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TMI Blog2021 (4) TMI 545X X X X Extracts X X X X X X X X Extracts X X X X ..... rosecution in terms of section 245H of the Income Tax Act, 1961. 3. By the impugned orders, the 2nd respondent, Income Tax Settlement Commission, has settled the case by determining the income of the first respondent in the respective writ petitions as follows:- i) Dr.Chandralekha, the 1st respondent in W.P.No.31351 of 2015 Ass.Year Income Returned Addl.Income offered in the Settlement Application Further income required to be disclosed Total income determined by the ITSC 2006-07 22,72,917 3,26,925 15,30,426 41,30,268 2007-08 42,77,279 91,33,667 16,90,085 1,51,01,031 2008-09 1,78,00,263 2,97,14,051 20,000 4,75,34,314 2009-10 1,65,23,840 1,20,36,985 1,20,000 2,86,80,825 2010-11 1,57,21,167 1,07,66,760 1,35,910 2,66,23,837 2011-12 2,24,65,316 67,01,640 (-)6,21,400 2,85,45,756 2012-13 12,78,91,040 0 19,65,867 12,98,56,907 Total 20,69,51,822 6,86,80,228 60,83,688 28,04,72,938 Additional Amount offered for Tax : (Rs. 28,04,72,938 - Rs. 20,69,51,822/- = Rs. 7,35,21,116/-) ii) Dr.K.Veluswamy, the 1st respondent viz in W.P.No.31352 of 2015 Ass.Year Income Returned Addl.Income offered in the Settlement Application Further income requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012-13, even though, the 1st respondent in the respective writ petitions did not offer any additional income for settling the case for the Assessment year 2012-13. 7. It is therefore submitted that the 2nd respondent Income Tax Settlement Commission ought not to have settled the case inasmuch as no additional income was offered by them for the Assessment year 2012-13. 8. That apart, it is submitted that in the impugned orders, the 2nd respondent Income Tax Settlement Commission erred in directing the payment of interest contrary to the decision of the Hon'ble Supreme Court in Brij Lal and Others vs. CIT (2010) 328 ITR 477(SC). 9. It is therefore submitted that Dr.S.Chandralekha, 1st respondent in W.P.No.31351 of 2015 who had received loan from M/s.Palani Medical Centre Private Limited, of which, she was a Director and since the amount was paid to her from the said company in which her shareholder and director, the amount received by her, was to be considered as a deemed dividend within the meaning of Section 2(22) (e) of the Income Tax Act,1961 and therefore was liable to tax in her hands and no income was offered. 10. I have also heard the learned Senior Standing counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on various dates from the Company. 19. It is submitted that the 2nd respondent, Income Tax Settlement Commission wrongly accepted the claim of Dr.Chandralekha for the aforesaid amount was utilized by her in the hospital ran under her proprietary name by interlacing funds and was purely on the commercial basis and the same has also deemed dividend within the meaning of Section 2(22)(e) of the Act as per the decision of this Court in Commissioner of Income Tax vs. F.Praveen (2008) 220 CTR 639 (Mad). 20. It is submitted that the 2nd respondent, Income Tax Settlement Commission committed a mistake in relying on the said decision of the case. 21. On the other hand, it is submitted that the issue ought to have examined from the purview of the following decisions of the Hon'ble Supreme Court : i) Brij Lal vs. CIT (2010) 328 ITR 477(SC) ii) Miss P.Sarada vs. Commissioner of Inome Tax, (1998) 96 Taxman 11 (SC) iii) Commissioner of Income Tax vs. P.K.Abubucker, (2004) 135 Taxman 77 (Madras) iv) Commissioner of Income Tax vs. F.Praveen, (2008) 220 CTR 639 (Madras) 22. Learned Counsel for the 1st respondent in the respective writ petitions defends the impugned orders and submits th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t period under Section 153A and thereafter for the assessment year 2012-13 for which notice under Section 142(1) was issued to them on 20.11.2012. 28. The application filed by the 1st respondent in the respective writ petitions for the period covered by notices issued under Section 153 A of the Income Tax Act, 1961 were in order. The 1st respondent in the respective writ petitions satisfied the statutory requirement of the sub- clause (i) to the first proviso to section 245C of the Income Tax Act, 1961 inasmuch as the additional amount of income disclosed for settling the case exceeded Rs. 50 lakhs. Thus, there is no merit in the challenge to the impugned orders to that extent. 29. However, no additional income was disclosed for the assessment year 2012-13 (period outside the notice issued under section 153 A for block assessment) by the first respondent in the respective writ petitions. As per the aforesaid provision, the 1st respondent in the respective writ petitions should have disclosed additional income above Ten Lakh. Therefore objection of the petitioner is valid. Therefore, they have not satisfied the statutory requirement under sub- clause (ii) to the first proviso to S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 245-C(1-B) then Section 234-B(2) applies. The said subsection deals with the situation where before determination of the total income under Section 143(1) or Section 143(3) tax is paid under Section 140-A or otherwise interest shall be calculated in accordance with Section 234-B(1) up to the date on which tax is so paid. In that sense an application under Section 245-C(1) is a return. Section 245-C(1) deals with computation of total income. 34. There is one more way of looking at the Act. Chapter XIXA refers to the procedure of settlement [see Section 245-D(1)]. As stated above, Section 245-D(1) provides for expeditious recovery of tax by way of pre-assessment collection. Interest on default in payment of advance tax comes under Sections 234- A, 234-B, 234-C, which fall in Chapter XVII which deals with collection and recovery of tax. It is important to note that interest follows computation of additional payment of income tax under Sections 245-C(1-B) and (1-C). This is how Sections 234-A, 234-B and 234-C get engrafted into Chapter XIX-A at the stage of Section 245-D(1). 35. As stated, till the Settlement Commission decides to admit the case under Section 245-D(1) the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of the order of settlement under Section 245-D(4). (3)The Settlement Commission cannot reopen its concluded proceedings by invoking Section 154 of the Act so as to levy interest under Section 234-B, particularly, in view of Section 245-I. 39. Thus, there two distinct stages under Chapter XIX-A and that the legislature has not contemplated the levy of interest between the order under Section 245-D(1) stage and Section 245-D(4) stage. Interest under Section 234-B will be chargeable till the order of the Settlement Commission under Section 245-D(1) i.e. admission of the case. 40. In the impugned order, the 2nd respondent Income Tax Settlement Commission has directed the interest under Section 234A to be charged for the delay in filing of the original return under section 139/153 A/153C. 41. The impugned order to the extent it is contrary to the decision of the Honourable Supreme Court in the above case in Brij Lal Vs Commissioner of Income Tax (2011) 1 SCC 1 ;[2010] 328 ITR 477 is liable to be there for modified. 42. The officers under the jurisdiction of the 1st respondent are therefore directed to give effect to the order of the second respondent Income Tax Settlemen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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