2014 (5) TMI 543 - HC - Income Tax

Validity of order u/s 245D(4) of the Act - order of Settlement Commission - Full and true disclosures not made Held that - The report u/s 245D(2B) of the Act which had been submitted by the Commissioner to the Settlement Commission indicates that the property was acquired for ₹ 90 crores - Mr Sahni referred to the order of the Income Tax Settlement Commission dated 31.12.2010 in which it has been specifically mentioned that the Commissioner in his report under Rule 9 pointed out that the initial acquisition of the property was of ₹ 90 crores and that the premium had been calculated at ₹ 40 crores taking the valuation to ₹ 130 crores at the time of the induction - The order dated 21.05.2012 does not call for any interference - The fact that Smt. Lata Jain and Sh. Roshan Agarwal had together declared a sum of ₹ 16 crores as undisclosed income in respect of the transaction cannot bind the assessee and her husband Sh. Gopal Gupta In any event, what the Settlement Commission has said in the order in respect of Smt. Lata Jain and Sh. Roshan Agarwal, is that as per their calculations the premium amount came to ₹ 13.3 crores but since the applicants had declared more than that, the disclosure needed no disturbance. Rs 6.5 crores had been disclosed in the initial statement given by Sh. Gopal Gupta at the time of the search and seizure operation and the figure was subsequently enhanced to ₹ 7.61 crores at the time the application for settlement was made before the Settlement Commission - The Settlement Commission in its order dated 31.12.2010 did not fix any figure as to the amount of undisclosed amount - the amount declared by the applicants was much more than what had been surrendered by Sh. Gopal Gupta and what had been computed by the Department, the disclosure made by them needed no disturbance - The Revenue cannot attempt to add anything more to this value in the absence of any concrete evidence - If the stand taken by the Revenue were to be accepted, then the value of the property would come to ₹ 158.19 crores - there is not an iota of evidence to indicate that the value of the property was anything but ₹ 130 crores there is no perversity in the order dated 21.05.2012 passed by the Settlement Commission u/s 245D(4) of the Act Decided against Revenue.

Summary

Issues:
Challenge to the order of the Income Tax Settlement Commission under Section 245D(4) of the Income Tax Act, 1961 regarding undisclosed income declaration.

Analysis:
1. The primary issue in this case was the challenge brought by the Commissioner of Income Tax against the order of the Settlement Commission. The petitioner contended that the respondent did not make a full and true disclosure regarding a property transaction, leading to a difference in undisclosed income declarations between the respondent and the sellers involved.

2. The case involved a property transaction at Motia Khan, Karol Bagh, where discrepancies arose in the undisclosed income declarations. The Revenue argued that the value of the property was higher than what was disclosed by the respondent, based on the sellers' declarations and the premium involved in the transaction.

3. The respondent's counsel argued that there was a full and true disclosure made by the respondent and her husband regarding the property transaction. They contended that the disclosed amount was based on the value of the property and the share acquired, leaving no undisclosed amount as per their calculations.

4. The Court analyzed the details of the property transaction, including the value of the property, premium amounts, and the disclosed investments by the respondent and her husband. It was emphasized that the disclosed amount covered the value of the 1/3rd share in the property, and there was no concrete evidence to support the Revenue's claim of additional undisclosed income.

5. Referring to a previous order of the Settlement Commission involving the sellers, the Court noted that the disclosed amounts by the sellers exceeded the calculations based on the premium, leading to no disturbance in their disclosure. The Court found no binding effect of the sellers' declarations on the respondent and her husband.

6. Ultimately, the Court concluded that there was no perversity in the Settlement Commission's order, as the disclosed amount by the respondent and her husband was based on the property's actual value. The petition challenging the order was dismissed, with no costs imposed.

This detailed analysis of the judgment highlights the key arguments, evidence, and reasoning considered by the Court in resolving the issues raised in the case.