Madras High Court
M/S.Lion Dates Impex (P) Ltd vs The Chairman on 3 September, 2021
Author: S.M.Subramaniam
Bench: S.M.Subramaniam
W.P. No.36950 of 2016
and
W.M.P.Nos.31747 & 31748 of 2016
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated: 03.09.2021
CORAM:
THE HON'BLE MR. JUSTICE S.M.SUBRAMANIAM
W.P. No.36950 of 2016
and
W.M.P.Nos.31747 & 31748 of 2016
M/s.Lion Dates Impex (P) Ltd.,
No.4, Sterling Road, Nungambakkam,
Chennai – 600 034,
Rep.by its Managing Director P.Ponnudurai
.. Petitioner
Vs
1.The Chairman,
Income Tax Settlement Commission,
Principal Bench, New Delhi.
2.Income Tax Settlement Commission,
Additional Bench, 640, Anna Salai,
Chennai – 35.
3.Principal Commissioner of Income Tax,
Central – II, Chennai – 600 034.
4.The Assistant Commissioner of Income Tax (AO),
Central Circle-I, Trichy. .. Respondents
PRAYER: This Writ Petition is filed under Article 226 of the
Constitution of India, praying to issue a writ of Certiorarified Mandamus
calling for the records relating to the order of the 2nd respondent made in
Settlement Application Nos.TN/CN52/2014-15/57/IT dated 30.09.2016
https://www.mhc.tn.gov.in/judis/
1/26
W.P. No.36950 of 2016
and
W.M.P.Nos.31747 & 31748 of 2016
and quash the same and consequently direct the 1st respondent to
constitute a Special Bench under Section 245BA (5) of Income Tax Act,
1961 to hear the petitioner's Settlement Application dated 02.03.2015
uninfluenced by the findings of the impugned order of the 2nd respondent
dated 30.09.2016 and forbearing the 4th respondent from proceeding
further with Assessment Proceedings in pursuance to the Assessment
Notices dated 03.10.2016, 05.10.2016 & 06.10.2016 issued under
Section 142 (1) of r/w Section 129 of Income Tax Act, 1961 in respect of
the petitioner's assessment for Assessment Years 2007-08 to 2014-15.
For Petitioner : Mr.Palani Selvaraj
for Mr.R.G.Narendhiran
For Respondents : Mr.A.P.Srinivas
Senior Standing Counsel for IT
ORDER
The lis on hand is instituted challenging the order passed by the Income Tax Settlement Commission on 30.09.2016 and further relief is sought for forbearing the fourth respondent from proceeding with the Assessment proceedings.
2.The petitioner is a company engaged in the business of purchase and sales of dates, oats and honey and the manufacture of syrups, jams and squash. The petitioner’s brand ‘Lion’ is well known https://www.mhc.tn.gov.in/judis/ 2/26 W.P. No.36950 of 2016 and W.M.P.Nos.31747 & 31748 of 2016 brand in the retail dates market in India. The main business of the petitioner is of dealing in dates, which are mainly imported from Middle East, largely from Oman, while purchases are also made from the Mumbai market. The imported dates are stored in cold storage immediately at the receiving station. After clearing, they are transported to the processing and manufacturing units at various places for cleaning, sorting, deseeding and packing. The packed dates are stored and delivered to the various centers in the country for supply to the market.
The factory and processing units of the petitioner are situated at various places. The petitioner claims that from April 2011, the petitioner has started manufacture of dates, syrups and jams at its dedicated international standards unit situated at Ward-A, Block 6, T.S.No.21, Kallanai Road, Devadanam Village, Trichy Taluk, and more than thousand workers are employed for these purposes.
