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TMI Blog2017 (5) TMI 1055X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned order of the ITSC is concerned, it does not spell out any rational criteria for distinguishing between six companies of the Bindal Group and the four Petitioners. Further, the ITSC proceeded to reject the settlement application of the four Petitioners on a ground that was not urged by the Revenue viz., the failure to disclose the manner of earning undisclosed income. Merely because the consolidated cash flow was not in respect of four Petitioners could not mean that they had not disclosed the manner of earned undisclosed income. In the considered view of the Court, the impugned order of the ITSC according a different treatment to the four Petitioners does not appear to be justified in the facts and circumstances of the case. If allowed to stand, the impugned order might defeat the very purpose of the companies of the Bindal Group applying to the ITSC for an early settlement of disputes. The Court is unable to sustain the impugned order dated 13th May 2016 passed by the ITSC declining the prayers of the Petitioners that their applications before the ITSC should be proceeded in accordance with law. While setting aside the impugned orders, the Court directs that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SC on 17th March 2016 under Section 245 C (1) of the Act for AYs 2008-09 to 2015-16. The income which was not disclosed before the AO and which was offered by Bindals Duplex Limited for tax was ₹ 4.10 crore comprising of unsecured loans for AY 2013-14, ₹ 3.50 crore comprising of unsecured loans and sum for AY 2014-15 and ₹ 10 lakhs towards unaccounted stock. Likewise, Swabhiman Vyapaar Private Limited, Brina Gopal Traders Pvt. Ltd. and Tehri Pulp Paper Limited offered for tax sums that were not earlier disclosed aggregating to ₹ 32.50 lakhs, ₹ 33.51 lakhs and ₹ 8.25 crores respectively. 5. Enclosed with the applications was the full and true statement of facts. Inter alia it was stated therein that the main promoter of Bindal Group of companies, Shri Rakesh Kumar, had been in business since 1976; that he started with the family business of sugar, gur etc; he set up a couple of mini sugar plants in Muzaffarnagar, Saharanpur and in adjoining areas; Bindals Duplux Ltd. was promoted by him in 1989 for manufacturing Kraft Paper; thereafter, for purposes of trading, Neeraj Paper Marketing Ltd, was set up in 1995; in 1998, the company, Teri Pulp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chnical requirements prescribed u/s 245C(1) have been fulfilled by all the applicants. On the basis of the material placed before us, we are of the view that as of now, there is no reason to hold that the disclosures made by the applicants are not full and true. The applicants have also explained the manner of deriving additional income not disclosed to the Assessing Officer, in their respective settlement applications. We accordingly hold that all the ten applications dated 18.03.2016 are fit to be allowed and proceeded with. Ordered accordingly. 9. After the application was allowed to be proceeded as above, the Principal Commissioner of Income Tax (Central), Delhi-3, Respondent No.1, filed a report under Section 245D (2B) of the Act before the ITSC. It is significant that the report submitted by Respondent No. 1 was a consolidated report and did not make any distinction between the 10 applicants. The main areas of undisclosed income declared in six companies i.e., Bindal Papers Mills Ltd., Bindal Sponge Industries Ltd., Tehri Pulp Paper Ltd., Neeraj Paper Marketing Pvt. Ltd., Agarwal Duplex Board Mills Ltd. and Bindlas Duplux Ltd. were found as following: a. Bogus shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned in the cash flow statement were held not to be supported by the seized documents. According to Respondent No. 1, the additional disclosure of income made by the Assessee was just about 50% of what ought to have been disclosed. 12. To the above report, the Petitioner submitted a para-wise reply on 11th May 2016. The impugned order dated 13th May 2016 of the ITSC held that no clinching and direct evidence has been placed on record by the Department upto this stage before us to come to the conclusion that the Applicant has not made true and full disclosure of its income in the settlement application. It was stated that most of the issues raised by Respondent No. 1 in his report need further verification/inquiry which can be taken up in the later proceedings. Accordingly, six applications were allowed to be proceeded with further within the meaning of Section 245D (2C) of the Act. 13. Further, as far as four Petitioners before the Court were concerned, by a separate order of the same date i.e., 13th May 2016, it was observed as follows: On a perusal of PCIT's report, it is seen that no specific comments have been made with regard to the present four Applicants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applications filed by the four Petitioners and also six other companies of the Bindal Group, it was elaborately explained that unaccounted income/funds generated by the group as a whole from the unaccounted business transactions and inflation of expenses were brought into a common pool and redeployed/introduced in the form of share capital and/or unsecured loans in various companies of the Group. It was also explained that there was intermingling of funds generated by the various companies in the group. These were redeployed and introduced in various group companies, depending upon business requirement. Mr. Vohra accordingly submitted that the ITSC was required to examine all these applications as a whole and not individually for final settlement of the income of various entities in the group. 19. Mr. Vohra further submitted that in the initial order passed by the ITSC on 30th March 2016, there was a categorical finding that the Applicants had explained the manner of deriving additional income. Further, in its report dated 3rd May 2016, Respondent No. 1 did not offer any specific comment on the applications filed by the four Petitioners herein. This was noted by the ITSC in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which were part of the Bindal Group were permitted to be proceeded with. There was a rational basis for a different treatment being accorded to the Petitioners since they were not covered under the consolidated cash flow statement filed before the ITSC. 23. The above submissions have been considered. What the Respondents are unable to deny is the fact that the applicants before the ITSC included six companies of Bindal Group whose applications were directed to be proceeded with by the ITSC. As far as the four Petitioners were concerned, the ITSC held their applications to be invalid although they belonged to the same Bindal Group. 24. The second fact is that in their applications the ten companies explained that the unaccounted income diverted generated by the Group formed a common pool and was redeployed into all companies in the Group. The funds generated were introduced in the form of share capital or unsecured loans in various other companies of the Bindal Group. It was, therefore, not possible to examine the state of affairs of any one company of the group in isolation of the entire group. 25. The third aspect is that the report submitted by Respondent No. 1 before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failure to disclose the manner of earning undisclosed income. Merely because the consolidated cash flow was not in respect of four Petitioners could not mean that they had not disclosed the manner of earned undisclosed income. 29. In the considered view of the Court, the impugned order of the ITSC according a different treatment to the four Petitioners does not appear to be justified in the facts and circumstances of the case. If allowed to stand, the impugned order might defeat the very purpose of the companies of the Bindal Group applying to the ITSC for an early settlement of disputes. 30. For all the aforementioned reasons, the Court is unable to sustain the impugned order dated 13th May 2016 passed by the ITSC declining the prayers of the Petitioners that their applications before the ITSC should be proceeded in accordance with law. 31. While setting aside the impugned orders, the Court directs that the applications of the four Petitioners would be entertained and proceeded with by the ITSC on the same basis as the six other companies in the Bindal Group. The Petitioners applications shall be permitted to be proceeded with. 32. The writ petitions are allowed and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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