PCIT Vs Shankarlal Nebhumal Uttamchandani (Gujarat High Court)
Conclusion: Additional income disclosed to the tune of Rs. 12 Crore by assessee during the course of proceedings before the Commission was just and proper and Commission was right in considering the revised offer made by assessee during the course of the proceedings in the nature of spirit of settlement.
Held: Principal CIT challenged the common order passed by the Settlement Commission on the ground that assessee did not make true and full disclosure and major portion of the income required to be disclosed for assessment was suppressed by assessee. The question which arose for consideration was whether additional income disclosed to the tune of Rs. 12 Crore by assessee during the course of proceedings before the Commission could be said to be fresh and substantial disclosure or not and to come to conclusion that it was far greater than the initial disclosure made by assessee. Court was required to examine and inquire as to whether the order of Commission was contrary to any of the provisions of the Act or not and if so, apart from grounds of bias, fraud and malice which of course constituted a separate and independent category, had it prejudiced assessee or not. In facts of the present case, merely because assessee had disclosed additional income of Rs. 12 Crore during the course of settlement, it could not be said that Commission had not followed the procedure prescribed under the Act of 1961. It was held that on perusal of the impugned order passed by the Commission, it was apparent that the application submitted by assessee had been dealt with as per the provisions of section 245C and 245D. The Commission had observed detailed procedure while exercising powers under section 245D(4) by examining thoroughly report submitted by assessee under Rule 9 of the Income Tax Settlement Commission (Procedure) Rules, 1997. 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. Thus, the Commission was right in considering the revised offer made by assessee during the course of the proceedings in the nature of spirit of settlement. Therefore, the order passed by the Commission did not call for any interference.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
1. Having regard to the controversy involved in the present case which lies in a very narrow compass, with the consent of the learned advocates for the respective parties, the matter is taken up for final hearing.
2. The petitioner has filed, in all, five petitions for different assessment years i.e. 2012-2013 to 2016-2017 challenging the common order dated 25th July, 2018 passed by the Settlement Commission (‘the Commission’ for short) on the ground that the respondent did not make true and full disclosure and major portion of the income required to be disclosed for assessment was suppressed by the respondent assessee. Therefore, all the petitions are heard analogously and are disposed of by this common judgment.
3. For the sake of convenience, facts are recorded from Special Civil Application No.13251/2019. Respondent herein has been carrying on the business of purchase and sale of land and trading in textile items of art silk clothes. A survey under section 133A of the Income Tax Act, 1961 (“the Act of 1961”) was carried out on 3rd July, 2015 at the office premises of the respondent.
3.1) During the course of survey operation, various loose documents were found and impounded by the department.
In the statement recorded under section 131 of the Act of 1961 on 3rd July, 2015, respondent assessee offered additional income of Rs.2,77,35,875/ and Rs.4,51,20,308/ for the assessment years 2014-2015 and 2015-2016 respectively, aggregating to Rs.7,28,56,183/which was in relation to long term capital gain claimed as exempt under section 10(38) of the Act on the sale of shares of M/s. Surbhi Chemicals Ltd.
3.2) The respondent assessee filed Settlement Application under section 245C(1) of the Act of 1961 before the Commission on 1st January, 2017 offering additional income for the assessment years as under :