3.The learned counsel appearing on behalf of the petitioner contended that the Income Tax Settlement Commission rejected the application filed by the petitioner under Section 245C of the Income Tax Act, as not maintainable and thus, the petitioner is constrained to move the present Writ Petition.
https://www.mhc.tn.gov.in/judis/ 3/26 W.P. No.36950 of 2016 and W.M.P.Nos.31747 & 31748 of 2016
4.It is contended that the petitioner was not provided with an opportunity to defend their case on several stages and therefore, the impugned order is in violation of the principles of natural justice. The petitioner raised a ground of bias in this Writ Petition. However, such an official bias was not raised before the Settlement Commission. The petitioner states that the Settlement Commission has violated the circular issued by the CBDT on the Revenue. Despite the fact that the said circular is binding, valuation of assets and buildings estimated by the petitioner has not taken into consideration by the Settlement Commission, even after filing of additional documents before the Commission. The deliberation made by the Settlement Commission with reference to Section 80IB of the Income Tax Act was also improper. For all these reasons, the impugned order passed by the Settlement Commission is liable to be set aside.
5.The learned counsel for the petitioner drawn the attention of this Court with reference to the disputed facts which all are raised between the parties. One hand, it is submitted that the petitioner has filed an application with true and full disclosure of Income and further https://www.mhc.tn.gov.in/judis/ 4/26 W.P. No.36950 of 2016 and W.M.P.Nos.31747 & 31748 of 2016 submitted application declaring additional income. The petitioner clarified the doubts raised by the Settlement Commission and participated in the adjudicatory process. Inspite of the co-operation extended by the petitioner, the Settlement Commission, rejected the applications as not maintainable, on the ground that the petitioner has not disclosed all the material facts fully and truly in order to substantiate and the petitioner has stated that the details regarding the investments, profits and loss and other Books of Accounts were submitted before the Income Tax Settlement Commission.
6.It is contended that the Director General of Income Tax (Investigation), took charge as Vice-Chairman subsequent to the search conducted in the premises on 17.07.2013. Thus, the subsequent proceedings based on the search operations were initiated within the knowledge of the Vice-Chairman of the Income Tax Settlement Commission and the Administrative circulars and directions were also made with his knowledge. Thus, there was an official bias and on that ground also the impugned order is liable to be set aside. In order to establish the ground regarding violation of principles of natural justice, the petitioner has stated that the last report was submitted on 29.09.2016 https://www.mhc.tn.gov.in/judis/ 5/26 W.P. No.36950 of 2016 and W.M.P.Nos.31747 & 31748 of 2016 after filing of written submission by the petitioner and therefore, he has not provided further opportunity to make his submissions on the said Report. The CBDT Circular dated 18.12.2014 in relation to admissions of undisclosed Income under coercion/pressure during search/survey, the Board issued guidelines and directed to convey that any instance of undue influence/coercion in the recording of the statement during search/survey/other proceedings under IT Act, 1961 and / or recording a disclosure of undisclosed income under pressure/coercion shall be viewed by the Board adversely. The said circular has not been followed scrupulously by the Authorities Competent. The petitioner filed an application under Section 245C before the Commission. Subsequent to the search conducted in the premises, the petitioner approached the Settlement Commission with an intention to settle the issues. He made full and true disclosure in respect of the materials and inspite of that the application was rejected as not maintainable.
7.The learned counsel for the petitioner has stated that dates and date syrup are not different products is purely a legal issue could be decided by the Courts. In this regard, the petitioner has stated that they have not involved in any manufacturing process and they have imported https://www.mhc.tn.gov.in/judis/ 6/26 W.P. No.36950 of 2016 and W.M.P.Nos.31747 & 31748 of 2016 initially the dates syrup and packed the syrup and supplied in the retail market. Therefore, the findings with reference to Section 80IB made by the respondent are not in consonance with the provisions of the Income Tax Act. The facts, in this regard has established by the petitioner were not considered. The petitioner purchased the equipments for producing dates, syrup and jam with an investment of Rs.2.84 Crores. Subsequently, the old unit using conventional process was dismantled and the new unit was brought into existence in March, 2011 when trial production was started after pertaining central excise registration on 14.03.2011.
Therefore, these facts established through documents were not considered by the Settlement Commission and the application was rejected merely on the ground that the petitioner has not disclosed the material facts fully and truly.
