances are out of cash available in the books of account pertaining to advances given to various staff members to meet business expenditure and employee-wise total advance is given. 10. Mr. Patel has further submitted that the Settlement Commission has committed serious error of law while rejecting the miscellaneous applications by stating that the powe....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... taxes were finally paid after disposal of the reference. 11. Mr. Patel has, therefore, submitted that the order passed by the Settlement Commission requires to be quashed and set aside and appropriate directions sought for by the petitioner are required to be issued to the Settlement Commission for deciding the petitioner's application afresh. 12. Mr. M. R. Bhatt, learned senior counsel appearing for the respondent, on the other hand, has submitted that the decision of the Settlement Commission cannot be challenged in the petition filed under article 226 of the Constitution of India. In support of his submission, he relied on the decision of the apex court in the case of C. A. Abraham v. Asst. CIT reported in [2002] 255 ITR 540 (Mad). It is held that the Settlement Commission has decided the issue on the basis of the assessee's applications disclosing full and true income. Therefore, it could not be said that the Settlement Commission had followed an irregular procedure to enable the court to interfere with the order of the Commission. Moreover, the court's power of judicial review on the decision of the Settlement Commission was very restricted. The court, while e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le has already been proved by the Department. With regard to valuation of closing stock of finished goods and raw materials, Mr. Bhatt has submitted that the Assessing Officer has valued investment at cost which included freight and octroi. The petitioner has omitted these two items from the cost. With regard to charging of interest under section 220(2) of the Act, Mr. Bhatt has submitted that this issue was raised by the petitioner in rectification application as while disposing of the main application, the Settlement Com- mission has given a categorical direction to charge interest under section 220(2) after the date of the order under section 245D(4) following the decision of the Supreme Court on the issue and hence there is no scope of any rectification as prayed for by the petitioner. In support of his submission Mr. Bhatt relied on the decision of the apex court in CIT v. Hindustan Bulk Carriers reported in [2003] 259 ITR 449 (SC) it is held that interest payable on the tax due has to be determined by the Settlement Commission after settlement of the case and the starting point of charging interest would be the due date of payment of advance tax or tax assessed or demanded as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rder of the Settlement Commission is contrary to the provisions of the Income-tax Act, and if so whether it has prejudiced the petitioner, apart from grounds of bias, fraud and malice which constitute a separate and independent category. Keeping this ratio in mind, we are of the view that except a issue regarding undervaluation of closing stock of finished goods and raw materials no other issues deserve any consideration by this court as they are all in the realm of facts and it is difficult to hold that the finding of the Settlement Commission is contrary to the provisions of the Income- tax Act, 1961. Even the directions issued by the Settlement Commission with regard to charging of interest under section 220(2) of the Act are also in consonance with the provisions of the Income-tax Act and they are duly supported by the binding decision of the apex court. In the case of CIT v. Hindustan Bulk Carriers [2003] 259 ITR 449 (SC) as well as CIT v. Damani Brothers [2003] 259 ITR 475 (SC), it is difficult to accept the submissions of Mr. Patel that the order of the Settlement Commission is very vague on the issue of charging of interest as it is not clarified as to from which period the....