Thomas Philip Vs Interim Board for Settlement-II (Kerala High Court)
Summary: The Kerala High Court dismissed the writ petition filed by Thomas Philip, Managing Director and shareholder in Delta Group companies, challenging the order dated 22.12.2023 passed by the Interim Board for Settlement-II in respect of Assessment Years 2012-13 to 2018-19. The petitioner challenged, among other things, additions made under Section 2(22)(e) of the Income-tax Act, 1961 towards deemed dividend.
A search and seizure action under Section 132 of the Income-tax Act was conducted on 13.10.2017 at several premises of the Delta Group and at the petitioner’s residence. Notices under Section 153A were subsequently issued for Assessment Years 2012-13 to 2017-18, while notice under Section 143(2) was issued for Assessment Year 2018-19. The petitioner had filed settlement applications twice in 2019 and 2020, which were rejected for failure to satisfy the prescribed criteria. A third application filed on 26.02.2021 was dealt with by the Interim Board for Settlement following abolition of the Settlement Commission. In that application, the petitioner admitted undisclosed income of Rs.44,00,000 towards remuneration earned outside banking channels for Assessment Years 2013-14 to 2018-19.
The Principal Commissioner of Income Tax submitted a report under Rule 9 of the Income Tax Settlement Commission (Procedure) Rules, stating that additional income of Rs.10,52,32,443 had not been disclosed for Assessment Years 2012-13 to 2018-19. After considering the petitioner’s objection under Rule 9A, the Interim Board did not consider undisclosed income for Assessment Year 2012-13 because there had been no search operation for that year. It accepted certain amounts offered as unaccounted remuneration and unaccounted sales, including Rs.1.25 crore offered as unaccounted sales, holding that such amounts could not be added again.
