A.J. Shastri, J. - Through this note, it is correctly pointed out to us that in our judgment dated 21.07.2016, we had made a wrong reference and quoted portion of the judgment of the Supreme Court in case of Ajmera Housing Corpn. v. CIT [2010] 326 ITR 642/193 Taxman 193. For convenience, the said judgment is recalled and we would pass a fresh corrected order in the said petitions.
1.1 Both these petitions viz. petition being Special Civil Application No. 12483 of 2014 as well as petition being Special Civil Application No. 12502 of 2014 are essentially arising out of the same set of facts and the controversy involved in both the petitions is also the same. The only distinguishing feature is that the additional amount of tax and the working out of it would change. Therefore, both these petitions are decided to be dealt with by way of this common judgement and order and, for that purpose, Special Civil Application No. 12483 of 2014 is treated as a lead matter.
2. The petitioner, by way of present petition, has challenged the validity of an order passed by the Income Tax settlement Commission exercising powers under Section 245D(4) of the Income Tax Act, 1961 ['the Act' for short]. The same is filed on the premise that the survey proceedings came to be initiated under Section 133A of the Act at the business premises of the assessee-company. At the relevant time, the assessee's project of construction was on going in the name of 'Rajeshwar Green' and 'Rajeshwar Planets' in the vicinity of Vadodara. During the course of survey proceedings, the authorities have found specifically that the books of accounts were not updated regularly. On the day of survey, it was found that previously profit and loss account and the balance sheet of M/s. Shriraj Developers were generated in incriminating the loose papers also found during the course of such proceedings related to the receipts of on money by the assessee and during the process of search, it was marked that two customers, who were present in the premises, their statements also came to be recorded reflecting the receipts of on money by the assessee. On the basis of documents and materials gathered during the course of survey proceedings, the statement of Director of the company also came to be recorded on 13.03.2012, in which, the said Director had admitted that they received payments both in cash as well as by way of cheque in response to the said project which was ongoing. The said Director Mr. Kamal Agarwal had, during the process of search, admitted Rs. 40 crores as unaccounted cash profit from on money collected. During the course of search operation, the authority found that undisclosed income of Rs. 4 crores and net profit of Rs. 1.05 crores totaling around Rs. 5.05 crores as income chargeable to tax for the current financial year 2011-12 relevant to assessment year 2012-13 and agreed to pay the tax on this undisclosed amount. It is in the background of this material which has been gathered, the proceedings came to be initiated. Resultantly, the assessee filed an application before the Income Tax Settlement Commission on 20.03.2013. In response to the application received by the Settlement Commission, a report came to be called under Section 245D(2B) of the Act vide communication dated 12.04.2013 from the office of the petitioner. The said requested report, after a detailed inquiry, came to be submitted before the authority, in which, the Commissioner of Income Tax-I had submitted and analyzed the detailed material which was part of the search process and ultimately, submitted the exhausting report before the Commission and submitted that the letter came to be written by the company on its later head dated 13.03.2012 showing and making willingness to the acceptance of undisclosed income and considering the report, the Settlement Commission was requested to determine the quantum of income assessable in light of the circumstances stated in the report. Based upon the said report and after hearing the parties, vide order dated 19.02.2014, the Settlement Commission formulated an opinion that the applicants have disclosed the additional income as reflected in para 4.1 of the order and thereby the additional income worked out at 15% on the ground of on money receipt for all six years. Later on, the total on money has been worked out at Rs. 10,43,96,700/- in case of the present petitioner. Similarly, the miscellaneous income which has been offered by the petitioner to the extent of Rs. 2 lacs and Rs. 2.45 lacs respectively for the assessment year 2011-12 and 2012-13 these additional incomes offered by the applicants were hither to not disclosed before the Assessing Officer. It was also found by the Commission on verification of the record that the offer of additional undisclosed income at 15% of the worked out on money amounts should be accepted. The ascertainment of it is reflected in a tabular form mentioned in present petition. While considering the application, the Commission has, observed that the petitioner has during the course of the proceedings, voluntarily offered further additional amount of Rs. 15 lacs and Rs. 25 lacs for the assessment year 2012-13 in the spirit of settlement and to buy peace. The said offer was made by the original applicants vide their communication dated 12.02.2014 and considering the offer of material on record and the conduct on part of the respondents, the Commission has accepted the additional undisclosed income made by the applicants at 15% of the reworked on money as found to be reasonable and therefore, vide order dated 19.02.2014, the Commission has accepted the offer of additional undisclosed income as reflected above and found that the said account was correctly worked out and the issue was ordered to be settled. The Commission during the course of proceedings, had also dealt with the issue of waiver of interest and the Commission found that in view of settled position of law, the Commission has no power to grant any waiver or reduction of interest chargeable under Sections 234A and 234C and, as a result of it, keeping the interest of Revenue also in mind, the interest under Section 2 34B of the Act was ordered to be charged up to the date of passing of the order under Section 245D(1) of the Act in view of the decision has relied upon by the Commission.
