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TMI Blog2012 (4) TMI 337X X X X Extracts X X X X X X X X Extracts X X X X ..... are levied independently. Thus, the determination of income by the Settlement Commission is necessarily with reference to the income disclosed in the application filed under the said section in the prescribed form. Moreover, in terms of provisions of sec.245I of the Act, every order of settlement passed under sub-section (4) of section 245D is conclusive as to the matters stated therein and no matter covered by such order, save as otherwise provided in the Chapter XIXA, can be reopened in any proceeding under this Act or under any other law for the time being in force. - Decided in favor of assessee. - IT(SS) NOS.29 TO 32 (Delhi) of 2011 - - - Dated:- 30-3-2012 - A.N. PAHUJA, C.M. GARG, JJ. ORDER A.N. Pahuja, Accountant Member These four appeals filed on 3rd October, 2011 by the Revenue against four separate orders dated 15th July, 2011 of the CIT(A)-III, New Delhi, in the case of S/shri Laxman Das, Govind Lal, Vishan Dass and Ved Prakash, raise the following similar grounds:- 1. "On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in deleting the interest of Rs. 13,03,211/- charged by the Assessing Officer u/s 245 D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eard on 2.3.2010. Sh. S.K. Tulsiyan, Advocate, stated that the unaccounted turnover mainly related to fabrics and as the trading was on wholesale basis, where elaborate handling on the part of the applicant was not required. He further submitted that for the purpose of buying peace and setting at rest all disputable issues the applicants, in modification of their earlier declaration, were finally offering additional income as under:- 6% of aggregate turnover of Rs. 21,36,02,650/- 1,28,16,160 Add;. Seed Money 20,00,000 Total 1,48,16,160 Sh. Tulsiyan added that the revised offer of Rs. 1,48,16,160 would be equally. divided in the hands of the four applicants @ Rs. 37,04,040/- each. 6. We have considered the facts and circumstances of the case, the rival submissions and the documents on record. There is no dispute regarding the computation of the total unaccounted turnover by the Deptt. at Rs.21,36,02,650/-as the same has been accepted by the applicants and on that basis the offer of the additional income has been revised. As regards the application of gross profit rate, the Bench finds that the CIT has adop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d up to the date of this order." 3. In terms of the aforesaid order of the Settlement Commission, the AO passed a consequential order on 4th May, 2010, levying, inter alia, interest u/s 245D(2C) and 158BFA(2) of the Act, as under:- interest u/s 245D(2C) S No. Particulars Amount 1 Amount declared as per original application dt. 23.10.2003 10,00,000/- 2 Revised amount of original application 37,04,040/- 3 Tax and Surcharge payable as per declaration made on the above. 22,66,872/- 4 Tax paid on the declaration made 6,12,000/- 5 Date of order u/s 245D(1) 23,10,2003 6 Due date of payment of Tax 01.01.2004 7 Tax paid upto 01.04.2004 6,12,000/- 8 Balance Tax payable 16,54,872/- 9 Interest u/s 245D(2C) from 1.1.2004 to 26.3.2010 at the rate of 15% 13,03,211/- I nterest u/s 158BFA 6 Due date of return 08.11.2002 7 Return filed on 10.12.2002 8 Delay 1 Month 9 Net taxable incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion has been accepted by the commission and forms part of the settlement order dated 26.03.10. It has been submitted that thus the determination of additional income is in substance quantification by the Commission of additional income, though on the face of it offered by the applicant on 02.03.10. I have carefully considered the issue at hand and am of the view that there are only two provisions u/s 245D under which charging of interest can be made. The first point in time when charging or interest can be made is u/s 245D (2A) r.w.s. 245D(2C) of the Act and the second point in time arises u/s 245D(6A). Under these provisions on receipt of an application u/s 245C the Commission upon hearing the applicant may allow the application to be proceeded with and the assessee shall within 35 days of the receipt of the copy of the order under sub section (1) of section 245D has to pay the additional amount of income tax payable on the income disclosed in the application. However where the additional of amount of income tax is not paid under sub section (2A) of 245D then the assessee shall be liable to pay simple interest at 15% per annum on the amount remaining unpaid from the date of ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quent revision of the original application and that too in a case where such application has already been admitted by the Commission and on which additional amount of tax and interest in default of payment of tax has already been paid. Secondly. there is no way that the assessee could have visualized as to on which figure the final determination of settlement amount would ultimately be made and consequently he could not have foreseen the additional taxes and interest thereon. Lastly, the process of settlement is the outcome of detailed submission and arguments from both sides which can in a give case result in offer of additional tax by the applicant itself which is in the nature of buying peace for setting to rest disputable issues. In the facts of this case it is this form which has taken place and as discussed above the additional income has been finally estimated at 6% of profit on undisclosed sales (there is no dispute on the figure of undisclosed sales) in fabrics. Merely based on this fact. there should be no case for charging of interest u/s 245D (2C). In view of this discussion I am inclined to hold that the undisclosed income finally settled at Rs. 37.04.040/-was on accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed independently. Accordingly. in view of above discussion,. the AO is directed to revise the calculation of interest charged u/s 245D(2C) of the Act in terms of the above findings. The Ground of appeal No.1 is therefore allowed in favour of the appellant. 