AI Drafter 
TaxTMI 
TaxTMI 
2017 (9) TMI 188
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.... business dealings and unaccounted income of the assessee. The Income Tax authorities initiated re-assessment proceedings in respect of the assessment years 2007-08 to assessment years 2012-13 and notice under section 133(2) was issued in respect of the assessment year 2013-14. 3. On 30.03.2015, the petitioner filed an application under section 245C of the Act before the Settlement Commission, Mumbai. By an order dated 08.04.2015, the Commissioner admitted the application and allowed the same to be proceeded further. 4. The Commissioner of Income Tax, Surat, received the order under section 245D on 13.04.2015. The due date of Report under section 245D(2B) was 13.05.2015. However, since no such report was filed on 14.05.2015, it was held that the Commissioner of Income Tax was presumed to have no objection to the application and accordingly, the Commission proceeded further. Rule 9 report was filed on 15.07.2016. 5. It was the case of the assessee that in view of the pending assessment proceedings he intended to make full and true disclosure of income by way of the application before the Settlement Commission. It was such purpose that, for the assessment years 2007-08 to 20....
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..... In view of the denial of Shri Savani of having any connection with the assessee the Principal Commissioner of Income Tax opined that the entire sale proceeds of the land at Vesu to the extent of Rs. 53 crores had to be construed as that of the assessee-Baldev Patel. The Rule 9 report recorded that the additional unaccounted income detected from the entries in the impounded documents of the assessment years 2007-08 to 2013-14, as against the disclosure of Rs. 32 crores was in fact, Rs. 85 crores the break up of which was as under: Asst. Year Additional Income detected from entries in the impounded documents. 2007-08 Rs. 42,09,77,000/- 2008-09 Rs. 3,78,79,073/- 2009-10 Rs.2,08,47,684/- 2010-11 Rs.3,55,59,570/- 2011-12 Rs.27,85,64,155/- 2012-13 Rs.3,35,56,000/- 2013-14 Rs.3,03,56,500/- Total Rs.85,77,39,982/- 9. To the Rule 9 report dated 15.07.2016, the petitioner submitted his comments dated 31.08.2016.The same were filed before the Commission on 09.09.2016. Based on the Rule 9 report and on the submissions so filed, a hearing was held by the Commission. The applicant requested for an opportunity to file copies of documents ....
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....ough the Statement of Shri Parbat which is annexed to the petition. 13. Mr. Divetia also invited our attention to the copies of the entries which are annexed to the paper book filed before the Settlement Commission, to establish the connection in the land dealings vis-a-vis Hitesh Savani. The entries in the ledger account showed that Hiteshbhai Savani was clearly associated with the assessee in the transactions. According to Shri Divetia there is substantial evidence on record to show the proximity of Shri Hitesh Savani as a partner. Therefore to hold that the entire income due to the unaccounted cash of Rs. 53 crores be added to the assessee's income was not just. 14. With regard to the second observation under Rule 9 report on the manner of disclosure of income vis-a-vis buying and selling of movable property for and on behalf of others in the name of third parties, it was suggested that in fact the assessee had dealt on behalf of one Shri Vince Patel who was a resident in USA. That the identity of Shri Vince was established by furnishing his address and also the details of ledger entries showing details of transactions with Mr. Vince Patel. 15. On this account, Mr. ....
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....the assessee came forth to disclose the income before the Settlement Commission as under: Asst. Year Amount of additional income of Rs. Remarks 2007-08 17,57,000/- 2008-09 06,68,500/- 2009-10 58,85,730/- 2010-11 16,18,980/- 2011-12 2,07,75,640/- Including LTCG 2012-13 13,000/- 2013-14 18,99,400/- Total 3,26,14,940/- 22. The Principal Commissioner of Income Tax on 15.07.2016 submitted a report under Rule 9 of the Settlement Commission Procedure Rules, 1987. It was the case of the assessee that he had earned unaccounted income as a result of dealing in plots comprising of Survey Nos. 223, 224 and 225 at Vesu. These dealings, according to the assessee, were in association with Shri Hitesh Savani.From the total earning of Rs. 53.00 Crores (rounded off) each of them had a share of Rs. 26.50 Crores. 23. Shri Hitesh Savani, in a statement on 11.03.2015, denied having entered into such a transaction. In fact, he denied knowing the assessee. In order to establish the genuineness of the claim, the assessee was asked to furnish complete details of the ....
