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TMI Blog2012 (6) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... faction. Even before us the petitioner insists that it had made fully and true disclosure and also stated the manner in which the said income was earned. The petitioner cannot challenge and question the order of the Settlement Commission being the beneficiary of the order. - Decided against the petitioner with cost. - Writ Petition (Civil) No. 4368 of 2010 - - - Dated:- 18-5-2012 - MR. JUSTICE SANJIV KHANNA, MR. JUSTICE R.V. EASWAR, JJ. For Appellant: Mr. O.S. Bajpai, Sr. Advocate with Mr. V.N. Jha, Advocate. For Respondents: Ms. Rashmi Chopra, Sr. Standing Counsel. SANJIV KHANNA, J. In Merchant of Venice, Portia disguised as young law clerk had propounded that the bond only allowed Shylock to remove the flesh, not the blood of Antonio. Further damning Shylock s case, she said that he must cut one pound of flesh, no more, no less; she asserted if the scale do turn/But in the estimation of a hair/though diest and all thy goods are confiscate. The impugned order passed by the Settlement Commission deserves to be upheld for the petitioner herein- Gupta Perfumers (P) Ltd. it is apparent is caught in their own web, which they stoutly and strongly deny. Even now ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e return for the assessment years in question was Rs.2,41,70,205/-. 5. The Settlement Commission by the impugned order dated 28th May, 2010, has accepted the settlement application in part and computed the income of the petitioner as under: - Asstt. Yr. Income returned as per Return of Income (Rs.) Income offered before ITSC (Rs.) Income Decided by the ITSC (Rs.) 2005-06 3,54,700 1,84,154 5,38,854 2007-08 3,46,289 70,464 4,16,753 2008-09 3,50,450 12,31,709 15,82,159 2009-10 *1,19,57,396 **66,93,849 1,86,51,245 *As shown in the Computation sheet filed with the return before deduction u/s 80I. ** As shown in the SOF before claim of deduction u/s 80I. 6. The grievance of the petitioner is against the following observations and findings recorded by the Settlement Commission:- 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 fre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r companies/entities had provided financial assistance on interest to Gupta Co. (P) Ltd. The application referred to several documents seized from the business/ residential premises at the time of search. 11. It was stated and the Settlement Commission has quoted extracts from the application that the petitioner was maintaining financial records in regular course in the form of cash book, ledger with proper supporting material/evidence. The major component of the cost was the labour charges which were by supported by wage sheets maintained on regular basis. Virender Kumar Gupta being an elderly person was acting as an ombudsman of the family and was maintaining a memorandum of record, containing summary of sales etc. The transactions were entered in the cash book and the surplus generated was kept in a pool maintained by the Directors. Due to lack of care on the part of the staff members, accounts relating to the manufacturing activities, cash books etc, were misplaced. However, the summary of sales recorded on day to day basis in the memorandum which were kept in the custody of Virender Kumar Gupta were available and these were made the basis of computation of the undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns. It was submitted that none of the Directors were asked as to the recent activities of the petitioner company. Ashok Kumar Gupta was an executive of Gupta Co.(P) Ltd. and had nothing to do with the petitioner. The petitioner enclosed photocopies of some cash memos, affidavits of Mukesh Chand Misra and Anukesh Kapur. It was stated that the manufacturing activities were assiduously kept away from public sight and were carried on at odd hours so as to avoid detection. In these circumstances, enquiries conducted in the neighbourhood should be ignored. The fact that in the material seized there was no indication of business activities of the petitioner was inconsequential as the petitioner was admitting the same, stating that it goes to show that the petitioner was carrying on its activities outside the declared accounts and the same were kept away from the knowledge of public at large. It was asserted that ;- no prudent person would like to own and discharge such a huge liability only for the sake of fictional after thought (quote) as has been alleged by the learned CIT in his report. Further, the plea that the application should be rejected by the Hon ble Income Tax Settlement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk between Gupta Co. (P) Ltd. and some of the seized papers was shown. When the documents claimed by the petitioner showed up in the books of the accounts of the Gupta Co.(P) Ltd. The petitioner stated that the bills issued by Gupta Co. (P) Ltd. were just used as a cover. The explanation was doubted as in such a case, why would these bills find mention in the books of Gupta Co.(P) Ltd. j. As per the amendment brought by Finance Act, 2007 w.e.f. 1.6.2007, no settlement application can be filed by a person subjected to search and seizure action. The apparent reason for the petitioner company owning up the seized papers appears to be to prevent consideration of the seized papers in the rightful hands during the regular search and seizure assessment of that person. 15. The Settlement Commission accordingly held as under:- 90. We are, therefore, unable to accept the applicant s contention that the seized papers belong to it. Without enterting into the correctness or otherwise of the income offered on the basis of these papers, we hold that the department will be free to take appropriate action in appropriate hands for taxing the income contained in the seized papers refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ytime if the Settlement Commission was satisfied that the petitioner has concealed or given false evidence during the course of the settlement proceedings. 17. It is apparent from the impugned order that confronted with the above situation, the Settlement Commission has substantially accepted the surrender of income made by the petitioner and also granted them immunity from penalty and prosecution. In our opinion, the Settlement Commission had rightly observed that no third person can gain from the immunity in case the seized papers relate to the third person. The seized papers can be used and utilized against third persons. The computation of taxable income in the case of the petitioner does not mean that the said papers or seized materials cannot be used if they disclose or relate to income of a third person. The petitioner has substantially succeeded as far as their declaration of the undisclosed income is concerned. In case the seized documents/ material relate to a third person and disclose undeclared income of the third person, the Revenue is certainly entitled to rely and use the evidence and material against the said person. The petitioner is not entitled to and cannot cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut merit. The order of the Settlement Commission is certainly complete and conclusive as far as petitioner is concerned. The said third persons were not before the Settlement Commission and the Settlement Commission was not examining their application. The impugned order does not become unconclusive or bad for the said reason. Section 245 I is also not violated for there cannot be any reopening in the case of the petitioner, unless fraud etc. has been played. Section 245-I reads as under:- 245-I Every order of settlement passed under sub-section (4) of section 245D shall be conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwise provided in this Chapter, be reopened in any proceeding under this Act or under any other law for the time being in force. The said Section states that the order of the Settlement Commission under Section 245D(4) shall be conclusive as to the matters stated therein and save and otherwise provided no matter in the said order shall be reopened in any proceedings. The use of words save otherwise provided in this Chapter refers to the reopening of the matters, which are conclusively decided. The conclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Commission to have the case settled and any such application shall be disposed of in the manner hereinafter provided : Provided that no such application shall be made unless, - (a) The assessee has furnished the return of income which he is or was required to furnish under any of the provisions of this Act; and (b) The additional amount of income-tax payable on the income disclosed in the application exceeds one hundred thousand rupees. What the Section requires is that the applicant before the Settlement Commission must disclose in the prescribed form full and true disclosure of his income and the manner in which the income is derived. The Settlement Commission has accepted the full and true disclosure made by the petitioner, though there is dispute about the manner in which the undisclosed income was earned. The petitioner cannot insist and claim that their application should have been dismissed as they had failed to make disclosure on the manner in which the said income was earned. The Settlement Commission has taken on record the reasoning given by the petitioner for earning the said income and expressed dissatisfaction. Even before us the petitioner insists that it had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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