8.The learned Senior Standing Counsel objected the contentions raised on behalf of the petitioner by stating that the powers of the Settlement Commission and the scope of settling the issues between the assessee and the Department are clearly enumerated under the provisions of the Income Tax Act. Once the settlement Commission could able to arrive a conclusion that the assessee has not disclosed all https://www.mhc.tn.gov.in/judis/ 7/26 W.P. No.36950 of 2016 and W.M.P.Nos.31747 & 31748 of 2016 material facts fully and truly, then a petition for settlement under Section 247 (1) of the Income Tax Act is not maintainable at all. The findings in this regard made in the impugned order would reveal that the petitioner has not only suppressed certain facts but not produced all the materials truly and fully. Whenever, the Department confronted with the assessee, he made declaration in piecemeal and therefore, the Settlement Commission arrived a conclusion that the issues cannot be settled and accordingly, rejected the application as not maintainable. Thus, there is no infirmity as such in respect of the order passed by the Settlement Commission.
9.Considering the arguments as advanced by the respective learned counsel appearing on behalf of the parties to the lis, this Court is of the considered opinion that the provision for settlement is an enabling provision to settle the dispute between the parties. Therefore, law expects that the parties, who are approaching the Settlement Commission by way of application, must disclose full and true income in the event of any difference or confrontation in this regard such an application for settlement cannot be entertained. Contrarily, the Assessing Officer must be permitted to make regular assessment of income under Section 153A https://www.mhc.tn.gov.in/judis/ 8/26 W.P. No.36950 of 2016 and W.M.P.Nos.31747 & 31748 of 2016 of the Act. It is further contended that the differential amount of income is crossing Rs.25 Crores and all these facts were placed before the Settlement Commission by the Department. In this regard, it is contended that the Settlement Commission has committed an error in adopting the decision making process, as the process adopted is totally in contravention to the facts and circumstances established by the Department and further, such facts and circumstances are not correlating with the application filed by the assessee under Section 245C of the Act.
When there are discrepancies and doubt arises with regard to the true and full disclosure of income, then the natural course of action would be that the Assessing Officer must be permitted to make a regular assessment under Section 153A of the Act and settlement cannot be arrived under doubtful circumstances. In such circumstances, settlements are impermissible and cannot be construed as settlement at all.
10. The very concept of settlement is depending on the mutual consensus and in the absence of element of mutual consensus between the parties, the settlement by the Settlement Commission cannot be unilateral and in such an event, Settlement Commission is usurping the powers of the Assessing Officer under other provisions of the Act. In https://www.mhc.tn.gov.in/judis/ 9/26 W.P. No.36950 of 2016 and W.M.P.Nos.31747 & 31748 of 2016 other words, every authority under the Income Tax Act, 1961 is expected to exercise the powers as contemplated.
11. The question of exercise of excessive powers or jurisdiction would arise, if the authority made an attempt to travel beyond the scope of the provision under which, such powers are conferred to a particular authority. In the instant case, the power of the Settlement Commission is well enumerated under Section 245C and 245D of the Act. The manner in which settlement is to be arrived is also contemplated under the Act. Certain pre-conditions are also stipulated.
Thus, the Settlement Commission cannot enter into the venture of assessment, which is the power of an Assessing Officer under Section 153A of the Act. Therefore, this Court is of an opinion that in the absence of any true and full disclosure, the Settlement Commission cannot go beyond the scope of Section 245C of the Act and adjudicate the additional income found by the Department during seizure, which is admittedly not disclosed in the application filed at the first instance by the assessee.
https://www.mhc.tn.gov.in/judis/ 10/26 W.P. No.36950 of 2016 and W.M.P.Nos.31747 & 31748 of 2016
12.It is not in dispute that for entertaining an application for settlement under Section 245C of the Income Tax Act, the assessee must disclose true and full income enabling the Commission to settle the issues. If any non-disclosure is identified during the course of proceedings, that itself is sufficient to reject the application as not maintainable. The Commission is not empowered to proceed further as in the event of identifying non-disclosure of income, since the Assessing Officer is the Authority to proceed with reassessment. In the present case, action has been initiated under Section 147 & 148 of the Act.
