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2017 (2) TMI 861
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....Pvt. Ltd., M/s. Asthavinayak Estate Co. Pvt. Ltd., M/s. Lodha Glowing Construction Pvt. Ltd., M/s. Lodha Home Developers Pvt. Ltd., M/s. Sahajanand Hitech Construction Pvt. Ltd., M/s. Lodha Pranik Landmark Associates M/s. Lodha Construction (Dombivili) M/s. Lodha Estate Pvt. Ltd., M/s. Mahavir Premises Pvt. Ltd., M/s. Cowtown Land Development Pvt. Ltd., M/s. Lodha Impression Real Estate Pvt. Ltd. M/s. Macrotech Constructions Pvt. Ltd., M/s. Lodha Buildcon Pvt. Ltd., M/s. Lodha Dwellers Pvt. Ltd., M/s. Lodha Novel Buildfarms Pvt. Ltd., M/s. Vivek Enterprises M/s. Asthavinayak Real Estate Co. Pvt. Ltd M/s. Adinath Builders Pvt. Ltd., M/s. Ajinath Hitech Builders Pvt. Ltd., M/s. Anantnath Constructions & Farms Pvt. Ltd., M/s. Dharmanath BuildTech & Farms Pvt. Ltd., M/s. Galaxy Premises Pvt. Ltd., M/s. Hi Class Buildcon Pvt. Ltd., M/s. Lodha Building & Construction Pvt.Ltd M/s. Lodha Designer Constructions Pvt.Ltd. M/s. Lodha Land Developers Pvt. Ltd., M/s. Lodha Properties Development Pvt.Ltd M/s. Siddhant Residential Paradise Pvt. Ltd. M/s. Shantinath Designer Construction Pvt. Ltd., M/s. Suryakrupa Farms & Construction Pvt. Ltd., M/s. Mahavir Build Estate Pvt. Ltd., M/s. Naminath Bu....
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....t-Assessee's failure to make full and true disclosure as required under Section 245C(1) of the Act. Further, the impugned order is challenged in view of the alleged failure of the Commission, to consider the statutory provisions viz: Sections 245C(1), 37 and 40A( 3) of the Act, while allowing the settlement application. Therefore, the impugned order, it is submitted, ignores the provisions of the Act and is in defiance of the mandate, as provided in Section 245D(4) of the Act. In view of the above, we are of the view that the Petition does require consideration for admission. 4 Briefly, the facts giving rise to this Petition, are as under: (a) On 30th January, 2013, the Respondent filed their application for settlement under Section 245(C)(1) of the Act. The applications were filed for the period ranging from Assessment Years 2005-06 to 2012-13; (b) On 12th February, 2013, the Commission accepted the Respondents' applications for settlement under Section 245D( 1) of the Act. Thus allowing the settlement applications to be proceeded with; (c) On 8th April, 2013, the Commission passed an order under Section 245D( 2C) of the Act, holding that the applications were not ....
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....e Commission at the stage of Section 245D( 4) of the Act. It was also recorded that in case the Petitioner does challenge the order of the Commission under Section 245D(4) of the Act, at that stage, the Court would consider whether the Petitioner should also be allowed to challenge the order dated 16th May, 2014 passed under Section 245D (2C) of the Act; and (i) Thereafter, the application for settlement filed by the Respondents, were heard by the Commission on various dates i.e. on 13th October,2014, 21st October, 2014 and 5th November, 2014, leading to the impugned order dated 28th November, 2014 under Section 245D( 4) of the Act. 5 Mr. Kevic Setalvad, learned Senior Counsel appearing for the Petitioner in support of the Petition, submits as under: (a) The impugned order of the Commission has settled the dispute, determining the additional income at Rs. 340 Crores as against the disclosed income of Rs. 245 Crores. This determination of undisclosed income far in excess of the income disclosed by the Petitioner, would by itself be conclusive of the failure on the part of the Respondent-Assessees to make a full and true disclosure of its income; (b) No full and true disc....