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....rs and that money has also been collected on behalf of both the partners. However, although these entries show transactions relating to Hitesh the connection with the entries of amounts received as per BFI 35-page 12 (discussed above) is not. In para no. 14 of PB-V submitted by applicant on 26.09.2016, reference has been made to notings in the diaries at BFI 16 page 3. These notings have reference to "Baldevbhai + Himmatbhai Savani" (father of Hitesh) as well as "Baldevhai diary" and "Himmatbhai (diary)". The notings do not therefore support the applicant's contention of 50% share of Shri Hiteshbhai Savani. The detail of joint investments in Vesu land (para 15 of the applicant's PB-V filed on 26.09.2016) show receipts from a number of persons including the applicant and the name of Hitesh appears to be for only one amount. In view of these facts, the applicant's contention regarding 50% share of Shri Hitesh Himmatbhai Savani in the joint share of 14.18% relating to plot no. 223, 224 and 225 at Vesu Surat is not correct. The applicant's claim that the presumption u/s 292 C(1)(ii) of the Act is available to the applicant regarding his claim of 50% share of Shri Hitesh....
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....also shown the statement of Shri Ravjibhai Karamsingh Sutharia who had stated that Shri Baldevbhai Bhikhabhai Patel and his friend Shri Hitesh Himmatbhai Savani has jointly invested in cash in the purchase of R.S. No 223, 224 and 225 Vesu, Surat and upon sale of the land, had taken their share of the sale proceeds and that in reply thereof, Shri Hitesh Himmatbhai Savani stated that he had read the statement shown to him but he did not know any person by the name of Shri Ravjibhai Karamsingh Sutharia or Shri Baldevbhai Bhikhabhai Patel and had no share in any transactions relating to the stated Vesu land. The applicant has referred to the statement of Shri Parbatbhai one of the co-owner of Vesu land, but has not given the details of the applicant's submissions/Department's submissions in which the copy of the statement is available." 25. The Settlement Commission in its order vis-a-vis land dealings at Vesu categorically observed that none of the dates, which were shown to be the dates of transactions tallied with the dates on which the consideration in the land was received. The Commission further observed that no evidence was brought on record by the applicant to establ....
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....hasis on BFI 8 pg 47 "returned to Vince (page no. 212 of applicant's PB-II submitted on 23.08.2016). However, the return has to be seen with reference to BFI 8 pg 15 discussed above in which Vince + Baldevbhai is noted. The claim of noting of returning of Rs. 10 lacs plus Rs. 20 lac by transaction through angadia to Mr. Vinci Patel is not supported by any details of the angadia or the mode of remittance to Mr. Vince Patel. As regards Sanjay, the transaction details available at page 215 and 216 of Rule 9 report are compatible with purchase of the flat in Vaishnu Devi property by the applicant and sale thereof. The applicant has worked out profit of Rs. 13,00,000/- in respect of this property and the sale is also offered to tax. It is concluded that for none of the transactions claimed to be made for third parties, the entries in the impounded documents show that these transactions relate to the third parties. It is therefore respectfully submitted that as discussed with relation to property at RS No 223, 224 and 225 Vesu Surat, the judgment of CIT v. Indeo Airways P Ltd 349 ITR 85 (Delhi) is distinguishable. No confirmations or any other evidence has been furnished by the appli....