13.Therefore, this Court has to primarily find out whether the application filed by the petitioner under Section 147 (C) of the Act is entertainable or not with reference to the conditions stipulated in the provision itself. Once it is found that the application is entertainable then alone the question of adjudication of further merits would arise.
Therefore, other grounds raised on merits are to be considered only if the application before the Settlement Commission is maintainable.
14.In this regard, it is relevant to consider the findings of the Settlement Commission in its order and the Settlement Commission https://www.mhc.tn.gov.in/judis/ 11/26 W.P. No.36950 of 2016 and W.M.P.Nos.31747 & 31748 of 2016 considered the following issues, which reads as under:
“6.0. In the SOF, the Applicant has made the following prayers:
a) To settle the total income offered in respect of Ays 2007 – 08 to 2014 – 15 on the basis of the disclosures made and to determine the consequential tax and interest chargeable thereon under the Income Tax Act, 1961.
b) To allow the telescoping and capitalization of the income offered.
c) To grant waiver of interest leviable under the Income Tax Act, 1961.
d) To grant waiver of penalty under the I.T.Act in terms of section 245H.
e) To grant immunity from prosecution in terms of section 245H.” 7.1. Serious issues cropped up in this case. The main issue that arose for consideration is whether the methodology adopted by the applicant to disclose income in the application is correct or not. Claim of 80IB deduction is another bone of contention Additional claim of depreciation on account of capitalisation, based on self-serving valuation reports was another major problem. Applicant stated that for two A.Ys 2012-13 and 2013-14 the returns are to be accepted in 115JB without any alteration in view of the judgment of the apex court in the case of Apollo Tyres. Adding back of depreciation or adding back unexplained investment etc. are https://www.mhc.tn.gov.in/judis/ 12/26 W.P. No.36950 of 2016 and W.M.P.Nos.31747 & 31748 of 2016 difficult. These issues are discussed below and findings given as to the fact whether the fact whether the applicant disclosed full and true income or not.
7.2.The applicant commenced his business in the year 2000. It was processing and selling dates: According to para 3 of the application, after cleaning deseeding and packing the product was stored and marketed. The applicant is involved in the business of processing, preservation and packaging of dates (fruit). It has also cold storage facility. According to the seized material enclosed to the AO's report dated 19.09.2016 it was involved in FYs 2007-08 & 2008-09 in syrup production. These documents are enclosed in pages 70 to 79 of this order. It has also disclosed the expenditure under the head Machinery Maintenance in syrup unit in these two Asst years. This is seen as per the seized material. The applicant admits that it was involved in syrup production earlier but it was discontinued in the intervening two years and again started from March 2011.
The applicant claimed nearly Rs.55 Crores of Sec.80IB(11A) deduction for the AYs.2012-13, 2013-14 and 2014-15. The Department objected to this claim. Detailed report of the AO was enclosed by the C.I.T. Sec.80IB(11A) reads as follows:
Section 80IB(11A):
[(11A) The amount of deduction in a case of [an https://www.mhc.tn.gov.in/judis/ 13/26 W.P. No.36950 of 2016 and W.M.P.Nos.31747 & 31748 of 2016 undertaking deriving profit from the business of processing, preservation and packaging of fruits or vegetables or [meat and meat products or poultry or marine or dairy products or] from] the integrated business of handling, storage and transportation of foodgrains, shall be hundred per cent of the profits and gains derived from such undertaking for five assessment years beginning with the initial assessment year and thereafter, twenty-five per cent (or thirty per cent where the assessee is a company) of the profits and gains derived from the operation of such business in a manner that the total period of deduction does not exceed ten consecutive assessment years and subject to fulfilment of the condition that it begins to operate such business on or after the 1st day of April, 2001;] [Provided that the provisions of this section shall not apply to an undertaking engaged in the business of processing, preservation and packaging of meat or meat products or poultry or marine or dairy products if it begins to operate such business before the 1st day of April, 2009.]” 7.3.According to Sec.80IC(11A) once an assessee in involved in the processing preservation and packaging of fruits or vegetables, he can claim deduction u/s 80IB. The AR pointed out that with respect to processing of dates, the applicant was involved in the business from 2001 onwards and with respect to processing of dates and syrup production, https://www.mhc.tn.gov.in/judis/ 14/26 W.P. No.36950 of 2016 and W.M.P.Nos.31747 & 31748 of 2016 the applicant was involved in business from FY 2007-08 (AY 2008-09) to the extent evidence is available. It may be that even earlier, the applicant was involved in import and packaging of syrup. Thus the claim that new unit was started only in FY 2011-12 (AY 2012-13) is not factually correct.
