TaxTMI 
TaxTMI 
2025 (6) TMI 1226
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.... laser treatment and aesthetic medicine. The other appellant is Mr.M.Vedamurthy, who is husband of Dr. Maya Vedamurthy. Both of them are partners in the Firm by name M/s.RSV Skin and Laser Centre, which is the third appellant. The Firm has been operational with effect from the assessment year 2015-2016. 3. A search under Section 132 of the Income Tax Act, 1961 (the Act) was conducted on 1 st March, 2018 at the business premises as well as the residence of the three appellants. Incriminating documents, such as books, diaries, folders, loose sheets, etc., were seized at the time of search. The search indicated investment in immovable property to the tune of Rs. 7,35,00,000/- made from the partnership Firm. Sworn statements of two partners as well as the Accountant one Mr.Nirmal Nareshkumar was also taken during search. Substantial cash and gold bullion were also found. 4. The three appellants filed settlement applications in Form 34B under Section 245C of the Act on 27th December, 2019. These were allowed to be proceeded with by the Income Tax Settlement Commission (ITSC) vide a consolidated order dated 9th January, 2020 under Section 245D(1) of the Act. The year-wise details o....
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....d in the return of income filed for the A.Y. 2018-19 for both the applicant as well as Dr. Maya Vedamurthy. This is very strange because all along the applicant has been stating that from A.Y. 2015-16, the income of the clinic has been offered in the applicant Firm and not in the hands of Dr. Maya Vedamurthy. On being questioned during the hearing, the applicant had no answer to justify this claim and thus it is clear that this income of Rs. 3.06 Crores clearly evidenced from the impounded documents has not been offered by the applicant. (b) As regards the balance of Rs. 2.50 Crores of discrepancy found in the fee receipts, the applicant has simply stated that it is covered under the total disclosure without justifying how and where. During the hearing, when the A.R. was questioned on the same, he could not justify this exclusion and simply stated that there are expenses against this income without giving any supporting proof or giving any cogent reason. (iii) Mr.M.Vedamurthy: Against the unaccounted income of Rs. 1.67 Crores found during the search, the applicant has claimed 30% of expenses. The said income is stated to be unaccounted commission from pathology. T....
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....(4) of Section 245D. For better appreciation, these two sub-Sections are quoted hereinbelow:- "Section 245D(2C):- Where a report of the [Principal Commissioner or] Commissioner called for under sub-section (2B) has been furnished within the period specified therein, the Settlement Commission may, on the basis of the report and within a period of fifteen days of the receipt of the report, by an order in writing, declare the application in question as invalid, and shall send the copy of such order to the applicant and the [Principal Commissioner or] Commissioner: Provided that an application shall not be declared invalid unless an opportunity has been given to the applicant of being heard: Provided further that where the [Principal Commissioner] Commissioner has not furnished the report within the aforesaid period, the Settlement Commission shall proceed further in the matter without the report of the [Principal Commissioner or ] Commissioner. Section 245D(4):- (4) After examination of the records and the report of the [Principal Commissioner or] Commissioner, if any, received under- (i) sub-section (2B) or sub-section (3....
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....volved, where there is fraudulent practice adopted, the assessee's approach the Commission. Even in those cases, if the Commission allows an application to be proceeded with under Section 245D(1), yet upon receipt of the report, the application can be declared invalid under sub-Section (2C) of Section 245D. In fact, the decision in Abdul Rahim (supra) is one such case. 19. We have referred to the four issues, which the applicant wanted to be settled by the Commission, which have been stated above and, the first among the four issues is with regard to the income earned from offshore supply of goods. The Commission was largely guided by the report of the CIT, who reported that the composite contract of offshore and onshore services are artificial bifurcated. The Settlement Commission held that the contention of the 1st respondent/writ petitioner that it is not a composite and it was a separate composite and the same was done by NTPC was held to be not fully true. In other words, the Settlement Commission appears to have accepted the fact that the contracts were bifurcated by NTPC, the entity which invited the tender, but the Commission would state that the bifurcation done b....
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.... hearing and any further evidence as may be placed before it by the applicant or obtained by the Settlement Commission in exercise of its power and then proceed to pass orders as it deems fit. Therefore, the procedure at the (2C) stage is undoubtedly summary in nature and the application filed by the 1 st respondent/writ petitioner could not have been declared as invalid at the said stage, as the issue requires adjudication, which can be done only when the application is decided under Section 245D(4) of the Act." 10. In a similar matter, in Principal Commissioner of Income-tax (Central) v. Settlement Commission [2016] 65 taxmann.com 309 (Gujarat) also the Court held that question of fulfillment of all material requirements of a valid application for settlement would be still open for the Commission to examine before further inquiry under sub-section (3) of Section 245D of the Act and passing final order under sub-section (4) of Section 245D of the Act. That was a case where the Department went to the High Court challenging the decision of the Settlement Commission to move to the next stage under sub-section (3) of Section 245D. According to the Department, the application for se....
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....o right to revise an application under section 245C(1) of the Act and further that such revised annexure making further disclosure of undisclosed income alone was sufficient to establish that the initial application made by the assessee could not be entertained as it did not contain true and full disclosure of the undisclosed income and the manner in which such income had been derived." ...... 7. In the said judgment, as reproduced in para 13, the counsel for the assessee had not contended that once the application has been proceeded with under section 245D(1) and has not been held to be invalid under section 245D(2C), the validity of the same in terms of the requisite conditions stipulated in section 245C(1) cannot be gone into at the subsequent stages up to the passing of the order under section 245D(4) of the Act. Same is the situation in the present case. We record the contention of the counsel for the assessee that despite the orders being passed by the Settlement Commission under subsection (1) of section 245D and section 245D(2C) of the Act, the question of fulfilment of all material requirements of a valid application for settlement would be still open for....
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....on a plain reading of the provisions, it is apparent that the submission made by the learned counsel for the respondents 2 to 5 merits acceptance insofar as it was contended by him that the entire issue remains open and at any stage of the proceedings till the order under Section 245D(4) is passed by the Settlement Commission, the issue with regard to full and true disclosure and the manner in which the undisclosed income had been derived would be open and can be raised by the Revenue. In fact, it was clarified by the learned counsel for the respondents 2 to 5 that the said respondents do not even contend that once an application has been proceeded with under Section 245D(1) and has not been held to be invalid under Section 245D(2C), the validity of the same in terms of the requisite conditions stipulated in Section 245C(1) cannot be gone into at the subsequent stages up to the passing of the order under Section 245D(4) of the said Act." 12. Here, in this case, each of the appellants have disclosed the receipt and also offered part of the receipt as income by claiming the remaining as expenses. This is the situation where a deeper probe into the factual scenario is required. In ....