2014 (5) TMI 857 - HC - Income Tax

Application for rectification of order order of settlement commission - Benefit of amount of excise duty Held that - The order of the Commission does not suffer from any patent illegality, which may warrant any interference in the exercise of the writ jurisdiction - the assessee has not reflected sum as amount of excise duty paid during the AY 2008-09 in the statement of the case filed before the Commission - if such amount would have been disclosed, the income would be lower than the income declared by the assessee in his statement of facts - by not reflecting the disclosed income for payment of excise duty, the assessee wishes to take benefit of payment of excise duty in the rectification application - the Commission is the authority competent to examine the extent of undisclosed income - The Commission has framed an opinion that the benefit of the amount of the excise duty cannot be given to the assessee as it would negate even the undisclosed income shown in the statement of facts the opinion is possible finding as per the facts noticed by the Commission thus, there was no illegality in the order passed by the Commission Decided against Assessee.

Summary

Issues:
Challenge to order passed by Income Tax Settlement Commission for rectification of an earlier order, Claim of excise duty benefit in rectification application, Calculation of undisclosed income, Petitioner's plea for deduction under Section 43B, Jurisdiction of the Commission to examine undisclosed income.

Analysis:
The case involves a challenge to an order passed by the Income Tax Settlement Commission regarding the rectification of an earlier order. The petitioner sought the benefit of excise duty amounting to Rs.80 lakhs in the rectification application, which was not successful. The Commission had considered the petitioner's request for settlement for three assessment years and had applied a gross profit rate on the undisclosed income. In the assessment year 2008-09, the gross profit rate applied was 17.06% on the undisclosed income. The petitioner's grievance was that the calculation of undisclosed income did not include the excise duty amount, leading to a request for rectification of the mistake in the Commission's order.

The Commission observed that the petitioner had calculated the undisclosed income at Rs.12,87,529 and included the excise duty amount of Rs.80 lakhs in the net figure. The Commission estimated the income for the assessment year 2008-09 at Rs.53,70,680, resulting in an addition of Rs.40,83,151. The petitioner sought a deduction under Section 43B for the excise duty amount, which would significantly reduce the declared income. However, the Commission found no mistake apparent from records on this issue and denied the plea for deduction.

Upon hearing both parties, the Court found that the Commission's order did not display any patent illegality warranting interference in the writ jurisdiction. The petitioner had not disclosed the excise duty payment in the statement filed before the Commission, which could have lowered the declared income. The Commission, being the competent authority to examine undisclosed income, determined that granting the excise duty benefit would contradict the undisclosed income shown in the statement of facts. The Court upheld the Commission's decision, stating that there was no illegality in the order that required intervention.

In conclusion, the Court dismissed the petition, affirming the Commission's decision regarding the benefit of excise duty and undisclosed income calculation.