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....emely narrow. The Apex Court held as under:- "16. It is true that the finality clause contained in Section 245-I does not and cannot bar the jurisdiction of the High Court under Article 226 or the jurisdiction of this court under Article 32 or under Article 136, as the case may be. But that does not mean that the jurisdiction of this Court in the appeal preferred directly in this court is any different than what it would be if the assessee had first approached the High Court under Article 226 and then come up in appeal to this court under Article 136. A party does not and cannot gain any advantage by approaching this Court directly under Article 136, instead of approaching the High Court under Article 226. This is not a limitation inherent in Article 136; it is a limitation which this court imposes on itself having regard to the nature of the function performed by the Commission and keeping in view the principles of judicial review. Maybe, there is also some force in what Dr. Gauri Shankar says viz., that the order of the Commission is in the nature of a package deal and that it may not be possible, ordinarily speaking, to dissect its order and that the assessee should not....
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....sons, we are of the opinion that the only ground upon which this Court can interfere in these appeals is that the 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 on the said deeds is not correct, it would not be a ground for interference in these appeals, since a wrong interpretation of a deed of trust cannot be a violation of the provisions of the Income Tax Act. It is equally clear that the interpretation placed upon the said deeds by the Commission does not bind the authorities under the Act in proceedings relating to other assessment years." 29. In the case of Vishnubhai Mafatlal Patel vs. The Assistant Commissioner of Income Tax reported in [2013] 31 taxmann.com 99, the Court observed that while making application under section 245C, the applicant should make a full and true disclosure of income. Such true and full disclosure of....
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....of the Settlement Commission to reject the application for settlement which in its opinion does not satisfy the legal requirements and more particularly, those contained in sub-section(1) of section 245C of the Act. 18. In case of Saurashtra Cement Ltd. And ors. v. Commissioner of Customs and anr. reported in 2012(3) G.L.H. 235, scope of judicial review by the Supreme Court against the order of Settlement Commission was examined in light of various decisions of the Apex Court and following observations were made : "15. It is well settled that no finality clause in a statute would oust the jurisdiction of the High Court under Article 226 of the Constitution or that of the Supreme court under Article 32 or 136 of the Constitution. Nevertheless, the parameters of judicial intervention in a decision rendered by an administrative tribunal are well recognised and well laid down. Ordinarily, the court would interfere if the Tribunal has acted without jurisdiction or failed to exercise jurisdiction vested in it or the decision of the Tribunal is wholly arbitrary or perverse or malafide or is against the principles of natural justice or when such decision is ultra vires th....
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....ment of the legislative bodies. (See Ira Munn v. State of Illinois)." 30. That the scope of judicial review under Article 226 to interfere in orders passed by the Settlement Commission was limited was reiterated by this Court in case of Manojkumar Babulal Agrawal vs. Secretary reported in [2017] 83 taxmann.com 139 : "16. Question is should such conclusion of the Commission be interfered in exercise of writ jurisdiction? The scope of judicial review in exercise of writ jurisdiction under Articles 226 and 227 of the Constitution of India while examining the validity of an order of the Settlement Commission has come up for consideration before various Courts in the past. In case of Jyotendrasinhji(supra), the Apex Court held and observed that the sole overall limitation upon the Commission appears to be that it should act in accordance with the provisions of the Act. The scope of inquiry whether by the High Court under Article 226 or by the Supreme Court under Article 136 is also the same namely, whether the order of the Commission is contrary to any of the provisions of the Act and if so, has it prejudiced the petitioner apart from the ground of bias, fraud and malice, wh....
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....he requirement that the petitioner made true and full disclosure of undisclosed income and the manner of deriving the same. The petitioners were required to make an application and make such declarations as required under section 245C(1) of the Act. They could not have hoped for or insisted upon a second innings to do so beyond the stage of section 245D(1) of the Act. If other-wise such requirements of the Act were not fulfilled, the Commission was well within the powers to terminate such application without any further addo." 31. Having considered the submissions of learned advocate for the respective parties what is apparent from the order passed by the Settlement Commission is: a. Based on the feedback of the Principal Commissioner of Income Tax, on a report under Rule 9 on 15.07.2016, and on independent assessment of evidence the Settlement Commission has come to the conclusion that the assessee had not made a full and true disclosure of income as envisaged under the provisions of the Income Tax Act concerning the Settlement Commission. b. The decision making process of the Settlement Commission was certainly not flawed. Though the assessee has sought to op....