7.9.1.There is no separate unit that has been started in the A.Yr.2012-13 to make any claim. It is only one or two other machinery that was added. In fact, production of syrup was shown in the profit and loss account for the A.Yr.2008-
2009 & 2009-2010 itself. Even the maintenance on the machinery relating to syrup unit, expenditure was claimed in the profit and loss account. Thus, according to the CIT, the unit was started long back and business activities were continued since several years because processing and packing was involved. Hence, this cannot be the first year or initial year. Moreover, there was a lull or stoppage of activity in the A.Yr. 2010-11 & 2011-12 and again in the month of March, 2011, there was production. The A.R states it was trial production. The applicant's claims that only imported syrup was available as on 01.04.2011 is correct/false. In the order sheet noting as per the paper book of CIT dt. 29.09.2015 at page-13, it is admitted by the applicant that stock was produced in the month March, 2011. Hence, even in the past years i.e.-A.Y2011-2012 and earlier, there was production from out of the machinery in the factory. Moreover, imported syrup was being processed and https://www.mhc.tn.gov.in/judis/ 15/26 W.P. No.36950 of 2016 and W.M.P.Nos.31747 & 31748 of 2016 packaged and sold for the past five years. According to the Section, the commencement of the production is not the criteria but is is the commencement of business that is the criteria. The business was already being carried on since few years and this cannot be denied. The unit was in existence and the addition of new machinery of Rs.2.8 crores cannot be said to form a new unit.
7.9.2.It appears that the applicant while filing the Excise returns under the new amended provisions thought of this idea to claim 80IB deduction under I.T.Act. This is not sufficient in order to claim 80IB deduction. The applicant itself pointed out the amended provisions in the Exice Act according to which even on the packaged products excise duty was to be paid. This is referred above. IT is admitted that there is no raw materials/production register except for the excise record.
7.9.5.No additional staff were employed and there was no additional registration for the purposes of EPF/ESI etc. It is the same staff that were continued in the same premise Depreciation of building is not identified and separately debited to Sec. 80IB unit as against other unit. According to CIT vs Essar Bulk Carriers, 238 ITR 186 (Mad), separate trading profit and loss account and balance sheet has to be filed for the purpose of Sec.80IB units. Once this is not complied with the applicant is not eligible for this claim.
https://www.mhc.tn.gov.in/judis/ 16/26 W.P. No.36950 of 2016 and W.M.P.Nos.31747 & 31748 of 2016 7.9.6.When this was all pointed out by the CIT, the applicant filed a fresh paper book calling back depreciation and adding back certain other expenditures as taxable. The following is the additional income offered as per the latest APB filed on 29.09.2016 which is enclosed in pages 80 to 94 of this order claim of deduction u/s.80IB on that portion Depreciation syrup machinery, wrongly claimed against taxable income now offered:
A.Y. 2012-13. - Rs.39,09,583 A.Y. 2013-14. - Rs.33,23,146 A.Y. 2014-15. - Rs.28,24,674 **Depreciation of Rs.24,31,944 /- was also added back in AY 2011-12 on syrup unit.
