INCOME TAX ACT, 1961

Section 245C Section 245D(4)

Settlement Commission - Application under section 245C - Additional income disclosed during hearing of proceedings - Prescribed proceeding whether followed by Commission arriving any particular finding

Assessee herein had been carrying on the business of purchase and sale of land and trading in textile items of art silk clothes. During the course of survey operation, various loose documents were found and impounded by the department. In the statement recorded under section 131 respondent assessee offered additional income for the assessment years 2014-15 and 2015-16 aggregating to Rs. 7,28,56,183 which was in relation to long-term capital gain claimed as exempt under section 10(38) on the sale of shares of M/s. Surbhi Chemicals Ltd. The assessee filed Settlement Application under section 245C(1) before the Commission on 1-1-2017 offering additional income for relvant assessment years, The revenue filed report as per rule 9 of the Income Tax Settlement Commission (Procedure) Rules, 1997 (Rules) in the course of hearing before Commission. It was submitted in the report that on examination of impounded documents, it was found that the quantum of additional income disclosed by the assessee before the Commission was not true and full disclosure for the assessment year 2012-13 to 2016-17. The assessee submitted reply to Rule 9 report giving explanation to each of the points therein. Further, the assessee disclosed additional income during the course of hearing under section 245D(4) aggregating to Rs. 12,00,00,000 for the five years from assessment years 2012-13 to 2016-17 Commission concluded that all the issues raised by the petitioner were covered in the additional income offered in the statement of fact and additional income further disclosed by the assessee amounting to Rs. 12 Crore and accordingly the case of the assessee was settled on the terms and conditions stated in the impugned order.Held: Merely because the assessee had disclosed additional income of Rs. 12 crore during the course of settlement, it cannot be said that Commission had not followed the procedure prescribed under the Act of 1961. On perusal of the impugned order passed by the Commission, it was apparent that the application submitted by the respondent had been dealt with as per the provisions of sections 245C and 245D. The CIT had observed detailed procedure while exercising powers under section 245D(4) by examining thoroughly report submitted by the petitioner under rule 9. The Commission had also provided proper opportunity of hearing to the respective parties and therefore the amount which had been determined by the Commission was just and proper. In view of the decisions cited by the respondent, the Commission was right in considering the revised offer made by the respondent during the course of the proceedings in the nature of spirit of settlement. The Commission had thoroughly minutely examined all the details relating to the issue in question and arrived at a particular finding, same cannot, therefore, be substituted.

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