3. Upon hearing both the sides, the computation of total income and the payment of taxes came to be determined and the applicant was ordered to pay tax including interest as per the order within a period of 35 days from the date of receipt of this order which from the record it is found to have been paid. While dealing with the issue of capitalization of income during the course of hearing, the applicants themselves have not pressed the issue and therefore, the said issue was not dealt with on merit. Sofar as question of immunity from prosecution and penalty is concerned, a request was made by the applicant to grant the same in view of Section 245H of the Act and having found and satisfied, the Commission accepted the request precisely on the satisfaction that no attempt was made by the applicant to conceal any material fact during the course of the proceedings and the applicants had, during the course of proceedings, voluntarily and in the spirit of settlement without pressing any fact, have disclosed material and therefore, since the applicants have fully corroborated in the proceedings, the Commission was of the opinion to grant immunity from penalty to the applicants • In the background of that satisfaction, even the immunity was ordered to be granted from prosecution to the applicants and thereby the order in question came to be passed by the Commission. To strike the balance between both the sides in para 11.1 and 11.2 the Commission has observed that in case of non- compliance of the same, the liberty was kept open for the Revenue to deal with in the manner which is prescribed. Para 11.1 and 11.2 reads as under:
"11.1 The immunity granted to the applicants vide this order may be withdrawn, if the applicants fails to pay the applicable tax demanded with time, and in the manner specified by this order, or fail to comply with other conditions stated in the order.
11.2 The immunity granted to the applicants may also at any time be withdrawn, if the Commission is satisfied that the applicants had in the course of the settlement proceedings, concealed any particulars material to the settlement, or have given false evidence. Thereupon, the applicants may be tried for the offence for which immunity was granted, or for any other offence for which the applicants appear to have been guilty in connection with the settlement and the applicants shall also become liable to the imposition of any penalty under the Act to which the applicants would have been liable and had such immunity not been granted."
4. In the background of aforesaid facts feeling aggrieved of and dissatisfied with the order passed by the Settlement Commission. Learned advocate for the petitioner has contended that Settlement Commission, while passing order, has committed an error in not examining the assessee from the view point of an issue that there was originally no full and true discloser of the undisclosed income. Counsel submitted that despite the settled position of law, the applicant before the Settlement Commission though having no right to revise the application had done that process which has rendered the order vitiate. The counsel submitted that in view of the decision delivered by the Apex Court, no revision can be allowed during the course of proceedings. Counsel for the petitioner further submitted that there is a serious procedural infirmity on the part of the respondent No.l viz. the Settlement Commission not giving complete go by to the report which has been filed in Rule 9 and thereby the order was passed by the respondent Commission is bad in law. It was contended before the Court that there was a complete failure on part of the applicant to full discloser of the undisclosed income and thereby requested the court not to entertain the petition.
5. As against this, the learned advocate appearing for the respondent submitted that while dealing with the application not only the Commission has considered the detailed reports submitted dated 29.08.2013 but also considered the intention of the applicants. There is a specific finding arrived at by the Commission during the course of hearing that there was full cooperation on part of the applicants and to the fullest extent the disclosure was made by the applicants. It was also submitted by the counsel for the respondents that the Commission has taken note of the situation that there was no concealment on the part of the respondent and in the spirit of settlement, the respondents applicants have given a full disclosure and therefore, submitted that on the basis of such material on record, the Commission has rightly exercised the jurisdiction which vested in law and therefore, submitted that the petition being devoid of merit be dismissed inlimine.
6. Having heard learned counsel appearing for the respective parties and having perused the orders passed by the learned Commission and having gone through the report submitted before the Settlement Commission, we found that the findings arrived at by the Commission is just and proper and the respondents have disclosed additional income in the spirit of settlement during the course of proceedings and therefore, in the absence of any nondisclosure deliberately on part of the respondent the Commission has exercised due discretion vested in law and therefore, such finding of fact does not deserve to be disturbed or substituted.