Additional income offered on account of disallowance of expenses allocated to 80IB Unit;
A.Y. 2012-13 - Rs.5,45,00,000
A.Y. 2013-14 - Rs.3,60,00,000
A.Y. 2014-15 - Rs.3,02,00,000
7.9.7.The applicant, when pointed out the defects in accounts and also the fact that around 54% of net profit was declared in the 80IB unit as against 12% int eh regular business which was abnormal, sought to correct the claims made. Fundamentally, the department objects to this type of apportionment and it stated that separate books of account ought to have been maintained. It is only on the last day of hearing just one day before the time barring date that such https://www.mhc.tn.gov.in/judis/ 17/26 W.P. No.36950 of 2016 and W.M.P.Nos.31747 & 31748 of 2016 huge additional income is sought to be disclosed. According to the section 80IB(11A) and rule 18BBB, the return shall be accompanied by the Profit and Loss Account and Balance Sheet of the undertaking or enterprise as if the undertaking or the enterprise were a distinct entity. It is clearly seen that in the case of the applicant this condition is not fulfilled. The adhoc apportionment made is not acceptable. Moreover, the unit is not a new unit. Just because there is a change in Excise law the applicant cannot change its mind and claim this benefit. There was production even in the earlier years and there was business of processing and packaging of dates and also syrup even in the earlier years. For once of the years, the return is filed belatedly and as per the judgment of the Supreme Court referred to by the AR this Commission has no power to take action u/s. 119 Sec 80AC is applicable.
7.9.8.Thus it is clearly seen that on account of 80IB deduction, figures that were submitted are being altered after the department pointed out the same. In all, the applicant withdrew Rs.12.07 crores for the 3A.Ys and disclosed it as additional income on account of withdrawal of deduction u/s.80IB to that extent. Thus on the same facts, additional income is disclosed now before the Commissioner at the last stage when confronted by the department. The Department cited the case of Major Metals Limited vs. Union of India 19 Taxmann.Com 176(Bombay) to state that penalty ought to be levied since the applicant is making disclosure in instalments.
https://www.mhc.tn.gov.in/judis/ 18/26 W.P. No.36950 of 2016 and W.M.P.Nos.31747 & 31748 of 2016 7.9.10.Above all, it was clearly pointed out to the applicant that u/s. 80IB benefit can be claimed only when the output was fruit or vegetable and no other product. When this was point out, the AR admitted on 26.09.2016 that Sec. 80IB (3) is only applicable and not Sec. 80A(11A). He requested that relief be given u/s. 80IB(3). The production of syrup or jam amounts to a different product though there is processing involved. Sec. 80IB(3) is no longer in operation. However, in the hearing on 29.09.2016 he stated that in view of Advance Ruling in the case of M/s. Delna Rustom 380 ITR 455 they are eligible for the benefit. The CIT (DR) pointed out that Advance Ruling is not binding on the Department. CIT(DR) referred to the decision in the following case laws:
(i) Decision of Bombay ITAT(J) Bench in the case of ITO-
19(3)4 Vs. Shri Shankar K. Bhanage in 3216 & 3217 / Mumbai/2010.
(ii) Decision of Madras ITAT(D) Bench in the case of M/s. Aseptic Fruit Products (India) P. Ltd vs ACIT, Circle (1) dated 30.09.2015 in ITA No. 1136/MDS/2015.
7.9.11.We have given our anxious consideration to this aspect. Whenever there is manufacture / production of article or thing the deduction to be claimed only u/s. 80IB(3). This section is no longer in vogue on account of time limit. It was a conscious decision of the legislature to stop the benefit of Sec. 80IB(3) as it was not extended. A reading of Sec.
https://www.mhc.tn.gov.in/judis/ 19/26 W.P. No.36950 of 2016 and W.M.P.Nos.31747 & 31748 of 2016 80IB(11A) shows that only when processing preservation and packaging of fruits or vegetables are done, the benefit can be claimed. All three activities are to be arrived out and the ultimate product should be fruits or vegetables and not any other product. To this extent, event in terms of language of this section, the applicant is not eligible.
