TaxTMI 
TaxTMI 
TaxTMI 
2017 (5) TMI 1692
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....0/M/2016 for A.Y. 2008-09 in the case of Ashtavinayak Estate Company Pvt. Ltd. 2. The short facts of the case are as under: Ground No.1 The assessee has filed the return of income for A.Y. 2008-09 on 10.06.2008 declaring loss at Rs. 1,39,654/-. The notice dated 09.10.2013 under section 148 was served to the assessee and reasons recorded are as under: "The assessee i.e. M/s. Aasthavinayak Estate Company Private Limited filed Return of income for A.Y. 2008-09 on 10/06/2008, declaring a loss of Rs. 139654. An application for settlement was filed by M/s Aasthavinayak Estate Company Private Limited before the Hon'ble income Tax Settlement Commission u/s 245C of Income Tax Act, 1961 on 30.01.2013 vide application No. MH/MUCC-4/127/2012-13/IT. The application before the Settlement Commission included a prayer made by M/S Aasthavinayak Estate Company Private Limited for A.Y 2008-09 also wherein an additional income of Rs. 501,049 was disclosed before the Commission, which was earlier, not disclosed before the assessing officer. The application of M/S Aasthavinayak Estate Company Private Limited before th....
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....d. A.R. submitted that there is no reason to believe for reopening the assessment under section 148 of the Act, therefore, it may be quashed. 5. On the other hand, the Ld. D.R. relied upon the order of the AO. 6. We have heard the rival contentions of both the parties. The AO has recorded the reasons for reopening the case which is reproduced in the order. It is evident that AO had precise and definite information as regard to escapement of income of Rs. 5,01,049/- since the said income was declared as additional income before Settlement Commission. The assessee has not disclosed its amount in the return of income. The AO had sufficient information regarding reopening the order and moreover assessee's writ petition before the High Court was also dismissed and the department was free to initiate the proceedings under section 147 of the Act. Therefore, we are of the view that Revenue is justified in reopening the assessment order. The ground No.1 is dismissed. Ground No.2 7. This ground relates to addition of Rs. 5,01,049/-. By relying on application under section 245C of the Act filed b....
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....on is rejected under section 245D(I) of the Act. Section 245HA is the section which relates to abatement of proceedings before Settlement Commission and as per section 245HA(2) where a proceedings before Settlement Commission abates the AO or as the case may be any other income tax authority before whom the proceeding at the time of application was pending shall be disposed in accordance with the provisions of Act as if no application under section 245 has been made. Section 245HA(3) imposed the restriction and AO or any authority shall be entitled to use this material or information produced by the assessee before the Settlement Commission or the result of inquiry held or evidence recorded by Settlement Commission in the course of proceeding before it as if such material or information has been produced before AO. That amendment has come from 01.06.15. Therefore, the AO has no authority to use this material. Therefore, this reopening is not justified. The Ld. A.R. has relied upon the decision of Hon'ble Gujarat High Court in the case of CIT vs. Maruti Fabrics47 taxman.com 298 (Guj) wherein the Hon'ble Gujarat High Court has considered the eviden....
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....he Hon'ble Gujarat High Court against the addition made by the AO on the basis of declaration made by the assessee before Settlement Commission of Central Excise and Customs Act and the Hon'ble Gujarat High Court decided the matter in favour of the assessee. 13. We find that assessee has made declaration and filed some information before Settlement Commission admitted under section 245D of the Act and it can be used only for limited purpose for settlement of tax dispute and passing an order under section 245D(4) of the Income Tax Act and not for other purpose. The assessee has made a disclosure and such disclosure ultimately ended in settlement order under section 245D(4) of the Act. The disclosure came to the possession of AO. The fact that the disclosure made under section 245D(1) of the Act even if constructed as if no order under section 245D(4) has been passed it will not give a license to the AO to use the confidential information disclosed in an annexure to the application of the Settlement Commission. If the application is treated as not admitted under 245D(1) of the Act, then the provisions are clear that confidential infor....
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....se of the proceedings before him on fair reading of sub-section (2) of Section 32L of the Act whatever is admitted by the assessee while submitting the application before the Settlement Commission submitted under Section 32E(1) of the Act straightway cannot be said to be admission on behalf of the assessing accepting the liability. Whatever the material is produced alongwith the application and/or any material and/or other information produced by the assessee before the Settlement Commission or the result of the inquiry held or evidence recorded by the Settlement Commission in the course of the proceedings before it can be used by the adjudicating authority as if such materials, information, inquiry and evidence has been produced before such Central Excise Officer, while adjudicating the show cause notice and the proceedings. If the contention on behalf of the appellant is accepted, in that case, there is no question of further adjudication by the Central Excise Officer with respect to the amount admitted by the assessee while submitting the application before the Settlement Commission submitted under Section 32E(1) of the Act. Once the application or proceedings before the Settlem....
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....L(1) non - cooperation of the petitioner is the only ground. The Central Excise Officer derives its power its power to assess such abated proceeding vide section 32L(2) of the Central Excise Act. This is identical to powers vested with an AO under section 245HA(2) and 245HA(3) under the Income Tax Act. It is therefore very clear that the provisions of Central Excise Settlement Commission and that for Income Tax settlement Commission are identical. Therefore, the judgment of Hon'ble Gujarat High Court in the case of Maruti Fabrics although pertaining to Central Excise should be applied to cases abated under section 245HA of the Income Tax Act also. 16. Therefore, we are of the view that the judgment of Hon'ble Gujarat High Court is applicable to the facts of the assessee's case. We find that Hon'ble Gujarat High Court has held that if the petition filed before the Settlement Commission wherein assessee has made declaration but proves that assessee has neither earned such income nor any incriminating material was found during the search relating to undisclosed income then no addition can be made. 17. We have ....
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....tion 245HA relevant portion whereof reads thus :- "245HA. Abatement of proceeding before Settlement Commission.- (1) where.... (i)an application made under section 245C on or after the 1st day of June, 2007 has been rejected under sub-section (1) of section 245D; (ii)an application made under section 245C has not been allowed to be proceeded with under sub-section (2A) or further proceeded with under sub-section (2D) of section 245D; (iii)an application made under section 245C has been declared as invalid under sub-section (2C) of section 245D; (iv)in respect of any other application made under section 245C, an order under sub-section (4) of section 245D has not been passed within the time or period specified under sub-section (4A) of section 245D, the proceedings before the Settlement Commission shall abate on the specified date. Specified date would be (i) in respect of an application referred to in sub-section (2A) or sub-section (2D), on or before the 31st day of March, 2008; (ii) in respect of an application made on or after 1st day of June, 2007 within nine months from the end of the month in which the application was made. (2) Where a proceeding before....