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TMI Blog2017 (9) TMI 1107X X X X Extracts X X X X X X X X Extracts X X X X ..... the figures to be added to the income of the private respondent, the impugned order is set aside. The settlement application is remanded to the Settlement Commission for fresh consideration. The issue is answered accordingly. - W. P. No. 33, 34, 35 of 2016 - - - Dated:- 15-9-2017 - Debangsu Basak, J. For the Petitioners : Mr. Kaushik Chandra, Addl. Solicitor General Mr. Prithu Dudhoria, Advocate For the Respondents : Mr. J.P. Khaitan, Sr. Advocate Mr. Akhilesh Gupta, Advocate Mr. P.K. Jhunjhunwala, Advocate Mr. S. Rudra, Advocate ORDER Debangsu Basak, J. The Income Tax Department has challenged an Order dated June 10, 2014 passed by the Settlement Commission (Income Tax and Wealth Tax), Additional Bench, Kolkata in these writ petitions. The three writ petitions, all at the behest of the Income Tax Department, involve similar issues and have been heard analogously. The parties have treated W.P. No. 33 of 2016 as the lead case and have advanced their respective submissions thereon. Additional Solicitor General appearing for the writ petitioners has submitted that, the impugned order is perverse. It does not give any reasons as to why the Settlement Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as an assessing officer, the impugned order stands vitiated. For the grounds as canvassed, the impugned order should be quashed and the matter may be remanded to the Settlement Commission for fresh consideration. Learned Senior Advocate appearing for the private respondent has submitted that, the Settlement Commission has taken a realistic view on the expenditures claimed. He has drawn the attention of the Court to the fact that, the Settlement Commission has not taken the assessment of the shell companies into consideration. He has drawn the attention of the Court to the various findings recorded in the impugned order as also the stand taken by the Department in the affidavit in opposition. He has submitted that, the Department did not point out to the Settlement Commission that, the assessment orders of some of the assessment years have been reopened. On the issue of best judgment assessment, learned Senior Advocate for the private respondent has relied upon 1973 Volume 90 Income Tax Reports page 271 (Commissioner of Sales Tax, Madhya Pradesh v. H.M. Esufali H.M. Abdulali), 1978 Volume 115 Income Tax Reports page 524 (Brij Bhushan Lal Parduman Kumar v. Commissioner of Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent and the Public Utilities to Bardhaman Excavators Private Limited, Zoom Transport Private Limited, Venus Excavators Private Limited, Landmark Excavators Private Limited and a fifth legal entity. These five companies had actually excavated the coal for the Public Utilities. The private respondent had to reimburse the expenditure for such coal excavation to those five companies which the private respondent has done. According to the revenue, the four companies are actually shell companies. The person in control and management of the private respondent is in control and management of these four companies as also other legal entities. Such person had utilized the four companies as the first layer and the other entities as the second layer to escape Income Tax liability of huge amount. The Settlement Commission has considered the rival contentions. It has noted that, the four companies are companies incorporated under the Companies Act, 1956 and that, they are subject to assessment as separate assessees. It has also noted that, the four companies did not resort to settlement under Chapter XIXA of the Act of 1961. In paragraph 16 of the impugned order, the Settlement Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e best judgment basis are totally different. Trikamji Punia Sons (supra) has held that, the assessing officer has to make an assessment of the total income to the best of his judgment after taking into account the relevant materials which he has gathered. Brij Bhushan Lal Parduman Kumar (supra) has reviewed the authorities on the subject and has held that, a best judgment assessment must make an honest and fair estimate of the income of the assessee and though arbitrariness cannot be avoided in such estimate, the same must not be capricious but should have a reasonable nexus to the available materials and the circumstances of the case. Triyogi Narayan Singh (supra) has held that, a wrong judgment and a judgment containing a mistake do not share the same pedestal. A judgment containing a mistake may not necessarily render the judgment wrong but a wrong judgment is wrong by all means. In the facts of the present case, as noted above, instead of adding a sum of ₹ 263.68 Crores in respect of four entities, the assessing officer has added an aggregate sum of ₹ 36 Crores for the three Assessment Years concerned for each of the four shell companies. The assessing offic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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