9911796707
TMI Blog2021 (12) TMI 1033X X X X Extracts X X X X X X X X Extracts X X X X ..... record a satisfaction. Again, a satisfaction is different and distinct from a concrete finding of fact or law. The decision of the Supreme Court only uses the word 'satisfaction' and not finding. The satisfaction to be recorded is only an expression of a tentative opinion to entertain an application or to allow it to be processed further. Such a satisfaction does not and it could not determine either the rights of the parties to any extent or limit the options of the Settlement Commission to reach a different conclusion i.e. to reject the application either in part or in entirety, at a later stage. Unless the application filed is found to be wholly bogus or unfounded on facts or law, there may remain less reason to reject such applications outrightly. In the facts of the present case, the petitioner had supported his claim and the Settlement Commission had not reached a conclusion that the disclosure made was not full or true inasmuch as the quantification was not in dispute at that stage. The truthfulness of the disclosure made may be said to have been not believed by the Settlement Commission inasmuch as there are observations disbelieving the manner of acquiring th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had not explained the manner of acquiring the income (cash and jewellery), the Settlement Commission has again failed to take into consideration the effect of the Memorandum of Agreement and the further claim of the petitioner that the signatories to that agreement (who had contributed ₹ 10.5 crores to set up a new business) had disowned that amount, subsequent to that search. Prima-facie , there is merit in the submissions advanced by learned Senior Counsel for the petitioner that by virtue of Section 132 (4A), Section 56 (2) (vii) and Section 292 (C), the presumption in law arose as a consequence of the action/inaction of the third party in not claiming the cash seized at the petitioner s hands as may be treated as her income. Without drawing any final conclusion to that, we find that the said aspect has not been examined and has been completely overlooked by the Settlement Commission. Settlement Commission appears to have remained in some doubt about the aspect of the matter inasmuch as its observation on the issue are hypothetical and plural. It has thus tried to weigh between two hypothetical possibilities of the money belonging to the third party and, the money belo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her by certain friends/acquaintance. As to the jewellery, the petitioner claimed the same, having been received from her father-in-law and her mother-in-law. Some part of the jewellery was explained as belonging to her daughters, lying with her for safe custody. Upon conclusion of the search, the petitioner was again summoned under Section 131 of the Act, wherein, she appears to have reiterated her statement recorded during the search. At the same time, it is the case of the petitioner that during the second statement, thus recorded, she had made a statement to the Assessing Officer explaining the cash discovered belonging to three persons with whom, she had entered into a business arrangement to set up a joint venture enterprise. A Memorandum of Agreement is also claimed to have been produced by her. However, it is the case of the petitioner that neither that part of her statement was recorded under Section 131 of the Act nor the documents namely the Memorandum of Agreement received on record. Therefore, the petitioner further claims to have sent the same to the Assessing Authority by speed post on 21.09.2017. In such facts, the petitioner was visited with an assessment noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplained that the aforesaid parties who had contributed to the capital required in the new business had, disowned their connection to it, inasmuch, according to the petitioner, they were not coming forward to claim that money before the Income Tax Authority, occasioned by the seizure of the same in the proceedings carried out against the petitioner. Therefore, the petitioner disclosed the manner in which she came to own that money and therefore offered it as her income before the Settlement Commission. As to the documentary evidence, it does appear that a voluminous documents running into 688 pages in two volumes were submitted before the Settlement Commission containing the details of assessment records of the entity M/s SIB International to establish its genuineness and the income derived therefrom, by the petitioner. Further, the petitioner produced before the Settlement Commission the will deed executed by her father-in-law late Shiv Shankar Lal with respect to the Jewellery disclosed by her. She also placed on record the copies of invoices to establish the sale of jewellery and also earning commission from the jewellery business. Certain receipts and other documents have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to consider the possibilities and probabilities in two scenarios being (i) if the cash actually belongs to the persons, as claimed by the petitioner and (ii) what would emerge if it belongs to the petitioner. The Settlement Commission has itself chosen to use words and phrases which do not indicate any definite opinion being formed by it, inasmuch as it has only contemplated two possibilities that may exist. After making a discussion of the same, the Settlement Commission has again reached a conclusion that the manner of deriving such unaccounted income has not been explained by the petitioner. We will deal with that reasoning, a little later. In such facts, learned Senior Counsel for the petitioner submits that undisputedly, the proceedings before the Settlement Commission may be divided broadly into three stages. At the first stage, the matter remains confined between the Settlement Commission and the declarant to test whether the declarant had made a true and full disclosure of the undeclared income brought forth by it by means of the declaration. Second, it is to be examined if the manner in which such declared income has been acquired is disclosed by the declarant or not. