TaxTMI 
TaxTMI 
2017 (5) TMI 848
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.... and appropriate directions to restrain the income tax authorities from taking any action under the Act, till disposal of its application by the ITSC. 2. The brief facts are that a search and seizure operation was carried out under Section 132(1) of the Act against M/s. Rotomac and Anand/Dolphin Developers Group on 25.06.2014. The search was conducted at the business premises of those companies and their directors, associates, etc. After the search, the cases of all such assessees were centralized with the office of the Assistant Commissioner of Income Tax, Central Circle-II, Kanpur by order dated 29.07.2014 passed by Principal Commissioner of Income Tax-II, Kanpur. An assessment order dated 31.03.2016 under Section 148/143(3) of the Act was made by the Assistant Commissioner of Income Tax, Central Circle-II, Kanpur in the case of M/s. Dolphin Developers Ltd. (one of the group companies). Notices under Section 153A were issued by the Assessing Officer (situated at Kanpur), to the companies as well as individuals directors/partners for A.Y. 2009-10 to 2013-14. Returns in response to the said notices were filed by the respective parties. In the backdrop of these developments, the ....
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....39;Incoming and Outgoing' statement no narration or description is provided in the report of the outgoings because of which the Bench is unable to appreciate whether an outgoing is for business purpose or if it is merely on application of money or an investment. The A.R. fairly admitted the deficiencies/discrepancies pointed out to him on the above noted issues. He under took to provide clarification/information on these two aspects during section 245D(2C) proceedings, to make the issues clear. 9. After considering the facts on record and submissions of the Ld. AR, we are satisfied that the applicant, prima-facie, fulfills the conditions prescribed u/s 245C(1) of the I.T. Act. The issues arising, without prejudice, would be considered at the subsequent stage of proceedings. Accordingly, the Settlement Application is allowed to be proceeded with." 4. During the proceedings, a report was submitted by the Principal Commissioner under Section 245D(2B) of the Act, on 13.04.2016. This report suggested that the claim made by the applicant that the amount declared by him to belong to an entity, was unsubstantiated and that the moneys were unaccounted sums collected by the o....
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....ntity for income tax purposes. The accounts of such receipts might have been kept at single place for convenience of the main person handling the affairs of these companies. Keeping all such accounts at one place for the sake of convenience cannot by any stretch of imagination, be considered as relating to, and belonging to the person maintaining it. This fact only leads to the conclusion that money under consideration has been received by the said group companies and any resultant profit or loss arising out of any subsequent transactions rightfully belong to the company concerned. 7.2 In this background, the claim made by the applicant that the entire income, accounted and unaccounted, in fact belongs to him and not to the various recognized and separate legal and taxable entities whose names figure in the seized papers, appears to farfetched, and lacks credibility. 7.3 After careful consideration of the above facts and in this circumstances of the case, we hold that additional income declared in the settlement application filed by Sh. Vishvvanath Gupta does not rightfully belong to him and therefore, the same cannot be considered in his hands for the settlement ....
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.... stated above, he was instrumental in setting upto 8 business entities. The said business entities had undertaken 23 projects from time to time, and execution of such projects was spread over a span of a number of years. Besides, there are other projects also, execution of which was in progress as on date of search and seizure action and continued thereafter also. In order to provide ancillary services to the customers and investors, the petitioner on his own devised a model in the name of "Anand Builders Co." ("ABC" for short) and evidence to that effect is available in the seized material (printouts taken from hard disc under seizure marked as "HD-33") and other information available in the computer. It is argued that the seized material also discloses that ABC had been making investments in the properties acquired by various "business concerns" in relation to which projects were yet to be launched. 8. Learned senior counsel for the petitioner, Mr. C.S. Agarwal, argued that the seized material (printouts taken from HD-33) showed that very frequently, the Petitioner had been receiving funds from investors for bulk bookings in the projects that were being run by various business....
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....ion before the Commission. The ITSC has the opportunity and the right to declare any application invalid on the basis of such a report after duly considering it. 11. The revenue argues that in the facts of this case, the Commission was justified in rejecting the petitioner's application. It is asserted that a comparison of the material, especially the account books and the hard disk HD 33 containing waste materials was found and seized from the offices of Dolphin Developers P. Ltd which contained details of month-wise payments made by its customers during three years. A comparison with the details verified from the books of ABC matched the undeclared amounts, that tallied with the customers of Dolphin Developers Ltd. Clearly, therefore, the inference was that the amount declared by the petitioner, in fact belongs to that company and not his concern ABC. It is highlighted that the petitioner in fact admitted in the submissions before the Commission that such books seized, contained the transactions not only relating to M/s. Dolphin Developers Ltd, but also to the 23 projects launched by the 8 group concerns. Having, therefore, admitted that these amounts were received towards....
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....Ultimately on 29.01.1999, the Settlement Commission passed a final order determining total income of the assessee for the said assessment years at Rs. 42.58 crores. That order was challenged by the revenue before the Bombay High Court. Aggrieved by the order of the High Court, the assessee had approached the Supreme Court. The Supreme Court remanded the matter back to the Bombay High Court for fresh consideration upon which the Bombay High Court passed an order remitting the matter back to the Settlement Commission against which the applicants- assessees approached the Supreme Court. It was in this background that the Supreme Court observed as under: "26........It is plain from the language of sub- section (4) of Section 245D of the Act that the jurisdiction of the Settlement Commission to pass such orders as it may think fit is confined to the matters covered by the application and it can extend only to such matters which are referred to in the report of the Commissioner under sub- section (1) of sub-section (3) of the said Section. A "full and true" disclosure of income which had not been previously disclosed by the assessee, being a pre-condition for a valid appli....
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....s or perversity in the ITSC's order, the court cannot substitute its reasoning with that of the said body. The ITSC's findings here are based upon an analysis of the facts such as that the ABC's identity was unknown and that there was a certain degree of amorphousness in its functioning. Furthermore, the clear linkages between the amounts disclosed before the ITSC and the amounts declared by M/s. Dolphin Developers Ltd. was discernable. 14. The judgments of the Supreme Court in R.B. Shreeram Durga Prasad v. Settlement Commission, (1989) 176 ITR 169; Jyotendrasinghji v. S.I. Tripathi & Ors., (1993) 201 ITR 611 and Kuldeep Industrial corporation v. ITO, (1997) 223 ITR 840 delineate the scope of the High Court, while considering whether to interfere with the orders of the ITSC. In Jyotendrasinghji (supra), the correct legal position was explained as follows: - "Be that as it may, the fact remains that it is open to the Commission to accept an amount of tax by way of settlement and to prescribe the manner in which the said amount shall be paid. It may condone the defaults and lapses on the part of the assessee and may waive interest, penalties or prosecution, wh....