TaxTMI 
TaxTMI 
2025 (1) TMI 275
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....consideration, the Assessee has paid Rs. 51,00,000/- in cash over and above the sale consideration and has not declared the same in the sale deed and therefore in order to verify vide notice dated 01.03.2022, the Assessee was show caused to explain as to why on money paid to M/s. Indiabulls Infra Society Pvt. Ltd. for purchase of the aforesaid property, should not be added back to the total income of the Assessee. 3. The Assessee objected to the allegations by contending that no such payments have been made by the Assessee in cash to the builder. 4. The AO though considered the claim of the Assessee, however, not found the same as acceptable and on considering the peculiar facts and circumstances of the case ultimately added the amount of Rs. 51,00,000/- in the income of the Assessee by treating it as unexplained money under the provisions of section 69A of the Act by observing and holding as under: "A search and seizure operation was conducted on M/s. Indiabulls group of entities u/s 132 of the Act on 13.07.2016. In pursuance to which the M/s. Indiabulls Infra Society Ltd. filed a settlement application u/s 254(1) of the Act on 03.10.2017 disclosing certain addition....
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....of his claim also relied on various judgments passed by the various Hon'ble Courts". 7. On the contrary, the Ld. D.R. vehemently relied on the orders passed by the authorities below. Further, the Ld. D.R. submitted that admittedly in the instant case M/s. Indiabulls Infra Society Ltd. has filed one letter as reproduced by the AO, wherein the amount of Rs. 51,00,000/- has been shown as receipt of onmoney. Therefore, the addition made by the AO as affirmed by the Ld. Commissioner is labile to affirmed by dismissing the appeal of the Assessee, as the impugned order does not require any interference. 8. Having heard the parties and perusing the material available on record and giving thoughtful consideration to the rival claims of of the parties following questions emerge: (i) "Whether the statement/document made by/received from third party can be relied on making the addition, without giving an opportunity to contradict the same and/or the opportunity to cross examine the person who gave the statement/document". (ii) "Whether the suo-moto disclosure made before the Settlement Commission without corroborative material /evidence can be made base for making the a....
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....f the considered view that the statement/document made by/received from third party cannot be relied on making the addition, without giving an opportunity to contradict the same and/or the opportunity to cross examine the person who gave the statement/document. Thus, the question no. 1 is answered accordingly. 8.5 Coming to the second question "Whether the suo-moto disclosure made before the Settlement Commission can be made base for making the addition", we observe that Hon'ble Co-ordinate Bench of the Tribunal in the case of Late Shri Sawarmal Hisaria vs. Dy. Commissioner of Income Tax, Circle-2(4) ITA No.274/M/2021 decided on 05.04.2022 has dealt with the identical issue, wherein the disclosure made by the Assessee before Income Tax Settlement Commission (in short "the ITSC") was taken into consideration for making the addition. However, the tribunal did not approve such addition. 8.6 The Co-ordinate Bench of the Tribunal in the case ACIT vs. Smt. Renu Sehgal in ITA No.837/JP/2018 decided on 19.08.2019 has also dealt with the identical issue wherein the income was offered by making disclosure statement before the ITSC. The Tribunal by considering and following various judg....
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....addition can be made. The Hon'ble Gujarat High Court in the case of Commissioner vs. Maruti Fabrics 47 Taxmann.com 297 has held that whatever material is produced along with application by the assessee before Settlement Commission or result of inquiry held or evidence recorded by the Settlement Commission in course of proceedings before it can be used by the adjudicating authority as if same had been produced before such Central Excise Officer. Once application or proceedings before Settlement Commission fails, Central Excise Officer is required to adjudicate entire proceedings and show cause notice and Hon'ble Gujarat High Court has held as under: "Considering sub-section (2) of section 32L of the Act, in a case where an order is passed by the Settlement Commission under sub-section (1) of section 32L and thereafter adjudicating authority is required to adjudicate the case, the Central Excise Officer shall be entitled to use all the materials and other information produced by the assessee before the Settlement Commission or the result of inquiry held or evidence recorded by the Settlement Commission in the course of the proceedings before it as if such materials, informat....
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.... Central Excise Settlement Commission. This section is similar to section 245F of the Income Tax Act. Section 32L gives the powers of the Settlement Commission to send the case back to the Central Excise Officer. Section 32L reads as under: "32L(1) The Settlement Commission may, if it is of opinion that any person who made an application for settlement under section 32E has not co-operated with the Settlement Commission in the proceedings before it, send the case back to the Central Excise Officer having jurisdiction who shall thereupon dispose of the case in accordance with provisions of the Act as if no application under section 32E had been made. 32L(2) For the purpose of sub-section (1), the Central Excise Officer shall be entitled to use all the materials and other information produced by the assessee before the Settlement Commission in the course of the proceedings before it as if such materials, information, inquiry and evidence had been produced before such Central Excise Officer or held or recorded by him in the course of the proceedings before him." 15. We find that section 245HA(1) of the income Tax Act lists several circumstances in which the ....
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....exure to the Settlement application could not have been used by the Assessing Officer against the assessee to make the impugned addition. Therefore, the addition to the income made by the Assessing Officer in assessment year 2005-06 which is based only on the disclosure made in the Annexure to the Settlement Commission is not valid in law. Consequently, the imposition of penalty on the basis of such invalid addition cannot be sustained. In view of the above conclusion, we do not wish to go into the other alternate argument of the learned counsel for the assessee regarding abatement of proceedings before Settlement Commission and use of confidential information disclosed by the assessee in such proceedings by the Assessing Officer in making assessment." 18. From the above decision of the Tribunal where they have discussed the section 245C(1) and section 245D(i) and 245HA by following observation: "20. The Finance Act, 2007 made changes to the provisions for settlement of cases contained in Chapter XIX-A of the Income-tax Act 1961. One change involves introduction of a new concept of abatement of proceedings before the Settlement Commission for which provisions has ....
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....s to dispose of the case in accordance with the provisions of the Act as if no application for settlement had been made and for that purpose, it is entitled to use all the material and other information produced by the assessee before the Settlement Commission or the results of the inquiry held or evidence recorded by the Settlement Commission in the course of the proceedings before it." 19. We find from the above proposition of law by Hon'ble Gujarat High Court and Tribunal that simply relying upon the declaration made before the Settlement Commission no addition can be made. In this group case, the search was conducted in the business premises of Lodha Group and subsequent to search action assessee company along with other companies of Lodha Group filed a petition under section 245C(1) of the Act before Settlement Commission. The assessee has offered additional income of Rs. 5 lakhs towards the land brokerage income. This offer was made for maintainability of petition before Settlement Commission as stated in clause (i) and clause (ia) of section 245C(1) of the Act. We are of the view that after reopening of the assessment order no addition can be made on the basis of in....