9911796707
TMI Blog2017 (8) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... ioners' applications shall be permitted to be proceeded with. The writ petitions are allowed and the applications are disposed of in the above terms but, in the circumstances of the case, with no orders as to costs. The applications of the four petitioners will now be listed before the Income-tax Settlement Commission along with the applications of the six other companies constituting the Bindal group on the date that the Income-tax Settlement Commission may have fixed for further consideration of all the applications of the other six companies. - W. P. (C) Nos. 5424, 5425, 5427 and 5428 of 2016 and C. M. Nos. 22583, 22585, 22589 and 22591 of 2016 (for stay) - - - Dated:- 17-5-2017 - Dr. S. Muralidhar And Chander Shekhar, JJ. For the Petitioners : Ajay Vohra, Senior Advocate, with Rohit Jain and Vaibhav Kulkarni, Advocates For the Respondents : Zoheb Hossain, Senior Standing Counsel with Deepak Anand, Advocate JUDGMENT Dr. S. Muralidhar, J. 1. These are four writ petitions filed by four entities whose applications before the Income-tax Settlement Commission ( ITSC ) were not allowed to be proceeded with by the impugned order dated May 13, 2016 passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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, Tehri Pulp and Paper Limited ( TPPL ) was taken over by the Bindal group for manufacturing high quality kraft paper in 2001, the company, Agarwal Duplex Board Mills Limited ( ADBML ) was taken over for the purpose of duplex board. In the year 2002, Uttaranchal Iron and Ispat Limited in Kotdwar for manufacturing MS bars, flats, rounds, etc., and in 2003, Bindals Sponge Limited (for manufacturing sponge iron) were set up in the Angul District in Orissa. The group has also set up a writing printing paper manufacturing unit named Bindal Paper Mills Limited. It is stated that the interest in Uttaranchal Iron and Ispat Limited was transferred to an unrelated group in 2012 and the shares in Bindal Sponge Industries Limited were transferred to a different unrelated grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , respondent No. 1, filed a report under section 245D(2B) of the Act before the Income-tax Settlement Commission. 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 and Paper Ltd., Neeraj Paper Marketing Pvt. Ltd., Agarwal Duplex Board Mills Ltd. and Bindals Duplux Ltd. were found as following : a. Bogus share capital/share premium b. Unsecured loan c. Unaccounted stock found during the search and other expenses d. Other issues 10. It was mentioned that the other four companies, i.e., Brina Gopal Traders Pvt. Ltd., Satyavan Sales Promotions Pvt. Ltd., Swabhiman Vyapaar Pvt. Ltd. and V. R. Digital Pvt. Ltd. were companies where the issue involved was of share trading without any proper evidence. In the case of Swabhiman Vyapaar Pvt. Ltd. and Brina Gopal Traders Pvt. Ltd., the amount of unsecured loan declared was ₹ 25 lakhs each. According to respondent No. 1, there was inadequate disclosure on account of bogus share capital/shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion . 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., May 13, 2016, it was observed as follows : On a perusal of Principal Commissioner of Income-tax's report, it is seen that no specific comments have been made with regard to the present four applicants under consideration ; as to the manner of their deriving undisclosed income offered for taxation in the settlement applications. 14. The Income-tax Settlement Commission took up for consideration whether each of the four petitioners herein had made a true and full disclosure of income and the manner of earning income. In para 6 of the impugned order, it was observed as under : 6. However, other than the income from share dealings in the assessment year 2015-16, the applicants have not explained the manner of earning the income which has resulted into unexplained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanies in the group. These were redeployed and introduced in various group companies, depending upon business requirement. Mr. Vohra accordingly submitted that the Income-tax Settlement Commission 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 Income-tax Settlement Commission on March 30, 2016, there was a categorical finding that the applicants had explained the manner of deriving additional income. Further, in its report dated May 3, 2016, respondent No. 1 did not offer any specific comment on the applications filed by the four petitioners herein. This was noted by the Income-tax Settlement Commission in the impugned order. In fact, no comments were offered as to the manner of deriving undisclosed income. In other words, there was no objection raised by the respondent specific to the manner of deriving income by the four petitioners. 20. Mr. Vohra submitted that there was no occasion for the Income-tax Settlement Commission to reverse the stand taken by it in the earlier order and conclude that the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs since they were not covered under the consolidated cash flow statement filed before the Income-tax Settlement Commission. 23. The above submissions have been considered. What the respondents are unable to deny is the fact that the applicants before the Income-tax Settlement Commission included six companies of Bindal group whose applications were directed to be proceeded with by the Income-tax Settlement Commission. As far as the four petitioners were concerned, the Income-tax Settlement Commission 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 the Income-tax Settlement Commission was a cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeded 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 earning the undisclosed income. 29. In the considered view of the court, the impugned order of the Income- tax Settlement Commission according to a different treatment to the four petitioners does not appear to be justified n 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 Income-tax Settlement Commission for an early settlement of disputes. 30. For all the aforementioned reasons, the court is unable to sustain the impugned order dated May 13, 2016, passed by the Income-tax Settlement Commission declining the prayers of the petitioners that their applications before the Income-tax Settlement Commission should be proceeded in accordance with law. 31. While setting aside the impugned orders, the court directs that the applications of the four ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