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....me disclosed in the application for settlement under Section 245C( 1) of the Act. From the above, it is submitted that it follows that there has been a failure on the part of the Applicant to make a true and full disclosure, warranting the rejection of the application for settlement. In support, reliance is placed upon the decision of the Madras High Court in Kanara Jewellers and Others v/s. Settlement Commission reported in 315 ITR 328. It is submitted by the Petitioner that the aforesaid decision of the Madras High Court has proceeded on the basis that once the Commission revises the income disclosed by the Applicant before it, to a higher figure, then it must ipso facto follow that no true and full disclosure of income has been made by the Applicant in its settlement application. Consequently, the application for settlement itself becomes not maintainable under Section 245C of the Act. 7 This, reading of the Madras High Court's decision in Kanara Jewellers (supra) on the part of the Petitioner does not appear to be correct as evident from the facts arising before it. The Assessee therein had filed an application for settlement, declaring undisclosed income. The Commission....
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....ithin 35 days from receipt of the order of the Commission, than interest on the tax so determined, would become payable by the Applicant. Thus, the aforesaid provisions clearly bring out the fact that the Commission could settle the dispute between the parties at a higher income than the income disclosed by the Assessee in its application for settlement. It is only in such a case that tax become payable in pursuance of the order passed under Section 245D(4) of the Act, as otherwise, the Applicant has to pay tax payable on the income disclosed in its application for settlement along with interest before filing its application under Section 245C( 1) of the Act with the Commission. Thus, the decision of the Madras High Court in Kanara Jewellers (supra) having not considered the above statutory provisions is rendered subsilento. 9 One more reason why the contention of the Petitioner is not acceptable, is that if one imposes a ceiling for settlement to the income disclosed in the application, take a case where an amount of income is not disclosed/offered as undeclared income on the basis of a decision of a Tribunal or Court holding it to be exempted/ non-taxable. By the time, the Com....
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....h has not been disclosed before the Assessing Officer; (b) The manner in which such income has been derived; (c) The additional amount of income tax payable on such income; and (d) Such other particular as may be prescribed. Each of the above requirements have to be independently satisfied. Not disclosing the manner in which such income has been derived, is a condition to be satisfied independent of full and true disclosure of income which has not been disclosed. In case, the manner in which such disclosed income has been derived has not been set out in the application, then the application is to be rejected on that ground alone. In this case, the Petitioner contends that the necessary evidence of the manner in which income has been derived, was not contained in the application. Therefore, failure to make full and true disclosure. It is submitted that in the absence of any explanation or the lack of evidence in support of the application would make the application bad for failure to make a full and true disclosure. We asked Mr. Setalvad - whether such a contention was raised by Petitioner before the Commission. In response, he points out although such ....
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....ct by placing reliance upon Section 245(F) of the Act. Thus, upholding the Assessee's contention before it that Section 245(F) of the Act provides that the Commission is vested with all powers vested in an authority acting under the Act. The Delhi High Court held that the Commission while settling the dispute cannot enter into the arena of an Assessment, which the Assessing Officer would do under Chapter XIV of the Act. The Delhi High Court in fact observed that the Assessment which the Commission has to do, is by way of settlement as observed by the Supreme Court's decision in Brijlal v/s. CIT 2011 (1) SCC 1. 16 Lastly, he placed reliance upon the decision of the Division Bench of Jharkhand High Court in Pavan Kumar v/s. Union of India 326 ELT 493 - wherein the Division Bench held that the Settlement Commission cannot exercise substantive power of income tax authorities but only a procedural power vested in the authorities under the Act. We are unable to understand how does it support the contention that there is a failure to disclose truly and fully the manner in which the income was derived. 17 In the above view, we do not find any merit in the submissions on part ....
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.... post search i.e. 10th January, 2011. 20 However, it is true that the Commission had not accepted the Petitioner's claim that 10% of deduction on the car parking charges should be allowed and brought to tax the entire amount of Rs. 256 Crores as income received for settlement of the dispute. This declaration of 10% was claimed by the Petitioner on an adhoc estimated basis. The same was so disclosed in its application for settlement. This adhoc/ estimated claim of deduction was not found by the Commission to be false. Nor does the Petitioner in his report before the Commission offer any evidence of the claim for deductions being false. Therefore, merely because the claim of the Respondent for 10% deduction from the parking charges receivable, admittedly made on estimated basis, is rejected, it would not follow that there has been a failure to fully and truly disclose its income in the applications for settlement. It must be borne in mind that normally a statement made in an application for settlement that it is based full and true disclosure is to be accepted, unless there is evidence found contrary to the disclosure made. 21 The statement made on oath by the Applicant, ca....
