INCOME TAX ACT, 1961

Section 245D Article 226

Settlement Commission - Full and true disclosure - Offer of additional income, whether part of disclosure under section 245C already made -

The Settlement Commission noted that the applicants had offered additional income for bringing quietus to certain issues in the spirit of settlement as per letter dated 8-6-2018, viz. Rs. 2,07,498 in case of M/s. Shreyansh Corporation and Rs. 1,94,644 in case of M/s. Samarth India. 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 application. The Settlement Commission accordingly settled the cases of the respondents applicants on the terms and conditions set out in the impugned order. It appeared that it was 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.Held: Considering the nature of the proposed additions and the explanation put forth by the applicants, no infirmity can be found in the approach of the Settlement Commission in accepting such explanation. The revenue appears to be mainly aggrieved by the fact that in respect of proposed additions viz., proposal to disallow 5% of the trading expenses which came to be accepted by the Settlement Commission. According to the revenue, acceptance of such liability on the part of the applicants amounts to non-disclosure of full and true facts in the applications filed by them under section 245C. On a perusal of the impugned order passed by the Settlement Commission, it is abundantly clear that both the respondents had not accepted the liability of 5% of trading expenses, but in the spirit of settlement offered to pay the amount computed by the AO with a view to bring the quietus to the matter and buy peace of mind. The court was of the view that the offer to pay such amounts in addition to the amounts disclosed in the applications under section 245C could not be said to be disclosure of any further amounts under that section as the same had been offered only to bring about a settlement fact that the applicants had offered to pay such amounts, the liability whereof had not been accepted by them, could not be termed as non-disclosure of full and true facts in the applications under section 245C. The court did 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.

Distinguished:Pr. CIT v. Shree Nilkanth Developers (2016) 73 Taxmann.com 76 (Gujarat) : 2016 TaxPub(DT) 4106 (Guj-HC) and Amera Housing Corporation v. CIT (2010) 326 ITR 642 (SC) : 2010 TaxPub(DT0 2201 (SC).

REFERRED :

FAVOUR : In responents/assessee's favour.

A.Y. : 2004-2005

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