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TMI Blog2020 (1) TMI 998X X X X Extracts X X X X X X X X Extracts X X X X ..... course of the proceedings before the Commission is not new disclosure as found by the Apex Court in case of Ajmera Housing Corpn. [ 2010 (8) TMI 35 - SUPREME COURT] On perusal of the impugned order passed by the Commission, it is apparent that the application submitted by the respondent has been dealt with as per the provisions of section 245C and 245D of the Act. The Commission has observed detailed procedure while exercising powers under section 245D(4) of the Act of 1961 by examining thoroughly report submitted by the petitioner under Rule 9 of the Income Tax Settlement Commission (Procedure) Rules, 1997. The Commission has also provided proper opportunity of hearing to the respective parties and therefore the amount which has been determined by the Commission is just and proper. In view of the aforesaid decisions cited by the respondent, the Commission was right in considering the revised offer made by the respondent during the course of the proceedings in the nature of spirit of settlement. Therefore, the decision of the Apex Court in case of Ajmera Housing Corpn. (supra), would not come into operation in facts of the case. We are therefore of the opinion that order passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 56,183/ which was in relation to long term capital gain claimed as exempt under section 10(38) of the Act on the sale of shares of M/s. Surbhi Chemicals Ltd. 3.2) The respondent assessee filed Settlement Application under section 245C(1) of the Act of 1961 before the Commission on 1st January, 2017 offering additional income for the assessment years as under : SL. No. Assessment Year Additional income offered in the statement of claim 1 20122013 ₹ 1,18,029/ 2 20132014 ₹ 1,67,92,355/ 3 20142015 ₹ 6,67,26,846/ 4 20152016 ₹ 13,08,24,444/ 5 20162017 ₹ 64,38,326/ Total ₹ 22,09,00,000/ 3.3) respondent-assessee filed its statement of fact before the Commission, preparing a statement of sources and application of unaccounted income to demonstrate that investment/application and rotation of unaccounted funds is covered by overall source of unaccounted funds generated and offered to tax. It was submitted that applications thereof being explained by sources offered, the same were not separately liable to be treated as income. The respondent-assessee submitted that du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder 25th July, 2018 accepted the disclosures made by respondent assessee after considering the detailed item-wise explanation submitted by respondent assessee in respect of income of ₹ 113 Crore suggested by the petitioner and arrived at the conclusion that all the issues raised by the petitioner are covered in the additional income offered in the statement of fact and additional income further disclosed by the respondent assessee amounting to ₹ 12 Crore and accordingly the case of the respondent assessee was settled on the terms and conditions stated in the impugned order in paragraph no. 14 to 18. 4. Heard learned advocate Mr. Nikunt Raval appearing for learned advocate Mrs. Kalpana Raval for the petitioner and learned Senior Counsel Mr. S.N. Sopakar with learned advocate Mr. Bandish Soparkar for the respondent-assessee. 5. Learned advocate for the petitioner submitted that after making initial disclosure of ₹ 22.09 Crore, in the statement of fact filed before the Commission, the respondent assessee made further substantial disclosure of ₹ 12 Crore which is more than 50% of the original declaration. It was therefore, submitted that initial disclosu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , learned Senior Advocate Mr. S.N. Soparkar assisted by learned advocate Mr. Bandish Soparkar for the respondent assessee submitted that the facts of the present case are different than the facts before the Supreme Court in case of Ajmera Housing Corpn. (supra). Reliance was placed upon the decision of Apex Court in case of Jyotendrasinhji v. S.I. Tripathi reported in (1993) 201 ITR 611 (SC) dated 2nd April, 1993 to submit that this Court is required to consider the legality of the procedure followed by the Commission and not the validity of the order. He relied upon the following observations made by the Apex Court in the said decision : "15. It is true that the finality clause contained in Section 245I does not and cannot bar the jurisdiction of the High Court under Article 226 or the jurisdiction of this court under Article 32 or under Article 136, as the case may be. But that does not mean that the jurisdiction of this Court in the appeal preferred directly in this court is any different than what it would be if the assessee had first approached the High Court under Article 226 and then come up in appeal to this court under Article 136. A party does not and cannot gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harji J., speaking for the Bench comprising himself and S.R. Pandian, J. observed that in such a case this Court is " concerned with the legality of procedure followed and not with the validity of the order.' The learned Judge added 'judicial review is concerned not with the decision but with the decisionmaking process." Reliance was placed upon the decision of the House of Lords in