TaxTMI 
TaxTMI 
2017 (7) TMI 537
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.... operation, a statement of the Managing Director of the company, Shri Mahesh Jariwala, was recorded on 21.01.2009, in which, he declared undisclosed income of Rs. 15 crores. He also paid tax on such undisclosed income on 29.09.2009. However, in the return of income for the assessment year 2009-10 filed by the company on 30.09.2009, the disclosure of Rs. 15 crores was not made and the statement of the Director was retracted through a note appended to the return. 3. Consequent to the search, notices under section 153A of the Income Tax Act, 1961 ['the Act' for short] were issued on 27.09.2009 for carrying out assessment for the assessment years 2003-04 to 2008-09. In response to such notices, instead of filing return, the assessee chose to approach the Settlement Commission by filing application on 26.11.2010 seeking settlement of all assessments for the assessment years 2003-04 to 2009-10. 4. After crossing various stages envisaged in Chapter XIX-A of the Act pertaining to settlement of cases, the Settlement Commission proceeded to pass final order dated 29.03.2012 in terms of section 245D (4) of the Act and took up various contentious issues. The petitioner has challe....
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....unts. It was, therefore, prima facie found that the assessee was indulging into large scale unaccounted production. 7. During the course of the assessment, the Assessing Officer also took into account one more register marked as 'B1-19' pertaining to Kim-1 unit covering the period between 01.05.2008 and 09.01.2009. He compared the entries in this register with the excise register for the same period and found that unaccounted production was 69.67% of the accounted production. He extrapolated this data for the period between April 2008 and January 2009 i.e. up to the date the search and concluded that the unaccounted production for this period would be 72% of the accounted production. 8. On the basis of the comparisons between B1-13 to B1-16 registers and B1-19 register with the excise registers for the corresponding periods, the Assessing Officer worked out the data of accounted as well as unaccounted production and estimated the value of such unaccounted production by adopting cost of Rs. 150/- per kg of the material. These figures he summarized as under: Financial year Actual Production as per B1-19 and CSR (kg) (A) Accounted Production As per Excise (kg) (....
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....counted production reflected from B1-19 register at 72%, as worked out by the Assessing Officer or even 69.67% plainly flowing on comparison of the said register with the excise register for the precise matching periods but took a more conservative figure of 40% for the assessment years 2007-08 to 2009-10. The Settlement Commission projected these figures only for the assessee's manufacturing unit at Kim-1 on the ground that the said B1-19 register contained data only for the said unit. In other words, the Settlement Commission did not make any additions for the assessee's Kim-2 unit on the basis of such data. We may further, for the sake of clarity, record that the Settlement Commission made small addition of Rs. 30 lacs in case of Kim-2 unit on other issues which are not before us. 12. With respect to the assessment years 2003-04 to 2006-07, the Settlement Commission did notice assessee's contention that for the said period, no incriminating material was found during the search and that therefore, no additions can be made for the said period by extrapolation. The Settlement Commission, however, referred to the decision of the Supreme Court in case of Commissioner o....
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....nt, the ratio laid down by the Supreme Court in case of Commissioner of Sales Tax, Madhya Pradesh vs. H.M.Esufali H M. Abdulali would be applicable. For the same purpose, a reliance is also placed on the decision of Delhi High Court in case of Commissioner of Income Tax vs. Chetan Das Lachman Das reported in [2012] 25 Taxmann.com 227. 16.The entire controversy on this issue is limited to the additions made by the Settlement Commission under the head of 'unaccounted production' for the assessment years 2003-04 to 2005-06 [though technically assessment year 2006-07 would also fall in this category, the same is not referred since the addition is Nil] for the assessee's manufacturing unit at Kim-1. Upon perusal of the order of the Settlement Commission, we gather that against the actual data of unaccounted production recorded in B1-19 register as compared to the excise register for the relevant period, the unaccounted production came to 69.67% of the accounted production. The Settlement Commission also noted that number of employees found during the search is far in excess of those shown in the books of accounts of the company. Further, that the unaccounted production wa....
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....case where no material whatsoever for the earlier periods was found. The factors taken into account by the Settlement Commission, which in our opinion were relevant, were that registers relating to the manufacturing unit of the company which were found, established unaccounted production, admission by the employees that the company was engaging in such unaccounted production, the number of employees at the time of search being found far in excess of what was recorded in the books of accounts and the statement of the employees that the registers for the earlier periods were destroyed under the instructions of the management. Based on such facts, if the Commission made a projection of the available figure of unaccounted production over the entire period by adopting what can, at best, be stated as a conservative figure and by recording proper reasons, it would not be possible for us to interfere with such ultimate conclusion of the Settlement Commission. 20. In case of Fatechand Nursing Das vs. Settlement Commission (IT And WT) and anr reported in 176 ITR 169 the Supreme Court observed that in exercise of power of judicial review of the decision of the Settlement Commission, the Co....
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....ng himself and S.R. Pandian, J. observed that in such a case this Court is " concerned with the legality of procedure followed and not with the validity of the order.' The learned Judge added 'judicial review is concerned not with the decision but with the decision-making process." Reliance was placed upon the decision of the House of Lords in Chief Constable of the N.W. Police v. Evans, [1982] 1 W.L.R.1155. Thus, the appellate power under Article 136 was equated to power of judicial review, where the appeal is directed against the orders' of the Settlement Commission. For all the above reasons, we are of the opinion that the only ground upon which this Court can interfere in these appeals is that order of the Commission is contrary to the provisions of the Act and that such contravention has prejudiced the appellant The main controversy in these appeals relates to the interpretation of the settlement deeds though it is true, some contentions of law are also raised. The commission has interpreted the trust deeds in a particular manner, Even if the interpretation placed by the commission the said deeds is not correct, it would not be a ground for interference in these ap....
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....r film. Such raw material undergo processes which can be broadly classified into three categories before the final product of jarikasab would come into existence. The entire process was one integrated manufacturing process. By no stretch of imagination a single integrated manufacturing process can be sub-divided or bifurcated into different parts for ascertaining whether at a particular stage a new article or thing had come into existence through manufacturing process. The approach of the Settlement Commission was wholly erroneous. When a single integrated manufacturing activity is shown to bring into existence entirely new and a distinct mercantile product through the human and mechanical intervention, it was simply not open for the Settlement Commission to segregate a portion of such manufacturing process to hold that since no new marketable product came into existence, such process did not amount to manufacturing. Even within the narrow confines of our judicial review, in the order of Settlement Commission on this issue, we must intercept. This issue is therefore decided in favour of the assessee. 26.The third and last issue pertains to the expenditure of Rs. 39.30 lacs towar....