TaxTMI 
TaxTMI 
2019 (11) TMI 874
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.... 2019 viz. M/s. Shreyansh Corporation made an application under sub-section (1) of section 245C of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') wherein it offered Rs. 22,04,620/- as additional income for the year under consideration viz. assessment year 2004- 2005. In terms of the report made by the Principal Commissioner of Income Tax under rule 9 of the Settlement Commission Procedure Rules, 1997 (hereinafter referred to as 'the rules') after the Settlement Commission allowed the application to be further proceeded with under sub-section (2D) of section 245D of the Act, the Assessing Officer had proposed the following additions: Asst. Yr. Amount of addition Nature of addition 2004-05 1,51,50,052 Unexplained Capital Introduced 3,35,477 Unexplained Purchases @25% 1,29,328 Disallowance of administrative expenses @ 10% 12,94,622 Disallowance of interest on capital 2,07,498 Disallowance of trading expenses @ 5% Total 1,71,16,977/- 4.The respondent - applicant gave its comments to the contents of the above report by a reply as contemplated under rule 9....
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....er the Settlement Commission allowed the application to be proceeded further under subsection (2D) of section 245D of the Act, the Assessing Officer had proposed the following additions: Asst. Yr. Amount of addition Nature of addition 2004-05 1,12,06,467 Unexplained Capital Introduced 3,69,690 Unexplained Purchases @25% 1,21,413 Disallowance of administrative expenses @ 10% 10,11,348 Disallowance of interest on capital 1,94,664 Disallowance of trading expenses @ 5% Total 1,29,03,582/- 6. On 27.11.2017, the respondent - applicant gave its comments to the contents of the above report by a reply as contemplated under rule 9A of the rules, wherein it had dealt with additions proposed by the Assessing Officer as follows: 6.1 As regards addition of Rs. 1,12,06,467/- to partner's capital constituting introduction of capital, crediting of salary, interest and profit in capital account, it was pointed out that such amount had been duly considered in the combined cash flow of Shri M.D. Patel and the settlement petition of the group. The details of addition to capital account of Rs. 1,5....
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....viz. Rs. 2,07,498/- in case of M/s. Shreyansh Corporation and Rs. 1,94,644/- in case of M/s. Samarth India. 9. Taking into account all facts and discussions on record, the Settlement Commission was of the view that the additional income offered during section 245D(4) proceedings vide the applicant's letter dated 8.6.2018 added to the additional income disclosed in the settlement applications can be accepted with reference to the income disclosed in the settlement applications. It further noted that the CIT (DR) and the Assessing Officer also did not make any further submissions. The Settlement Commission accordingly, settled the cases of the respondents/applicants on the terms and conditions set out in the impugned order. Being aggrieved, the petitioner has filed the present petitions. 10. From the submissions made on behalf of the petitioner, it appears that it is these amounts of Rs. 2,07,498/- and Rs. 1,94,644/- which the respondents/applicants had offered to put an end to the issue and to buy peace of mind and which came to be accepted by the Settlement Commission, which form the core of the dispute in the present petitions. 11. Mr. Nikunt Raval, learned counsel fo....
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....ions that the validity of the impugned order passed by the Settlement Commission is required to be examined. On a perusal of the impugned order, it can be seen that the Settlement Commission has considered the additions proposed by the Assessing Officer and the explanation given by the respondents/ applicants and has been satisfied with such explanation. Insofar as the addition on account of unexplained capital introduced is concerned, the authorised representative had also explained that the capital so introduced had been duly considered in the combined cash flow of Shri Mohan D. Patel and that all payments and receipts of the 154 parties (the two applicants being one of them) has been included in the cash flow of Shri Mohan D. Patel which formed the basis of the settlement application filed by him. In this regard, the Settlement Commission has considered the fact that the applicants had submitted affidavits on the same lines as submitted by its group members which were accepted by the department, based on which those petitions were disposed of vide order dated 8.11.2017 passed under section 245D(4) of the Act. Moreover, the applicants had also submitted that if at any stage these....
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....Act cannot be said to be disclosure of any further amounts under that section as the same have been offered only to bring about a settlement. The fact that the applicants have offered to pay such amounts, the liability whereof has not been accepted by them, cannot be termed as non-disclosure of full and true facts in the applications under section 245C of the Act. Under the circumstances, considering the amounts so offered by way of settlement which are quite meagre considering the overall disclosure made, this court does not find any infirmity in the impugned order passed by the Settlement Commission warranting interference in exercise of powers under article 226 of the Constitution of India. 16. The decision of this court in the case of Shree Nilkanth Developers (supra) would not be applicable to the facts of the present case, inasmuch as in the facts of that case as well as in the case before the Supreme Court in Ajmera Housing Corporation v. CIT, (2010) 326 ITR 642, which finds reference therein, there were revised disclosures which were drastic in nature as compared to the initial disclosure made in the applications for settlement. The Supreme Court has frowned upon any rev....