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TMI Blog2021 (9) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... y and truly disclosed all material particulars bearing in mind that it is they who approached the ITSC to settle the dispute? - HELD THAT:- We find that the reasons assigned by the ITSC for coming to such a conclusion as to what would be the appropriate valuation method cannot be treated to be a perverse decision. With regard to the aspect as to whether the there was a full and true disclosure by the assessee, this has been considered by the ITSC, which recorded that the assessee cooperated with the proceedings before the ITSC. In fact, this has also been recorded so by the learned Single Judge in the impugned order - ITSC also noted the conduct of the assessee during the course of the proceedings. As pointed out earlier, the first report as per Rule 9 of the said Rules was submitted in June 2013, the comments were filed by the assessee before the ITSC to the said first report on 05.7.2013 and thereafter, a verification report was submitted and the comments were furnished to the assessee where the assessee offered additional sum by way of further disclosure. Aspects were noted by the ITSC and the conduct of the assessee was examined qua the aspect of full and true disclosure and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely heard Mr.R.Sivaraman, learned counsel appearing for the appellant and Mr.A.P.Srinivas, learned Senior Standing Counsel accepting notice for the first respondent. 2. In the light of the decision we propose to render in this appeal, notice to the second respondent is dispensed with and the appeal itself is taken up for final disposal. 3. This appeal is filed by the assessee challenging the order dated 09.4.2021 passed in W.P.No.16552 of 2014 filed by the first respondent herein as against the order passed by the second respondent herein. 4. In this judgment, the parties shall be referred to as the assessee (appellant), the Revenue (first respondent) and the ITSC (second respondent). 5. The facts leading to filing of the writ petition are as hereunder: The assessee is carrying on business in jewelery and diamonds under the name and style of M/s.Suman Jewelery, Coimbatore. The assessee has been filing return of income and for the assessment years from 2007-08 to 2012-13, the returns were filed. Seizure and search operations under Section 132 of the Income Tax Act, 1961 (for short, the Act) were carried on in the business and residential premises of the assessee and her elder s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions for further disclosure not because she accepted any understatement of income, but basically with a view to bring quietus to the matter and in the spirit of settlement. 8. Hence, the ITSC was of the opinion that it could not be said that the disclosure of income by the assessee was not full and true. Further, the prayer for immunity from penalty and prosecution was granted. The Assessing Officer was directed to compute tax as per law and it was directed to be paid in 12 monthly instalments starting from 30.9.2013. There has been a further direction issued by the ITSC for release of documents relating to a property at Theni. 9. After the order was passed by the ITSC under Section 245D(4) of the Act dated 31.7.2013, the assessee submitted a representation dated 13.3.2014 to the Commissioner of Income Tax, Central III, Chennai-34 for release of documents. Pursuant to that, by order dated 07.4.2014, the Income Tax Officer (HQ), Central III, Chennai addressed the Deputy Commissioner of Income Tax, Central Circle II, Coimbatore stating that the Commissioner of Income Tax, Central III, Chennai-34 recorded that since the assessee paid the entire outstanding demand, permission was g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SC and they recorded reasons as to why the procedure adopted by them was just, fair and proper. 14. As mentioned above, apart from preliminary objection, other objections were raised by the assessee on the merits of the matter as well. But, the said writ petition was pending from 2014 onwards and by the impugned order, the same had been allowed, the order passed by the ITSC was set aside and the Revenue has been permitted to proceed with the regular assessment proceedings. 15. We have carefully perused the impugned order passed in the said writ petition and examined as to the grounds, on which, the learned Writ Court had interfered with the order passed by the ITSC. We find that the primary and main reason for interfering with the order of the ITSC was on the ground that the assessee did not make a full and true disclosure before the ITSC and therefore, the application under Section 245C of the Act ought to have been rejected. The reason for coming to such a conclusion is on account of the fact that additional disclosure of income was made by the assessee during the pendency of the settlement proceedings. 16. The question would be as to whether this could be a reason to hold tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been mentioned. In this context, we also find that such other set of accounts were not found in respect of AY 2007-08. There is a large number of other deficiencies and discrepancies in the other set of accounts. We are, therefore, of the considered opinion that the other set of books cannot be relied upon for the purpose of quantifying the applicant's undisclosed income." 19. In our considered view, the learned Single Judge, while examining the above conclusion arrived at by the ITSC, ought not to have substituted his views with that of the ITSC unless he finds that there is a serious error in the decision making process. The learned Single Judge proceeded to hold that the observations and findings of the ITSC were utterly perverse and without jurisdiction and no prudent person could have come to such a conclusion. But, we do not find anything of that sort on a reading of paragraph 6.2.2. of the order passed by the ITSC. 20. The ITSC has given certain reasons, which appear to be plausible reasons for the course, which has been adopted by the ITSC with regard to the set of books of accounts to be reckoned while considering the case for settlement. The next aspect is as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut and the corresponding income has been offered for taxation. We find that the approach adopted by the applicant in this respect is logical, reasonable, scientific and hence, acceptable. 6.2.4. The Department has stated that for valuing the stock for each year, the applicant has adopted the 'weighted average cost method'. We find that the valuation of stock by adopting the 'weighted average cost method' is normally followed in this line of business. At this stage, we would like to examine the method adopted by the Department for working out the undisclosed income on the 'net accretion to asset method'. It appears that the working of the undisclosed income quantified by adopting this method in the report under Rule 9 of the Department was erroneous. This is indicated by the fact that different figures have been reached by the Department by adopting the same method in the paper book submitted on 25.7.2013. We, however, find that even the new working done by the Department suffers from a number of infirmities. The Department has considered negative figures in the regular books representing sundry debtors as an asset while such figures reflected both the sund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind that there is no error in the decision making process and as pointed out, we are not expected to substitute the decision of the ITSC, which has taken note of the conduct of the assessee, who was in the spirit of settlement subject to conditions. Therefore, we are of the view that the order passed in the said writ petition calls for interference. 25. We are conscious of the fact that the assessee had raised a preliminary objection with regard to the maintainability of the said writ petition filed at the instance of the Revenue against challenging the order passed by the ITSC. In fact, this issue had come up before us in other appeals as well and certain writ appeals were admitted to decide this question of law as to the maintainability of writ petitions filed by the Department questioning the order passed by the ITSC. 26. However, in the case on hand, we have not ruled on the aspect regarding maintainability of the said writ petition, as we are fully satisfied that there is no error in the decision making process committed by the ITSC nor the order passed by the ITSC can be construed to be perverse or illegal warranting interference under Article 226 of The Constitution of Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X
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