6. Finding on Ground of Appeal No.2:- So far as Ground of Appeal No 2 is concerned the AO has charged interest 158BF A of the Act amounting to Rs. 37.040/- for alleged default of late tiling of Block return. With respect to this charging or interest there are clear directions or the ITSC in para 10 of its order wherein the following has been held "interest u/s 158BFA being mandatory in nature, its waiver cannot be allowed. The A.O. is directed to charge interest as per law ". In view of the specific finding of the Commission and the fact that the above provision is mandatory in nature. this Ground of appeal is dismissed." 5 . The Revenue is now in appeal before us against the aforesaid findings of the ld. CIT(A), deleting interest levied u/s 245D(2C) of the Act. The ld. DR while carrying us through the relevant provisions of section 245D of the Act and order of the Settlement Commission contended that since the assessees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of July, 1995 and if the Commissioner fails to furnish the report within the said period, the Settlement Commission may make the order without such report. (2) A copy of every order under sub-section (1) shall be sent to the applicant and to the Commissioner. (2A) Subject to the provisions of sub-section (2B), the assessee shall, within thirty-five days of the receipt of a copy of the order under sub-section (1) allowing the application to be proceeded with, pay the additional amount of income-tax payable on the income disclosed in the application and shall furnish proof of such payment to the Settlement Commission. (2B) If the Settlement Commission is satisfied, on an application made in this behalf by, the assessee, that he is unable for good and sufficient reasons to pay the additional amount of income-tax referred to in sub-section (2A) within the time specified in that sub-section, it may extend the time for payment of the amount which remains unpaid or allow payment thereof by instalments if the assessee furnishes adequate security for the payment thereof. (2C) Where the additional amount of income-tax is not paid within the time specified under sub-section (2A), th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an order under sub-section (4) within a period of four years from the end of the financial year in which such application was allowed to be proceeded with. (5) Subject to the provisions of section 245BA, the materials brought on record before the Settlement Commission shall be considered by the Members of the concerned Bench before passing any order under sub-section (4) and, in relation to the passing of such order, the provisions of section 245BD shall apply. (6) Every order passed under sub-section (4) shall provide for the terms of settlement including any demand by way of tax, penalty or interest, the manner in which any sum due under the settlement shall be paid and all other matters to make the settlement effective and shall also provide that the settlement shall be void if it is subsequently found by the Settlement Commission that it has been obtained by fraud or misrepresentation of facts. (6A) Where any tax payable in pursuance of an order under sub-section (4) is not paid by the assessee within thirty-five days Of the receipt of a copy of the order by him, then, whether or not the Settlement Commission has extended the time for payment of such tax or has allowed pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach of the statements and other documents accompanying such annexure shall be forwarded to the CIT and further report shall be called from the CIT. The Settlement Commission is also empowered to direct the CIT to make further enquiry and investigations in the matter and furnish his report. Thereafter, after examining the record, CIT's report and such further evidence that may be laid before it or obtained by it, the Settlement Commission is required to pass an order as it thinks fit on the matter covered by the application and in every matter relating to the case not covered by the application and referred to in the report of the CIT under sub-section (1) or sub-section (3) of the said section. Thus, even when the Settlement Commission decides to proceed with the application, it is not denuded of its power to examine as to whether in his application u/s 245C(1) of the Act, the assessee made a full and true disclosure of his undisclosed income and the report(s) of the CIT and other documents coming on record at different stages of the consideration of the case, before or after the Settlement Commission has decided to proceed with the application, are most germane to determination of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to suggest that in the order of the Settlement Commission that the assessee did not comply with aforesaid order u/s 245D(1) of the Act. Similarly, when the Settlement Commission passes final order under section 245D(4) of the Act, the tax payable in pursuance of such an order is required to be paid by the assessee within 35 days of the receipt of copy of the order and for failure to do so, the assessee is liable to pay interest at the prescribed rate under section 245D(6A). Thus the interest payable under sections 245D(2C) and 245D(6) are in different contexts and are levied independently. In the instant case, the ld. CIT(A) after analyzing the procedure laid down under the provisions of sec. 245D of the Act concluded that there being no scope for revising an application made under section 245C of the Act, charging of interest u/s 245D(2C) of the Act on the premise that the applicant revised the original application is against the letter and spirit of the provisions contained in S. 245C(1), 245D of the Act. The ld. CIT(A) also concluded that the process of settlement is the outcome of detailed submission and arguments from both sides and accordingly , the additional income was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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