Chief Constable of the N.W. Police v. Evans, [1982] 1 W.L.R.1155. Thus, the appellate power under Article 136 was equated to power of judicial review, where the appeal is directed against the orders' of the Settlement Commission. For all the above reasons, we are of the opinion that the only ground upon which this Court can interfere in these appeals is that order of the Commission is contrary to the provisions of the Act and that such contravention has prejudiced the appellant The main controversy in these appeals relates to the interpretation of the settlement deeds though it is true, some contentions of law are also raised. The commission has interpreted the trust deeds in a particular manner. Even if the interpretation placed by the commission on the said deeds is not correct, it wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such income. In this context, we had called for the letter written by the applicants making such revised offers. Copies of such letters dated 6.2.2014 written by the partners of the firm are produced on record. In such letters, it was conveyed that the applicants had filed a petition for settlement in which offered a sum of ₹ 7,75,000/ at the rate of 12 per cent on peak balance of funds deployed in money lending activity. It was further stated that the applicant during the course of hearing under section 245D(4), in the spirit of settlement, agreed to further additional income of ₹ 39,12,667/ which is computed on the basis stated hereinbelow: a. interest in money lending activity @ 15% p.a.; b. Amount deployed in money lending activity ₹ 50,00,000/ c. Income out of on money receipt @ 15%. 12. Similar declarations were made in the case of other applicants as well. It can thus be seen that these revised offers of tax was in the nature of spirit of settlement and cannot be seen in strict sense of abandoning initial disclosures and replacing the same by fresh disclosures on the basis of such revised offers. What in essence the assessee did was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e additional disclosures for all years the assessees had sought settlement, we find the Commission committed no error in accepting them and in proceeding to pass final order on such settlement applications." 6.4) Reliance was also placed on the recent decision of this Court in case of Principal Commissioner of Income Tax, Central v. Income Tax Settlement Commission dated 22nd October, 2019 in Special Civil Application No. 9883/2019, wherein it is held as under : "50. In the above backdrop, the decision of the Supreme Court in the case of Ajmera Housing Corporation v. Commissioner of Income-tax (supra), on which reliance has been placed by the learned counsel for the petitioner would, in the opinion of this court, have no applicability to the facts of the present case, inasmuch as, in the facts of the said case, the assessee had filed application under section 245C before the Settlement Commission disclosing an amount of ₹ 1,94,33,580/ for the relevant assessment year in addition to the income declared in the return of income submitted by them earlier. During the course of the proceedings before the Settlement Commission, the assessee filed a revised settlement ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he respondent before the Commission, the decision of the Apex Court in case of Ajmera Housing Corpn. (supra), cannot be made applicable to the facts of the present case. It was further submitted that the Commission is convinced by the item-wise explanation submitted by the respondent assessee in response to the income of ₹ 113 Crore suggested by the petitioner. It was therefore submitted that in view of the decision of the Apex Court in case of Jyotendrasinhji (supra), Commission is not required to give any reason, as the Commission has acted in accordance with the provisions of the Act of 1961. He further submitted that as the scope of the inquiry is very limited, no interference is required to be made in the impugned order passed by the Commission. 7. Having considered submissions made by learned counsel for the respective parties and the order passed by the Commission, only question which arises for consideration in facts of the present case is that whether additional income disclosed to the tune of ₹ 12 Crore by the respondent assessee during the course of proceedings before the Commission can be said to be fresh and substantial disclosure or not and to come t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rect the Commissioner to make further enquiry and investigations in the matter and furnish his report. Thereafter, after examining the record, Commissioner's report and such further evidence that may be laid before it or obtained by it, the Settlement Commission is required to pass an order as it thinks fit on the matter covered by the application and in every matter relating to the case not covered by the application and referred to in the report of the Commissioner under subsection (1) or subsection (3) of the said Section. It bears repetition that as per the scheme of the Chapter, in the first instance, the report of the Commissioner is based on the bare information furnished by the assessee against item No. 10 of the prescribed form, and the material gathered by the revenue by way of its own investigation. It is evident from the language of Section 245C(1) of the Act that the report of the Commissioner is primarily on the nature of the case and the complexities of the investigation, as the annexure filed in support of the disclosure of undisclosed income against item No. 11 of the form and the manner in which such income had been derived are treated as confidentia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no ambiguity. 