TaxTMI 
TaxTMI 
2014 (2) TMI 896
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.... assessee from prosecution and penalty. Once the Settlement Commission is seized of the settlement application, the exclusive jurisdiction to exercise the powers and perform the functions of an income tax authority under the Act in relation to the case of the applicant became vested in the Settlement Commission until a final order of settlement is passed in terms of section 245D(4). In settling the case of the applicant, the Settlement Commission shall, after granting an opportunity to the applicant and to the Commissioner of Income Tax concerned to be heard, and after examining such further evidence as may be placed before it or obtained by it, pass such order as it thinks fit on the matters covered by the applicant and any other matter relating to the case not covered by the applicant, but referred to in the report of the Commissioner of Income Tax. Under sub-section (5) of section 245D, the materials brought on record before the Settlement Commission shall be considered by the members of the concerned Bench before passing any order of settlement. Under section 245(1), the assessee may, at any stage of a case relating to him, make an application in such form and in such a manner ....
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....ides that the order of settlement shall be conclusive as to the matters stated therein and in respect of such matters, the assessee cannot be subjected to reassessment proceedings. 3. On 10.2.2010, a search was conducted under Section 132 of the Act in the business premises of the assessee herein (R-2) as part of the search of the group companies, including the residential premises of its directors. Several incriminating documents, cash and other materials were seized. The incriminating documents are alleged to have contained evidence to show that the purchase of cement and steel aggregating to Rs.117.98 crores from 5 parties in Gurgaon and Delhi were bogus or false. The assessee filed an application before the Settlement Commission under section 245C(1) on 16.12.2011 in which it admitted that the purchase of cement and steel amounting to Rs.39.53 crores were not genuine and has to be taken as the income of the assessee which was not disclosed before the assessing officer in the block assessment relating to the assessment years 2004-05 to 2010-11. 4. In the course of the proceedings before the ITSC, a report was submitted by the CIT under Rule 9 of the Income Tax Settlement C....
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....tion, the CIT filed another report dated 10.12.2012 before the ITSC. In this report it was stated that the assessing officer was directed to give an opportunity to the assessee of cross-examining Ashok Oberoi, the main person who was said to have issued the bogus bills. The assessee was not able to cross-examine Ashosk Oberoi and the reasons thereof were also mentioned in the report of the CIT. The CIT further referred to the statement of Ashok Oberoi recorded on 16.11.2012 in which he confirmed his earlier statements and affidavits to the effect that the bills issued to the assessee were bogus bills and no material was in fact supplied against the same. 7. A final report was submitted by the CIT on 8.1.2013 in which it was stated that verification from the road transport authorities revealed that there was no proof that the registration numbers of the vehicles mentioned in the bills were used for transporting the cement and steel; in some cases, the registration numbers were those of two wheelers which were incapable of transporting the goods and in some cases the registration numbers were found to be of those vehicles registered with the transport authorities later than the re....
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....ivered the lone dissenting opinion, that the facts established that the applicant did not disclose its true and full income in the settlement application since it cannot be held with certainty that the applicant was not aware of the fact that it had claimed bogus expenditure of Rs.117.98 crores in the books of account. He further observed that the basic intent behind not offering full and true income in the settlement application is to suppress the taxable income. He expressed surprise that: - "the applicant, which was fully aware of the fact that the clinching evidences indicating bogus expenditure claimed in its P & L account were found during search and post-search investigation as mentioned above, had not offered the entire suppressed income/ bogus expenditure for tax either before the search team or the Assessing Officer (AO) or Income Tax Settlement Commission (ITSC). Thus, it cannot be ruled out that there was no attempt by the applicant to evade tax even in its SA where one of the prime conditions for filing application is full and true disclosure of the income. Further, it is evident from the above discussion that the applicant has tried its best till end during the set....
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....t had, in fact submitted evidence which established that the vehicles which allegedly carried the goods were not even registered with the transport authorities at the relevant time, that some of them were two-wheelers which were incapable of transporting cement and steel; the proprietors of those five firms had gone on record, on oath, that they issued bogus bills for a commission; there was immediate withdrawal of funds from the bank accounts of those firms after the cheques issued by the assessee were cleared, but there was no information forthcoming as to the destination of those funds leading to the inference that they came back to the till of the assessee; the addresses given by those firms were found to be non-existent. All this was known to the assessee, but still it did not make a full and true disclosure in the settlement application; it waited till the ITSC called for reports from the CIT which reiterated the aforesaid facts established by the seized material. It had no answer to the evidence, but in a desperate attempt tried to prove its innocence by filing valuation reports before the ITSC to show that the inflation of the expenses on purchase of cement and steel was on....
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....disclosed in the settlement application, aggregated to Rs.117.98 crores. In other words the assessee waited till the last moment to make the additional offer. This conduct of the assessee, far from showing co-operation in the proceedings before the ITSC, shows defiance and an attitude of a fence-sitter. The Member who expressed the minority view rejecting the claim for immunity from penalty and prosecution has pertinently brought out this aspect of the assessee's conduct in the observations quoted hereinabove. We agree with his view that the assessee was all along quite aware that the entire amount of Rs.117.98 crores, being bogus purchase of cement and steel from 5 parties of Gurgaon and Delhi, was concealed income. There is ample evidence brought on record by the revenue in this behalf. Yet the assessee consciously chose not to offer the aforesaid amount as additional income - i.e. income which was not disclosed before the assessing officer - in the application filed before the ITSC under Section 245(1). The assessee has thus failed to satisfy the twin conditions of Section 245H (1) and was, therefore, not entitled to the immunity. The majority view expressed by the ITSC, with re....