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TMI Blog2013 (8) TMI 702X X X X Extracts X X X X X X X X Extracts X X X X ..... tisfied the other part of the investment in M/s MSIL had been explained, the offer made by M/s MSL before seeking settlement before the commission was accepted only to the extent of unexplained investment in the other company. On the other hand, that was not considered by the settlement commission but the settlement commission only examined the capacity and ability of the applicant before it for generating the income which was not disclosed and later making an offer before a commission for the settlement. For this purpose the settlement commission had examined the past conduct and transactions of the applicant M/s MSL. In the absence of any such discussion regarding the source of investment in M/s MSIL, only offer being made by M/s MSL - a remand for such purpose will be in our considered opinion a futile exercise and more over such an exercise if at all could have been in the case of very company M/s MSIL and not by either the present respondents/assesses or M/s MSL - an applicant and declarant before the settlement commission - Decided in favour of Revenue. - ITA No.89,90,91,92,93/2007 - - - Dated:- 4-7-2013 - D V Shylendra Kumar and B S Indrakala, JJ. For the Appellant : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakhs in the hands of each of the assesses in the company M/s MSIL in fact, was not subjected to tax in the hands of the other company viz., M/s MSL but the tribunal proceeded on the erroneous assumption that it had been offered and taxed in the hands of M/s MSIL and therefore, should not be taxed in the hands of the individual assesses/respondents in these appeals and they should be permitted to resile by means of a rectification application. 5. The whole episode and the proceedings have a background. The income tax authorities had an occasion to search the premises of M/s MSIL under the provisions of Section 132 of the Act as on 25.1.1999. On that occasion, the authorities had seen the unexplained investments in the books of the company to the tune of Rs.4,84,88,500/- in respect of these amounts which otherwise would have been taxable in the hands of the said company M/s MSIL as its undisclosed income being credits not explained properly, each of the respondents/assesses in the five appeals had come forward and made an offer that they had invested a sum of Rs.20.00 lakhs each and the offer to tax this investment as their undisclosed income of the earlier years so that the unexp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n undisclosed income of Rs.4,84,88,500/-, the settlement commission ultimately by passing final orders accepted only an amount of Rs.2,65,04,026/- as the undisclosed income of the applicant by way of its investments in shares in MSIL and did not accept the entire amount of Rs.4,84,88,500/- as had been offered by the applicant. 11. It is after conclusion of all these proceedings, the respondent/assesses had given applications before the assessing officer seeking for rectification of the earlier assessment order in respect of each of them by giving an application on 3.10.2005 (wrongly referred to as the applications dated 3.7.2001 in the order of the tribunal). Under the applications seeking for rectification, each of the assesses wanted to go back on their declared income of Rs.20.00 lakhs as their share capital investment in M/s MSIL and on the premise that this amount formed part of the amount offered by M/s MSL and by mistake the amount had earlier been offered by these assesses as their investment to the extent declared in the hands of each of the assesses and therefore, the assessment order be rectified by deleting this amount of Rs.20.00 lakhs from the earlier undisclosed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts earlier order passed on 12.8.2005 in IT(SS)A No.11/Banga/2002 taking a similar view that as the entire amount of Rs.4,84,88,500/- had been offered by the sister concern of M/s MSIL and therefore the assessing officer bringing to tax a sum of Rs.3,84,88,500/- as the income of M/s MSIL after excluding Rs.1.00 crore amount which had been offered by the directors was not sustainable and therefore, allowed the appeals. 16. It is as against the common order passed by the tribunal in the case of these five respondents/individual assesses, the present appeals by the revenue. 17. What is vehemently urged by Sri Aravind, learned standing counsel for the income tax authorities, is that the tribunal proceeded on the erroneous assumption that the amount detected as the unexplained amount in the books of accounts of M/s MSIL during the search by the income tax authorities as on 25.1.1999 instead of assessing in the hands of the very assessee had been offered by its sister concern M/s MSL as its investment by way of share application in that company, had been assessed in the hands of the sister concern and therefore, part of this amount i.e., a sum of Rs.20.00 lakhs in the hands of each of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 154, there is no occasion for the tribunal to remand the matter to pass orders afresh on Section 154 application. 20. On the other hand appearing on behalf of the assesses Mr Parthasarthy and Mallaha Rao have vehemently contended that the respondents/assesses will be able to demonstrate that the amount of Rs.1.00 crore in the hands of each of the assesses at Rs.20.00 lakhs which has been offered and it was sought to be rectified had been examined by the settlement commission and the tribunal and had been brought to tax. Just because the tribunal has not made a detailed order to discuss as to how this amount had already been subjected to tax, does not mean that it had not been subjected to tax and also that M/s MSL was able to convince the settlement commission that the entire unexplained investments by way of share capital found in the hands of M/s MSIL had been properly explained and accounted by the applicant before the settlement commission and therefore, independent of Rs.2,65,04,626/- brought to tax in the hands of M/s MSL, the other part of the amount had been explained for, there is no occasion for the respondents/assesses to offer the very explained amount as part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icate the determination of tax liability in the hands of M/s MSL in respect of the entire amount. The computation of tax by the settlement commission clearly shows that the tax is computed on the total undisclosed income of Rs.2,65,04,626/-. 25. In fact that settlement commission has also given its reasons as to why it is accepting only a part of the amount offered. The settlement commission has also positively declined to give a direction to exclude the assessment of a sum of Rs.20.00 lakhs each in the case of the respondents/assesses on the premise that the applicant M/s MSL was making an offer of Rs.4,84,88,500/- as its undisclosed income for the reason that it cannot issue such directions in respect of persons not before the Commission and insofar as limiting the offer to a sum of Rs.2,65,04,626/- the settlement commission noticed that such alone could have been the undisclosed income of the assesses in the earlier period and it had no income generated beyond this. It is not as contended by Mr Parthasarthy that because the commission was satisfied the other part of the investment in M/s MSIL had been explained, the offer made by M/s MSL before seeking settlement before the co ..... 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