27. It is trite law that a taxing statute is to be construed strictly. In a taxing Act one has to look merely at what is said in the relevant provision. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. There is no room for any intendment. There is no equity about a tax. (See: Cape Brandy Syndicate Vs. Inland Revenue Commissioners (1921) 1 KB 64 and Federation of A.P. Chambers of Commerce & Industry & Ors. Vs. State of A.P. (2001) 247 ITR 36 (SC) In interpreting a taxing statute, the Court must look squarely at the words of the statute and interpret them. Considerations of hardship, injustice and equity are entirely out of place in interpreting a taxing statute. (Also see: Commissioner of Sales Tax, Uttar Pradesh Vs. The Modi Sugar Mills Ltd. AIR 1961 SC 1047. 28. As aforestated, in the scheme of Chapter XIXA, there is no stipulation for revision of an application filed under Section 245C(1) of the Act and thus the natural corollary is that determination of income by the Settlement Commission has necessarily to be with reference to the income disclosed in the application filed under the said Section in the prescrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "Given that a document or transaction is genuine, the court cannot go behind it to some supposed underlying substance. This is the wellknown principle of Inland Revenue Comrs v Duke of Westminster [1936] AC 1, [1935] All ER Rep 259, 19 Tax Cas 490. This is a cardinal principle but it must not be overstated or overextended. While obliging the court to accept documents or transactions, found to be genuine, as such, it does not compel the court to look at a document or a transaction in blinkers, isolated from any context to which it properly belongs. If it can be seen that a document or transaction was intended to have effect as part of a nexus or series of transactions, or as an ingredient of a wider transaction intended as a whole, there is nothing in the doctrine to prevent it being so regarded; to do so is not to prefer form to substance, or substance to form. It is the task of the court to ascertain the legal nature of any transactions to which it is sought to attach a tax or a tax consequence and if that emerges from a series or combination of transactions, intended to operate as such, it is that series or combination which may be regarded." 31. We are convin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court has also commented that having come to the conclusion that the penalty leviable worked out to be ₹ 562.87 lakhs, the Settlement Commission had no reason for levying a token penalty of ₹ 50 lakhs, which was not even 10% of the minimum leviable penalty. Ultimately the High Court observed that : (i) since the Settlement Commission had not supplied annexure filed on 19th September, 1994, declaring additional income of ₹ 11.41 crores, due opportunity had not been given to the revenue to place its stand properly; (ii) huge amount of unexplained expenses, unexplained loans and unexplained surplus, total of which was more than ₹ 14 crores, was not taken into consideration while passing the final order and (iii) the Settlement Commission had imposed token penalty of ₹ 50 lakhs while on its own assessment leviable penalty would have been ₹ 562.87 lakhs. Further, if the amount which had not been taken into consideration while assessing the total undisclosed income was to be taken into account, the amount of leviable penalty would have been much more. In light of these facts, the High Court formed the opinion that it would be in the interest o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax Settlement Commission (supra) dated 22nd October, 2019 would be applicable to the facts of the present case and as such no interference is called for while exercising jurisdiction under Article 226 of the Constitution of India, more particularly, when the Commission has arrived at the conclusion that further additional income of ₹ 12 Crore offered during section 245D(4) proceedings can be accepted with reference to income disclosed in the settlement application. 11. On perusal of the impugned order passed by the Commission, it is apparent that the application submitted by the respondent has been dealt with as per the provisions of section 245C and 245D of the Act. The Commission has observed detailed procedure while exercising powers under section 245D(4) of the Act of 1961 by examining thoroughly report submitted by the petitioner under Rule 9 of the Income Tax Settlement Commission (Procedure) Rules, 1997. The Commission has also provided proper opportunity of hearing to the respective parties and therefore the amount which has been determined by the Commission is just and proper. In view of the aforesaid decisions cited by the respondent, the Commission was right ..... X X X X Extracts X X X X X X X X Extracts X X X X
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