9911796707
TMI Blog2012 (6) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... urable desire to come clean with their inglorious past. The petitioner claims that they without any motive or intention to help a third person, declared undisclosed taxable income of Rs. 1,36,08,897/-. We record that the undisclosed income has been partly accepted and immunity from penalty and prosecution stands granted, but the "wrong" is checkmated and corrected by the Settlement Commission. 2. To appreciate the controversy, necessary basic facts may be noticed. 3. Gupta Perfumers (P) Ltd., the petitioner is a company that was incorporated on 15th February, 1973. It was engaged in the business of manufacture of perfumery compounds and flavoured essence concentrate also known as industrial fragrance and flavoured concentrates etc. The manufacture and sale as admitted and stated by the petitioner was closed in the year 1987. The petitioner claims that they retained the corporate structure and its business activities remained confined to investment of funds. 4. On 15th May, 2009, the petitioner filed an application for settlement and vide order dated 30th July, 2009 under Section 245D, the application was held to be valid for the assessment years 2005-06, 2007-08, 2008-09 and 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter and spirit behind settlement provisions and the statutory and salutary purpose enshrined and elucidated in Section 245D(4) and 245-I of the Act. The settlement is contrary to law as the order ceases to be conclusive and final and is uncertain. It was urged that the petitioner does not want that the entire order of the Settlement Commission should be set aside but it was interested and wanted that the aforesaid quoted observations should be struck down and deleted. In the alternative, it was submitted that if the petitioner had failed to make full and true disclosure,it was the duty of the Settlement Commission to dismiss the settlement application and not accept the undisclosed income declared. 8. We have considered, the contentions raised by the petitioner but as observed above, do not find any merit in the same. 9. On 10th & 11th February, 2009, search and seizure operations were conducted in the case of M/s Gupta & Co. (P) Limited, M/s C.H. Steel (India) Pvt. Ltd., MJI Tech (P) Ltd., VKG Electronics (P) Ltd. and Rita Devi Shanti Sagar Family Welfare Trust. In these operations, several documents were seized from the custody of Virender Kumar Gupta, Gupta and Co. (P) Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts marked Annexures A-3, A-5 and A-6, found at the residence of Virender Kumar Gupta and other documents found and seized from the office of Gupta & Co. (P) Ltd. do not pertain to the petitioner but pertain to undisclosed income of third parties who had been subjected to search. These documents form the basis of income offered for settlement, do not reflect to the income earned by the petitioner. c. Books of accounts of petitioner for the period 1st April, 2004 to 31st March, 2008, seized from one of the computers do not reflect or show any transaction relating to manufacturing/trading activities. Materials seized do not show or indicate that the petitioner had explicitly or implicitly carried on business activities. d. Statement of Virender Kumar Gupta, Director of Gupta & Co. (P) Ltd. recorded under Section 132 (4) of the Act, did not support the claim of the petitioner that the seized documents relate to the business transactions of the petitioner. e. Virender Kumar Gupta had not stated or claimed that the petitioner was carrying on manufacturing activities. f. Ashok Kumar Gupta, an employee of Gupta & Co.(P) Ltd. for the last 36 years had categorically stated that the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Gupta, Ashok Gupta, in a detailed and well reasoned order has reached the following findings:- a. Statements of Sharad Jain recorded on 19th May, 2009 and 10th May, 2010, do not support the claim of the petitioner that they were carrying on manufacturing activities. The books of accounts stated to be available were not produced, though it was adverted that they shall be furnished. Similarly, the statement of Virendra Kumar Gupta recorded on 21stMay, 2009, did not support the claim of the petitioner that due to lack of care on the part of the staff members, accounts relating to manufacturing activities like cash book, ledger etc. were misplaced. The accounts were in fact were never available as there was no manufacturing activity. The above findings were corroborated by the fact that no material or evidence was found in the search that the petitioner was engaged in manufacture/trading. b. The plea that the books of accounts have been misplaced was specious and should be rejected. c. Affidavits of Anukesh Kapoor and Mukesh Chand Mishra were not reliable and do not support the contention that the petitioner was engaged in manufacturing activities. d. It was strange that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication filed cannot be allowed to be withdrawn even when it is held that the seized papers on which the applicant has based its computation of income do not belong to it. 92. Section 245D(4) empowers the Commission to pass order in accordance with the provisions of the Income Tax Act as it thinks fit. The applicant has persisted till the very end with its claim of carrying on manufacturing activities and specifically stating in para 14 of reply filed on 27.4.10 "the applicant assiduously tried to keep its activities under a cover away from the public sight." It has also been specifically stated that the activities were being carried on at odd hours. In support of his contention the applicant has emphasized payment of Excise duty totaling to Rs.40,72,210/-. Considering all those facts, we accept the income shown by the applicant as such. 93. The applicant has prayed for immunity from penalty and prosecution. No immunity is granted in respect of income contained in the seized papers on the basis of which computation of income has been made in the settlement application and which has been held not to belong to the applicant company by us. The department will be free to init ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ettlement Commission shall not be a shield in proceedings against a third person. The third person must rely upon and meet the charge on merits. The petitioner has repeatedly stated on oath and asserted that the settlement application was not filed to benefit or secure advantage to a third person, whether related or not. Therefore, the petitioner should not have any grievance and objection to the said observation because they are not affected or prejudiced. The said direction can at best be used against a third person and not against the petitioner.We may, in this regard, reproduce what has been held by the Supreme Court in ITO v. Atchaiah, (1996) 1 SCC 417 : "7. In our opinion, the contention urged by Dr Gauri Shankar merits acceptance. We are of the opinion that under the present Act, the Income Tax Officer has no option like the one he had under the 1922 Act. He can, and he must, tax the right person and the right person alone. By "right person", we mean the person who is liable to be taxed, according to law, with respect to a particular income. The expression "wrong person" is obviously used as the opposite of the expression "right person". Merely because a wrong person is tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me earned by third parties. It is this aspect which is not decided by the Settlement Commission. The order meets the requirement of Section 245-I and is not contrary to the mandate of the said Section. The conclusiveness is attached to the averments and the findings recorded in the order of the Settlement Commission and Section 245I does not restrict the power and scope of what order should be passed by the Settlement Commission. What order or direction should be given by the Settlement Commission depends upon the facts and circumstances of each case and what is fair, just, equitable and warranted. 19. The argument of the petitioner that the settlement application should have been rejected as the petitioner had not made full and true disclosure, has to be rejected on the principle of approbate and reprobate. It is not the case of the petitioner that they did not make the full and true disclosure and in fact they still insist that they had made full and true disclosure. The Settlement Commission has accepted that the undisclosed income declared by the petitioner. Immunity has also been granted to the petitioner. The petitioner does not claim that it had tried to protect or had disc ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
