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TMI Blog2022 (1) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... see established before the Settlement Commission and the Settlement Commission also categorically made a finding, this Court has no reason to interfere with such findings as the said findings are candid and convincing and in consonance with the provisions of the Income Tax Act. In view of the fact that the application submitted by the petitioner under Section 254C was rejected as not maintainable in view of the non-compliance of the Mandatory conditions stipulated under the provisions and the petitioner/assessee could not able to establish that he has filed an application with true and full disclosure of facts. Thus, the petitioner is not entitled for any relief as such sought for in the present writ petition. X X X X Extracts X X X X X X X X Extracts X X X X ..... uted facts which all are raised between the parties. One hand, it is submitted that the petitioner has filed an application with true and full disclosure of Income and further submitted application declaring additional income. The petitioner clarified the doubts raised by the Settlement Commission and participated in the adjudicatory process. Inspite of the co-operation extended by the petitioner, the Settlement Commission, rejected the applications as not maintainable, on the ground that the petitioner has not disclosed all the material facts fully and truly in order to substantiate and the petitioner has stated that the details regarding the investments, profits and loss and other Books of Accounts were submitted before the Income Tax Settlement Commission. 6.It is contended that the Director General of Income Tax (Investigation), took charge as Vice-Chairman subsequent to the search conducted in the premises on 17.07.2013. Thus, the subsequent proceedings based on the search operations were initiated within the knowledge of the Vice-Chairman of the Income Tax Settlement Commission and the Administrative circulars and directions were also made with his knowledge. Thus, there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e material facts fully and truly. 8.The learned Senior Standing Counsel objected the contentions raised on behalf of the petitioner by stating that the powers of the Settlement Commission and the scope of settling the issues between the assessee and the Department are clearly enumerated under the provisions of the Income Tax Act. Once the settlement Commission could able to arrive a conclusion that the assessee has not disclosed all material facts fully and truly, then a petition for settlement under Section 247 (1) of the Income Tax Act is not maintainable at all. The findings in this regard made in the impugned order would reveal that the petitioner has not only suppressed certain facts but not produced all the materials truly and fully. Whenever, the Department confronted with the assessee, he made declaration in piecemeal and therefore, the Settlement Commission arrived a conclusion that the issues cannot be settled and accordingly, rejected the application as not maintainable. Thus, there is no infirmity as such in respect of the order passed by the Settlement Commission. 9.Considering the arguments as advanced by the respective learned counsel appearing on behalf of the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions are also stipulated. Thus, the Settlement Commission cannot enter into the venture of assessment, which is the power of an Assessing Officer under Section 153A of the Act. Therefore, this Court is of an opinion that in the absence of any true and full disclosure, the Settlement Commission cannot go beyond the scope of Section 245C of the Act and adjudicate the additional income found by the Department during seizure, which is admittedly not disclosed in the application filed at the first instance by the assessee. 12.It is not in dispute that for entertaining an application for settlement under Section 245C of the Income Tax Act, the assessee must disclose true and full income enabling the Commission to settle the issues. If any non-disclosure is identified during the course of proceedings, that itself is sufficient to reject the application as not maintainable. The Commission is not empowered to proceed further as in the event of identifying non-disclosure of income, since the Assessing Officer is the Authority to proceed with reassessment. In the present case, action has been initiated under Section 147 & 148 of the Act. 13.Therefore, this Court has to primarily find out w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO's report dated 19.09.2016 it was involved in FYs 2007-08 & 2008-09 in syrup production. These documents are enclosed in pages 70 to 79 of this order. It has also disclosed the expenditure under the head Machinery Maintenance in syrup unit in these two Asst years. This is seen as per the seized material. The applicant admits that it was involved in syrup production earlier but it was discontinued in the intervening two years and again started from March 2011. The applicant claimed nearly ₹ 55 Crores of Sec.80IB(11A) deduction for the AYs.2012-13, 2013-14 and 2014-15. The Department objected to this claim. Detailed report of the AO was enclosed by the C.I.T. Sec.80IB(11A) reads as follows: Section 80IB(11A): [(11A) The amount of deduction in a case of [an undertaking deriving