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....sions of the Act. The Petitioner has proceeded on a presumption that the amount which have been paid in cash and claimed as expenditure by the Respondent-Assessee, are in excess of Rs. 20,000/and, therefore, the said payments are hit by Section 40A( 3) of the Act and cannot be allowed as deduction. Section 40A( 3) of the Act, states that no deduction will be allowed on expenditure where an amount in excess of Rs. 20,000/is made to a person or aggregate of payment to a person in a day, otherwise than by way of account payee cheque or bank draft. There is no evidence on record to show that the Respondent-Assessee had made any payment to one single person in a day in excess of Rs. 20,000/. Therefore, there is no basis for disallowing expenditure by invoking Section 40A( 3) of the Act. The Revenue cannot proceed on presumptions and assumptions without any evidence to even remotely support the allegation that payment in excess of Rs. 20,000/was made to one person in a day to disallow expenditure under Section 40A( 3) of the Act. Therefore, the submission made on behalf of the Petitioner is without any substance and the grievance that this submission has not been considered by the Commis....
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....ng an application for rectification to the impugned order dated 28th November, 2014 is only six months from the date of the impugned order in terms of Section 245D(6B) of the Act. Therefore, if this grievance was raised immediately on passing of the impugned order by filing a Petition or resisting the payment consequent to settlement, then the mistake, if any, could have been corrected by filing a rectification application. Therefore, the Petitioner had no grievance or deliberately waited for the six months to expire before mounting this challenge at the hearing as it was not a ground in the Petition. This conduct on the part of the Petitioner itself disentitles the Petitioner from seeking any relief under Article 226 of the Constitution of India. It was submitted that remand, as suggested on this issue, would also serve no purpose as the composition of the Commission would have undergone a change and the members who passed the orders may not now be in office. It was further pointed out that the word payments to 'mafia' is not used by the applicant in its application or in any of the submissions made by it before the Commission. We asked the Petitioner to confirm if this so....
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.... incurred for settling disputes for removing encumbrances and unauthorized occupants by reaching out of Court Settlements, as according to the Respondent-Assessee, Court proceedings take a long time. Therefore, the above expenditure to settle the dispute out of the Court, cannot by itself amount to expenditure which is an offence or which is prohibited by law. 30 Mr. Setalvad was unable to point out how the aforesaid expenses are an offence or/are prohibited by law. All he did was to rely upon Section 23 of the Contract Act to state that these expenses are against public policy and, therefore, prohibited by law. We are unable to accept his contention on the above account. It is clear that none of the expenses which have been referred to in paragraphs 123 and 124 of the reply to the Commissioner's report under Rule 9 of the Settlement Procedure Rules even remotely suggest that the payments made for out of Court settlement is an offence or the same is prohibited by law. 31 It was next contended by Mr. Setalvad that in any view of matter, the Commission has recorded in paragraph 19 of the impugned order that amounts have been paid to local mafia for smooth functioning and ti....
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....hich transpired at the hearing before it. Therefore, on the basis of the record, it is always open to a litigant to point out that the aforesaid reference to 'local mafia' is incorrect as it is not based on any evidence relied upon by the impugned order to record such a statement of fact. Thus, the Apex Court ruling in Ramdas Nayak (supra) would have no application to the present facts. 34 We also find substance in the submission made by Mr. Dwarkadas that entire issue of payment to 'mafia' having some sinister significance is made only at the hearing before us, as no such ground is found in its writ petition. The Petitioner would have in such a case challenged the impugned order immediately or moved to Commission for rectification or atleast not written letters to the Respondent to pay the amounts in terms of Settlement arrived at by the impugned order of the Commission. 35 Further, we notice that the time to file a rectification application before the Commission under Section 245D(6B) of the Act, has already expired. Further, we have been informed that the members who passed the impugned order have retired. This coupled with the fact that the Petitioner had ....