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do not arise from the relevant material existing on record. They are stated to be wholly untenable. In fact, it is the submission of learned counsel for the petitioner that the Settlement Commission was obligated to look at such material and thereafter record its tentative opinion as to the manner of earning (undisclosed income) declared by the petitioner. As to the cash discovery, it has been submitted that the conclusions drawn by the Settlement Commission are based on extraneous material. In any case, they are self contradicted. The fact that the Memorandum of Agreement dated 27.3.2017 was not discovered during the search proceedings or during her statement recorded under Section 131 of the Act (even if true), would make no difference to the maintainability of the application filed by the petitioner. It is the undisclosed income, that may be brought forth, before the Settlement Commission. Inasmuch as, the petitioner had not filed any return of income with respect to the cash discovery made during the search conducted on 19.04.2017 and 20.04.2017 the petitioner's application was maintainable before the Settlement Commission, to that extent. Then, it has been submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed by the Settlement Commission inasmuch as the petitioner had failed to explain the manner in which the undisclosed income had been earned by the petitioner from either of the three sources disclosed. He has placed reliance on the decision of the Supreme Court in Ajmera Housing Corporation vs. Commissioner of Income Tax (2010) 326 ITR 642 . He has also placed reliance on the decision of Delhi High Court in Vishwa Nath Gupta vs. Principal Commissioner of Income Tax, Central Kanpur (2017) 395 ITR 165 (Delhi) . Having heard learned counsel for the parties and perused the record, the scope of the proceedings before the Settlement Commission, at the stage of entertaining a declaration made i.e. the first stage has been considered by the Supreme Court in Ajmera Housing Corporation (supra). In paragraphs 24 to 27 of the report, it was held as under:-. 24. Before embarking upon the rival contentions, it would be instructive to refer to the scheme of Chapter XIX-A of the Act. The Chapter was inserted in the Act by the Taxation Laws (Amendment) Act, 1975, pursuant to the recommendations of the Justice Wanchoo Committee Report. The recommendation, contained in Chapter 2 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and mentioned in the application. It needs little emphasis that Section 245C(1) of the Act mandates full and true disclosure of the particulars of undisclosed income and the manner in which such income was derived and, therefore, unless the Settlement Commission records its satisfaction on this aspect, it will not have the jurisdiction to pass any order on the matter covered by the application. Insofar as the decision of Vishwa Nath Gupta vs. Principal Commissioner of Income Tax (supra) is concerned, that was a converse case of fact, inasmuch as the declarant (in that case) claimed title over money that had been seized at the hands of third parties who also claimed title over that seized property. In that fact, the declarant filed an application disclosing that income as his own. The facts of the present case are converse to the same, inasmuch as here, the money has been seized from the hands of the petitioner and no other party has owned that money. Therefore, the decision of the Vishwa Nath Gupta (supra) is distinguishable on facts. There can be no doubt that at this stage, the petitioner was required to disclose (i) full proof of disclosure of the income (ii) the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation filed is found to be wholly bogus or unfounded on facts or law, there may remain less reason to reject such applications outrightly. In the facts of the present case, the petitioner had supported his claim and the Settlement Commission had not reached a conclusion that the disclosure made was not full or true inasmuch as the quantification was not in dispute at that stage. The truthfulness of the disclosure made may be said to have been not believed by the Settlement Commission inasmuch as there are observations disbelieving the manner of acquiring the declared income. In that regard, the petitioner had supported the disclosures with material in the shape of income tax returns, bank statements and another documents pertaining to the business entity M/s SIB International with respect to disclosure of undeclared income of ₹ 1 crore 25 lakhs. It had also brought on record the will deed, the affidavit of the attesting witness and also the invoices of sale and purchase of jewellery etc. in support of the disclosure arising from the jewellery business. These materials have not been considered at all by the Settlement Commission while recording a satisfaction in the negative, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sumption in law arose as a consequence of the action/inaction of the third party in not claiming the cash seized at the petitioner s hands as may be treated as her income. Without drawing any final conclusion to that, we find that the said aspect has not been examined and has been completely overlooked by the Settlement Commission. Further, the Settlement Commission appears to have remained in some doubt about the aspect of the matter inasmuch as its observation on the issue are hypothetical and plural. It has thus tried to weigh between two hypothetical possibilities of the money belonging to the third party and, the money belonging to the petitioner. The approach taken by the Settlement Commission cannot be endorsed or appreciated. It is expected from the Settlement Commission to form clear opinion on facts, even at the stage of admission. A quasi-judicial authority vested with such vide powers is not expected to act on doubts and probabilities but on definite opinion formed on material on record. Though such opinion is tentative (at this stage), the Settlement Commission should have remained conscious of the fact that it was only dealing with the first stage of admission o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