profit from the business of processing, preservation and packaging of fruits or vegetables or [meat and meat products or poultry or marine or dairy products or] from] the integrated business of handling, storage and transportation of foodgrains, shall be hundred per cent of the profits and gains derived from such undertaking for five assessment years beginning with the initial assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2012 and earlier, there was production from out of the machinery in the factory. Moreover, imported syrup was being processed and packaged and sold for the past five years. According to the Section, the commencement of the production is not the criteria but is is the commencement of business that is the criteria. The business was already being carried on since few years and this cannot be denied. The unit was in existence and the addition of new machinery of ₹ 2.8 crores cannot be said to form a new unit. 7.9.2.It appears that the applicant while filing the Excise returns under the new amended provisions thought of this idea to claim 80IB deduction under I.T.Act. This is not sufficient in order to claim 80IB deduction. The applicant itself pointed out the amended provisions in the Exice Act according to which even on the packaged products excise duty was to be paid. This is referred above. IT is admitted that there is no raw materials/production register except for the excise record. 7.9.5.No additional staff were employed and there was no additional registration for the purposes of EPF/ESI etc. It is the same staff that were continued in the same premise Depreciation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is filed belatedly and as per the judgment of the Supreme Court referred to by the AR this Commission has no power to take action u/s. 119 Sec 80AC is applicable. 7.9.8.Thus it is clearly seen that on account of 80IB deduction, figures that were submitted are being altered after the department pointed out the same. In all, the applicant withdrew ₹ 12.07 crores for the 3A.Ys and disclosed it as additional income on account of withdrawal of deduction u/s.80IB to that extent. Thus on the same facts, additional income is disclosed now before the Commissioner at the last stage when confronted by the department. The Department cited the case of Major Metals Limited vs. Union of India 19 Taxmann.Com 176(Bombay) to state that penalty ought to be levied since the applicant is making disclosure in instalments. 7.9.10.Above all, it was clearly pointed out to the applicant that u/s. 80IB benefit can be claimed only when the output was fruit or vegetable and no other product. When this was point out, the AR admitted on 26.09.2016 that Sec. 80IB (3) is only applicable and not Sec. 80A(11A). He requested that relief be given u/s. 80IB(3). The production of syrup or jam amounts to a di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and packaging of dates and also packaging of imported syrup. Addition made of just ₹ 2.8 crores on account of machinery out of total machinery of ₹ 7,36,55,743/- cannot be the basis to claim that new unit has been started from 10 CCB shows only machinery of ₹ 1 Crore is used in this unit whereas AR claimed over ₹ 3 Crores of machinery is involved. 7.9.14.One more abnormality is that the profit with respect to Sec. 80IB unit is disclosed at 54% or so whereas in the regular activity it is of the order of 12%. This was starting point for investigation. The applicant itself admitted the mistakes / incorrect claims and filed revised computation on 29.09.2016 just one day before the case gets time barred u/s. 245D(4). 7.9.15.The Department also pointed out that disclosure of additional income of ₹ 26,89,65,826/- in the last hearing would amount to substantive disclosure of additional income after the Department has pointed out that this amounts to concealment. Accordingly, the case of Major Metals would apply. 7.9.16.In view of this, it is clearly seen that the claim u/s. 80IB is not tenable in law as well as on facts. The applicant's disclosure of add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied as per Major Metals Ltd. - Mumbai High Court Judgement. The disclosure earlier made to this extent is not full and true. The applicant cannot disclose additional income in installments. 10.0.On the issue of claim of depreciation, issues relating to other immovable properties such as Anna Nagar, Sterling Road, Kathalur, etc. there is no necessity for us to give any findings as it is already held that the applicant did not disclose full and true income in its application and hence the application is not maintainable. On all other related issue also there is no necessity for us to give a finding as the applicable is being rejected. There is also difficulty with regard to the AYs 2012-13 & 2013-14 as the income is disclosed u/s. 115JB and the modifications cannot be done to the income according to the AR No finding need be given in this regard as application is being rejected as it is not full and true. 11.0.From the above it can clearly be seen that disclosure is not full and true and hence the application is also not maintainable. Reliance is placed in the cases of CIT vs ITSC 310 ITR 10, ACE Investments (2003) 264 ITR 571 (Mad) and Ajmeera Housing (2010) 193 TAXMN 193 (SC)." ..... X X X X Extracts X X X X X X X X Extracts X X X X
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