7. From the record we found that the application submitted by the respondents have been dealt with were within the schedule prescribed by the provision of law. A detailed procedure has been observed while exercising power under section 244D so much so that a report has also been examined thoroughly by the said Commission. During the course of hearing proper opportunity was also given to the respective parties and therefore, amount which have been determined by the said Commission are just and proper. The issue before the Court in the background of this fact is whether during the course of hearing even the amount which has been increased by way of additional disclosure whether can be entertained or considered by the Commission or not? Recently, if we recall that this very issue has been dealt with in detail and taking note of the decision delivered by this Court, in a group of petition being Special Civil Application No. 11909 of 2014 and allied matters, which has considered the said issue in a decision delivered on 12.07.2016 it was found by the Court that if during the course of proceedings if the revised offers are being generated then in the nature of spirit of Settlement the same is permitted to be considered by the Commission. In that context, the Division Bench of this Court has considered the decision delivered by the Apex Court reported in case of in a case of Ajmera Housing Corpn. (supra). The issue has been dealtwith and exactly we here in the present case also found the similar issue having been arose before the Settlement Commission. We are of the opinion that the order passed by the said Commission does not call for any interference. In the background of these facts, the following paras of the said decision are worked to be taken note of:
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It can thus be seen that on the issue of true and full disclosure, stage at which such disclosures should be made and the effect of making further disclosures by revising initial offers of settlement was examined by the Supreme Court in the case of Ajmera Housing Corporation (supra). The manner in which the Supreme Court has dealt with such issue and has made elaborate and conclusive observations, it cannot be stated contrary to what was argued before us that the above-noted portion of the judgment should not be seen as ration of the judgment of the Supreme Court. Ratio of this judgment is that the true and full disclosure of the income must be made at the initial stage and large scale remissions in such disclosure itself would show that the initial disclosures were not true. |
11. |
However, the facts of the present case are somewhat different. The applicants had initially offered on money rotation of Rs. 25 lakhs, Rs. 21 lakhs and Rs. 30 lakhs respectively and income at the rate of 12.5 per cent thereof by way of interest earned which during the course of assessment proceedings was revised to Rs. 50 lakhs, Rs. 50 lakhs and Rs. 75 lakhs respectively with rate of return at 15 per cent. With respect to revised rate of return, even counsel for the Revenue would not be in a position to argue that the same would form part of declaration of two incomes since whether rate of return should be estimated to 12.5 per cent or 15 per cent would be would be substantially in the realm of estimation of not profit. He would however, strenuously contend that revised declaration of on money should be enough to establish that initial disclosures made by the assessees were not full or true disclosures of such income. In this context, we had called for the letter written by the applicants making such revised offers. Copies of such letters dated 6.2.2014 written by the partners of the firm are produced on record. In such letters, it was conveyed that the applicants had filed a petition for settlement in which offered a sum of Rs. 7,75,000/- at the rate of 12 per cent on peak balance of funds deployed in money lending activity. It was further stated that the applicant during the course of hearing under section 245D(4), in the spirit of settlement, agreed to further additional income of Rs. 39,12,667/- which is computed on the basis stated hereinbelow: |
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a. interest in money lending activity @ 15% p.a.; |
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b. Amount deployed in money lending activity Rs. 50,00,000; |
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c. Income out of on money receipt @ 15%. |
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Similar declarations were made in the case of other applicants as well. It can thus be seen that these revised offers of tax was in the nature of spirit of settlement and cannot be seen in strict sense of abandoning initial disclosures and replacing the same by fresh disclosures on the basis of such revised offers. What in essence the assessee did was to raise their offers marginally to put an end to the entire dispute through settlement or in the spirit of settlement as is referred to in the said letter. This cannot be seen as accepting that original or initial declaration was not true and full disclosure thereby paving way for the application of judgment in the case of Ajmera Housing Corpn. (supra)." |
8. In view of the above facts and circumstances, more particularly, in view of the fact that this Court is dealing with and examining the order of said commission in exercise of writ jurisdiction keeping in view the scope of judicial review and keeping in view the exercise of extra ordinary jurisdiction, this Court is of the opinion that from the overall background of the fact without said Commission has thoroughly examined minutely all the details related to the issue in question and arrived at a particular finding which this Court found not to substitute the same. In the background of these facts and circumstances, resultantly, the petition deserves to be dismissed.
9. The conclusion arrived at by the Court is also covering the case of Special Civil Application No. 12502 of 2014 and therefore, the same is also dismissed in light of this judgement. Notice is discharged. No order as to costs.