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TMI Blog2017 (10) TMI 600X X X X Extracts X X X X X X X X Extracts X X X X ..... SC if the application is proceeded with and heard finally. The difference is too minimal when compared to the total amount disclosed, to constitute a failure to make full and true disclosure of the income Applicant has taken contradictory stand regarding whether it is a successor company or a new set up to explain the sale of assets - ITSC appears to have proceeded on a wrong premise. There is no doubt that Shetkari is an earlier avatar of the Petitioner. The Joint Venture Agreement clearly shows that 100% of shareholding of Shetkari was owned by Ridhi Sidhi and that was intended to be diluted with investments from the other companies including Enn Vee. The application of Enn Vee is pending before the ITSC. The primary ground for rejection is that Enn Vee is a conduit and that it has received the substantial amount of share capital from bogus/non-existent companies. If this is so, it would have consequences for Enn Vee as well. The dismissal of the Petitioner’s applications by the ITSC would result in a failure to examine the matter comprehensively and in entirety. It is not in dispute that the Petitioner company was undergoing restructuring. The restructuring of the shareho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osure of additional income of ₹ 11,60,96,390/- and paid additional tax and interest payable thereon aggregating to ₹ 97,29,856/-. The applications also contained the confidential portion which provided the details relating to the mode and manner of earning such additional income. The Petitioner also apprised the Assessing Officer ( AO ) of the factum of filing of settlement applications on 30th January, 2013. 4. Apart from the Petitioner's application, applications were also filed by the group companies and individuals on whom searches were carried out. In total the said applicants have declared a sum of ₹ 104,10,90,845/-. A consolidated order was passed by the ITSC on 8th February, 2013 directing that Since the applicants have prima-facie fulfilled the conditions prescribed under Section 245C (1) of the Act, the applications are allowed to be proceeded with. 5. The ITSC had simultaneously called for a report from the Commissioner of Income Tax (`CIT') which was submitted on 18th March, 2013. In this report, the CIT averred that the Petitioner has received substantial amount of share capital from bogus/non-existent companies. The report further s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so a failure to disclose the manner in which the income was derived and the additional amount of income tax payable on such income. 7. Pursuant to this report, the ITSC passed the impugned common order dated 3rd April, 2013 rejecting the applications of the Petitioner as also that of M/s. Radico Khaitan Ltd. The reasons for rejection are recorded as under: 1. Applicant has not filed reply to questionnaire till date even though the questionnaire was issued to him by the A.O. several months back. The learned Counsel for the applicant when asked to explain the reasons for not giving a reply even after lapse of several months merely stated that as the information sought was routine the reply was not given. In our view if the information sought was routine there should not have been any reason for the applicant to furnish the same without delay. 2. Applicant has taken contradictory stand regarding whether it is a successor company or a new set up to explain the sale of assets claiming that it is a successor company but regarding issue of fresh share capital it was stated that it was in the process of set up. 3. In Directors report at page 47 of Radico Khaitan Paper boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant and not on stamp paper. The agreement to amend apparently has no legal validity and cannot be accepted as the genuine agreement. In view of this the out of book sales of ₹ 3,81,56,000/- as worked out by CIT at page 4 of his report dated 18.03.2013 should have been declared by the applicant as its income but it has failed to do so and consequently has not made a full and true disclosure. 8. This order has been impugned in the present writ petition on severalgrounds including (a) That the ITSC does not have the powers of reviewing its earlier order (b) that there was no failure by the Petitioner to make full and true disclosure of its income (c) The application of Enn Vee against whom the allegation has been made, that it had received the bogus shares and that it is a conduit, is also currently pending before the ITSC and therefore, the Petitioner s case be also taken up along with the case of Enn Vee by the ITSC itself. Before this Court, the first issue is not pressed or argued. Submissions of the Petitioner 9. The main argument of Mr. Ajay Vohra, learned Senior Advocate appearing on behalf of the Petitioner is that the application of Enn Vee for sett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wers to review its own order. 12. Insofar as the merits of the case are concerned, Mr. Chaudhary submits that there was a failure by the Petitioner to make a full and true disclosure. He specifically relies upon the contradictory stand taken by the Petitioner which is recorded as reason no. 2 in the impugned order. He further submits that the AO had asked several questions to the Petitioner which were not answered by it. Mr. Chaudhary relies upon how on the one hand the Petitioner claims depreciation of the assets of the company and on the other hand the Petitioner also claims that the company was in the process of being set up. These two are completely contradictory and hence the ITSC, according to Mr. Chaudhary, has rightly rejected the applications of the Petitioner. He submits that the purpose with which the Joint Venture Agreement was entered into was merely to transfer manufacturing licenses issued by the Government of Maharashtra for operating the distillery. He, thus, submits that the Petitioner did not satisfy the threshold requirement of the full and true disclosure. Analysis and Findings 13. The reasons given by the ITSC for rejection of the application that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee as well. The dismissal of the Petitioner s applications by the ITSC would result in a failure to examine the matter comprehensively and in entirety. Even if what is contained in the report is indeed true which would become clear after the proceedings at the ITSC are concluded, appropriate orders can be passed by the ITSC in accordance with law in respect of such bogus companies, if any. The rejection of the applications of the Petitioner cannot be done on this sole ground and in fact it would be appropriate if the Petitioner s case is heard and decided along with case of Enn Vee. 18. Finally, the contradiction which has been highlighted in reason no.2 above appears to misunderstand the situation. It is not in dispute that the Petitioner company was undergoing restructuring. The restructuring of the shareholding is different from a company being newly setting up. The term `process of setup' is merely a misdescription by the Petitioner of the restructuring process, in its response dated 1st April 2013, to the notice of the ITSC dated 8th February 2013. The ITSC appears to have borrowed this terminology from the said document and has non-suited the Petitioner on that ground. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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