Case Law Details
RELEVANT PARAGRAPH
In perusal of the record, particularly different reports submitted by the Commissioner to the Settlement Commission and the final order passed by the Settlement Commission, it is no more in dispute that after the search of the premises of the Ajmera group as well as their accountant Vora on two occasions, application for settlement under Section 245C was made on 30th September, 1993 wherein additional income of Rs.1.94 crore was disclosed with confidential annexure.
After receipt of that application, under Section 245D(1), report of the Income-tax Commissioner was called and as per that report additional income should have been Rs.223.56 crore. In that report, the Commissioner had contended that the assessee had not made true and full disclosures of his income as required under Section 245C and on that ground, application was liable to be rejected. However, the Settlement Commission passed the order on 17th November, 1994 accepting the application of their assessee for consideration and accordingly, further report of Commissioner, Income-tax was called and as per the report dated 30th August, 1995 corrected by Additional report and reconciliation note dated 20th October, 1997, undisclosed income was shown to be Rs.187.2 crore. The learned counsel for the Revenue pointed out that after the initial report under Section 245D (1) was submitted by the Commissioner, matter was heard on 12.9.1994. The order admitting application was passed on 17.11.1994. After the date of last hearing and before the admission order, on 19.9.1994, a revised confidential annexure declaring additional income of Rs. 11.41 crore was submitted. It is contended that the confidential annexure dated 19.9.1994 was never made available to the Commissioner, Income-tax and he could not go through information provided by the assessee in the said disclosures and he also could not submit his report effectively. It is contended that this was in violation of Section 245D and the rules made there under.
9 Section 245C(1) provides that assessee may make an application in such a format and in such a manner as has been prescribed and containing full and true disclosure of his income which has not been disclosed before the Assessing Officer, manner in which such income has been derived, additional amount of income-tax payable on such income and such other particulars as has been prescribed to the Settlement Commission to have the case settled. Section 245D(1), as it stood before the amendment by the Finance Act, 2007 provided that on receipt of the application under Section 245C, the Settlement Commission shall call for the report from the Commissioner and on the basis of material contained in such report and having regard to the nature and circumstances of the case or the complicity of the investigation involved therein may pass an order either rejecting or allowing the application. If the application is not rejected and is allowed to be proceeded with, the Settlement Commission may call for the relevant records from the Commissioner and after examination of such records, if the Settlement Commission is of the opinion that any further enquiry or investigation in the matter is necessary, it may direct the Commissioner to make or cause to be made such further enquiry or investigation and furnish the report on the matters covered by the applications or any other matter relating to the case. Rule 5 of the Settlement Commission Procedure Rules provides that the settlement application shall be presented in the form no.34(b), which provides that along with the application there should be confidential information in the annexure. Rule 6 provides that on receipt of the settlement application, copy of such application, excluding annexure, shall be forwarded by the Commission to the Commissioner with the direction to furnish report. Rule 9 provides that where an order is passed by the Commission under Section 245D(1) allowing the settlement application to be proceeded with, copy of the annexure to the said application together with a copy of each of the statements and other documents accompanying such annexures shall be forwarded to the Commissioner along with the copy of the said order with the direction that the Commission shall furnish a further report, which may be done after making necessary inquiry or investigation. In the present case, application under Section 245C was made disclosing additional income of Rs.1.94 crore. On that basis commissioner’ s report was called under Section 245D(1) and on that basis, matter was heard and it was admitted. Before the order of admission was passed on 17.11.1994, the assessee revised their earlier application with Confidential annexure disclosing additional income of Rs.11.41 crore. In fact, this was revision of original application and, therefore, this revised application should have been sent to the Income-tax Commissioner for its report under Section 245D(1) but this was not done and admission order was passed on 17.11.1994. It is vehemently contended on behalf of the Revenue that the revised application and the confidential annexures dated 19.9.1994 were never made available to the Commissioner and this was violation of Rule 6 and 9 and thus, Revenue did not get sufficient opportunity of hearing in proceeding. There appears substance in this contention. In our opinion, non furnishing of that application and confidential annexures to the Commissioner amounted to violation of Rule 9 and on this count, it can be held that Revenue did not get sufficient opportunity to contest the application.
10. Leaned counsel for the Assessee harped upon the statement made before the Supreme Court that in the second report submitted by the Commissioner was admitted on 20th October, 1997, undisclosed income was estimated at Rs.42.5 crore and the Settlement Commission also noted approximately the same income. However, the learned counsel for the Revenue, on the basis of record, pointed out that the second report under Section 245D(4) read with Rule 9 was submitted on 30th August, 1995. As an objection was taken on behalf of the assessee about correctness or duplication of certain entries after removal of the errors, a note about reconciliation was submitted on 20th October, 1997 pertaining the second report submitted on 30th August, 1995. As per this rectified report, commissioner had assessed the undisclosed income of Rs.187.20 crore. This included annexures (A) and (B), which showed undisclosed income of Rs. 42,56,78,455/-on account of on money alone. Annexure (C) reveals amount of Rs. 45,27,52,985/-showing investment in cash, properties, drafts and others. Annexure (D) revealed details of cash receipts and its total was Rs. 54,71,31,828/-. Annexure (L) gave details of various cash payments by the respondents. This amount was assessed at Rs. 39,20,41,517/-. On perusal of the record, we find substance in the contention of the learned counsel for the respondents. It appears that what was pointed out before the Supreme Court was one part of the report and that part was in respect of on money only while other incomes, investments, receipts or payments were not covered in that part of the statement.
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