7.9.12.The Settlement Commission can settle matters involving dispute of facts. It cannot lay down principles of law. It is only the High Courts and Supreme Court that are vested with the power of laying down principles of law. Hence, there is difficulty.
7.9.13.Above all, on the basis of findings that, there is no new unit as claimed by the applicant, no separate books of accounts were maintained, no profit and loss account and balance sheets were filed, basic registers such as raw materials / production were not maintained, expenditure were incurred in common with other business activities, depreciation etc. were also not strictly ascertainable and hence the claim of Sec. 80IB(11A) is not valid. There is no case made out to claim deduction u/s. 80IB for all the years. On he belated return no benefit can be extended to the applicant. It is also to be noted that this business activity was commenced long back i.e. in the year 2001 or 2002 according to AR. The applicant was involved in processing and packaging of dates and also packaging of imported syrup. Addition made of just Rs. 2.8 crores on account of machinery https://www.mhc.tn.gov.in/judis/ 20/26 W.P. No.36950 of 2016 and W.M.P.Nos.31747 & 31748 of 2016 out of total machinery of Rs. 7,36,55,743/- cannot be the basis to claim that new unit has been started from 10 CCB shows only machinery of Rs. 1 Crore is used in this unit whereas AR claimed over Rs. 3 Crores of machinery is involved.
7.9.14.One more abnormality is that the profit with respect to Sec. 80IB unit is disclosed at 54% or so whereas in the regular activity it is of the order of 12%. This was starting point for investigation. The applicant itself admitted the mistakes / incorrect claims and filed revised computation on 29.09.2016 just one day before the case gets time barred u/s. 245D(4).
7.9.15.The Department also pointed out that disclosure of additional income of Rs. 26,89,65,826/- in the last hearing would amount to substantive disclosure of additional income after the Department has pointed out that this amounts to concealment. Accordingly, the case of Major Metals would apply.
7.9.16.In view of this, it is clearly seen that the claim u/s. 80IB is not tenable in law as well as on facts. The applicant’s disclosure of additional income to the extent of Rs. 12 Crores on this account is a result of the detection by the Department and is not voluntary. The disclosure made in this regard in the application is to be held as not full and true. The applicant is once again relying its own asset method and valuation report and continues to claim that Rs.
https://www.mhc.tn.gov.in/judis/ 21/26 W.P. No.36950 of 2016 and W.M.P.Nos.31747 & 31748 of 2016 21.66 crores of undisclosed income as invested in depreciable building (fresh construction activity) for which there is no evidence in the seized material. Once again, it is to be seen that the disclosure cannot be considered as full and true because this is not substantiated.
9.5.The valuation reports are not reliable. According to Hon’ble High Court of Delhi in the case of Agson Global (P) Ltd. Vs. ITSC, the powers to refer to 142(2A) order is not available to the Settlement Commission. Hence reference cannot be made to Valuation Cell also. When the department does not have the opportunity to refer to the valuation cell, it is difficult to admit valuer’s report and give relief to the applicant. This anamoly was also pointed out by the CIT (DR).
9.6.In fact, the main discovery in the search action was unearthing of undisclosed purchases which is shown in table below. Instead of disclosing the income based on the inflation of purchases which generated the undisclosed income, the applicant adopted its own methodology to suit its convenience and to claim depreciation.
9.7.The below table gives the undisclosed purchases detected assessment year-wise F.Y./A.Y Bogus bills raised Bogus bills raised Total by Mahalaxmi by Bait Al Tamur enterprises and others (Rs.) (Rs.) 2008-09/2009-10 96,34,201 -- 96,34,201 2009-10/2010-11 2,64,84,500 7,97,54,158 10,62,38, https://www.mhc.tn.gov.in/judis/ 22/26 W.P. No.36950 of 2016 and W.M.P.Nos.31747 & 31748 of 2016 658 2010-11/2011-12 -- 8,75,95,837 8,72,95,8 37 2011-12/2012-13 1,59,02,082 4,88,89,901 6,47,91,9 83 2012-13/2013-14 6,68,866 3,11,27,981 3,17,96,8 47 5,26,89,649 24,70,67,878 29,97,57, 527 When this was pointed out by the Department, a letter with Annexures was filed by the applicant on 29.09.2016 which is enclosed in part, to this order. Herein for A.Yr 2010-11, an amount of Rs. 8,55,03,998 an for A.Yr.2011-12, an amount of Rs. 4,29,17,481, totaling to Rs. 12,84,21,479 is disclosed as additional income on account of inflation of purchases.
9.8.The department clearly argued its case stating that penalty should be levied as per Major Metals Ltd. – Mumbai High Court Judgement. The disclosure earlier made to this extent is not full and true. The applicant cannot disclose additional income in installments.
10.0.On the issue of claim of depreciation, issues relating to other immovable properties such as Anna Nagar, Sterling Road, Kathalur, etc. there is no necessity for us to give any findings as it is already held that the applicant did not disclose full and true income in its application and hence the application is not maintainable. On all other related issue also there is no necessity for us to give a finding as the applicable is being rejected. There is also difficulty with regard to the AYs 2012-13 & 2013-14 as the income is disclosed u/s. 115JB and the modifications cannot be done to https://www.mhc.tn.gov.in/judis/ 23/26 W.P. No.36950 of 2016 and W.M.P.Nos.31747 & 31748 of 2016 the income according to the AR No finding need be given in this regard as application is being rejected as it is not full and true.
11.0.From the above it can clearly be seen that disclosure is not full and true and hence the application is also not maintainable. Reliance is placed in the cases of CIT vs ITSC 310 ITR 10, ACE Investments (2003) 264 ITR 571 (Mad) and Ajmeera Housing (2010) 193 TAXMN 193 (SC).”
15.Close reading of the above findings of the Settlement Commission, would reveal that there are many lapses established on the part of the petitioner / assessee in disclosing all the material facts truly and fully. It is not one instance wherein a doubt raised but on several issues the Settlement Commission could able to identify non-disclosure of material facts on the part of the Assessee. The Commission made a finding that the Assessee disclosed certain income only after the confrontation with the Department Officials. Certain disclosures are made in piecemeal then and to suit their convenience.
16.This being the conduct of the assessee established before the Settlement Commission and the Settlement Commission also categorically made a finding, this Court has no reason to interfere with https://www.mhc.tn.gov.in/judis/ 24/26 W.P. No.36950 of 2016 and W.M.P.Nos.31747 & 31748 of 2016 such findings as the said findings are candid and convincing and in consonance with the provisions of the Income Tax Act.
17.In view of the fact that the application submitted by the petitioner under Section 254C of the Income Tax Act, was rejected as not maintainable in view of the non-compliance of the Mandatory conditions stipulated under the provisions and the petitioner/assessee could not able to establish that he has filed an application with true and full disclosure of facts. Thus, the petitioner is not entitled for any relief as such sought for in the present writ petition.
18.Accordingly, the writ petition stands dismissed. No costs.
Consequently, connected miscellaneous petitions are closed.
03.09.2021 Speaking/Non-speaking order Index: Yes/No Internet: Yes Pns S.M.SUBRAMANIAM, J., https://www.mhc.tn.gov.in/judis/ 25/26 W.P. No.36950 of 2016 and W.M.P.Nos.31747 & 31748 of 2016 Pns To
1.The Chairman, Income Tax Settlement Commission, Principal Bench, New Delhi.
2.Income Tax Settlement Commission, Additional Bench, 640, Anna Salai, Chennai – 35.
3.Principal Commissioner of Income Tax, Central – II, Chennai – 600 034.
4.The Assistant Commissioner of Income Tax (AO), Central Circle-I, Trichy.
W.P. No.36950 of 2016and W.M.P.Nos.31747 & 31748 of 2016 03.09.2021 https://www.mhc.tn.gov.in/judis/ 26/26