JAKHOTIA POLYMERS PVT. LTD.,TELANGANA vs. ACIT, CC-26, NEW DELHI

Date of Hearing 27.09.2022 Date of Pronouncement 21.10.2022 ORDER PER SHAMIM YAHYA, AM,

These appeals filed by the assessee belonging to the same group against the respective orders of the Ld. CIT(A)-29, New Delhi. Since, the issues are common and connected, hence, the appeals were heard together and are being consolidated and disposed off by this common order.

4. In the assessment order, the Assessing Officer finalized the assessment of the assessee company under section 143 (3) dated 12.09.2019 for A.Y. 2010-11 at Rs. 99,71,560/- as against the income of Rs. 73,96,560/- shown in the return filed on 29.09.2010 by making addition of Rs. 25,20,000/- on protective basis on account of alleged unexplained payments kick back made to an employee of Dalmia Cement Ltd and of Rs. 55,000/- which was additional income declared before ITSC.

7. Thereafter, the Ld. CIT(A) dealt with disclosure of Rs.55,000/- made at the time of filing of application before the Settlement Commission. The Ld. CIT(A) confirmed the addition on the basis of disclosure made by the assessee before the Settlement Commission. In this regard, the order of the Ld. CIT(A) can be gainfully referred as under:-

The appellant has further stated that as per clause (ia) of the proviso to section 245C(1) of the Act, an applicant related to specified person referred to in clause (i), can approach the Settlement Commission only if the additional income tax payable by him on the income disclosed in the settlement application exceeds ten lakh rupees. That in their case, the specified person referred to in clause (i) of the section 245(C) was Sh. Om Prakash Jakhotia and his two group concerns; M/s Jakhotia Plastics Pvt. Ltd. (“the Assessee Company’) and M/s Jakhotia Polymers Pvt. Ltd. were the related persons who were required to pay minimum additional income tax of Rs. 10 lakhs on the additional income offered in the settlement application in order to qualify for admission of the matter before the Income-tax Settlement Commission.

12.2 In its submission the appellant has mentioned that in order to meet the conditions prescribed under the clause (ia) of proviso of section 254C(1) of the Act for admission of the settlement application, the assessee company had offered the following additional incomes before the Income Tax Settlement Commission:

S. No A.Ys Additional Income disclosed 2006-07 Rs. 20,000/- 1 2007-08 Rs. 25,000/- 2 3 2008-09 Rs. 30,000/- 4 2009-10 Rs. 40,000/- 5 Rs. 55,000/- 2010-11 Rs. 18,00,000/- 6 2011-12 7 2012-13 Rs. 18,45,000/- Total Rs. 38,15,000/-

12.3 Thus, as per the appellant the undisclosed income of Rs. 55,000/- was offered to tax only to meet the requirements of the Settlement Commission and there was no income as such that endured to the assessee during the year under consideration.

12.4 It is further submitted that the Hon'ble Delhi HighJJburt, vide their judgment dated 15.04.2019 have set aside the order of the Settlement Commission in its totality before the Ld.Assessing Officer and the Ld.Assessing Officer was required to frame the assessments afresh in accordance with law. Therefore, the ad-hoc surrendered amount of Rs. 55,000/-, as per the appellant does not have to be added unless and until there was evidence of any undisclosed income. The appellant has taken a plea that in case of completed assessment made u/s 153A, addition can only be made on the basis of incriminating material found during the course of search. In support of its argument the appellant has relied upon the judicial pronouncements as mentioned in the above paras.

12.5 The issue in this ground of appeal is regarding the addition of Rs. 55,000/- made by the AO on the basis of the additional income disclosed by the appellant before the ITSC. The appellant has claimed that since the said addition was made only on the basis of the undisclosed income of Rs. 55,000/- offered as additional income in the settlement application in order to qualify for admission of the settlement application by the ITSC and since the same was not backed by any incriminating evidence, therefore the same was unjustified. It is a matter of fact that the appellant had made the disclosure of undisclosed income of Rs. 55,000/- offered as additional income in its settlement application. The said fact has been admitted by the appellant in writing before the ITSC. The application of the appellant before the ITSC reflecting the said disclosure of an undisclosed income of Rs. 55,000/- is in itself an admission which cannot be denied. In my view, the same stands on the equal footing of acceptance of undisclosed income and is in the nature of incriminating material.

12.6 Under sub-section (3) of section 245HA of the Act, upon abatement of the proceedings before the Settlement Commission when the Assessing Officer proceeds to dispose of the pending cases, the Assessing Officer or other income-tax authority would be entitled to use material and other information produced by the assessee before the Settlement Commission, as if such material had been produced before the Assessing Officer or the authority as the case may be. The relevant provision of the section is as under:

“245HA. Abatement of proceeding before Settlement Commission

(3) For the purposes of sub-section (2), the Assessing Officer, or, as the case may be, other income-tax authority, shall be entitled to use all the material and other information produced by the assessee before the Settlement Commission or the results of the inquiry held or evidence recorded by the Settlement Commission in the course of the proceedings before it, as if such material, information, inquiry and evidence had been produced before the Assessing Officer or other income-tax authority or held or recorded by him in the course of the proceedings before him."

12.7 The Hon’ble High Court of Gujarat has held in the case of Vikas Shipping Corporation vs. Union of India, reported as 86 taxmann.com 68 (Gujarat), date of order 07.09.2017 at para 10 as under:

“10. The alternative request of preventing the income-tax authority from using the material on record before Settlemerd Commission cannot be accepted in terms of plain language used in sub-section(3) of section 245HA of the Act which reads as under:

"(3) For the purposes of sub-section (2), the Assessing Officer, or, as the case may be, other income-tax authority, shall be entitled to use all the material and other information produced by the assessee before the Settlement Commission or the results of the inquiry held of evidence recorded by the Settlement Commission in the course of the proceedings before it, as if such material, information, inquiry and evidence had been produced before the Assessing Officer or other income-tax authority or held or recorded by him in the course of the proceedings before him."

12.8 In view of the section 245HA(3) of the Act, and respectfully following the judgment of the Hon’ble Gujarat High Court in the case of Vikas Shipping Corporation vs. Union of India, reported as 86 taxmann.com 68 (Gujarat), date of order 07.09.2017, it is held that the Assessing Officer has rightly made the addition of Rs. 55,000/- on account of undisclosed income on the basis of submission of the appellant before the ITSC. In view of careful consideration of all the facts and circumstances of the case, I am of the considered opinion that the action taken by the Assessing Officer is as per law and is accordingly upheld and the said addition made by the AO of Rs. 55,000/- is confirmed. This ground of appeal is dismissed.”

8. Against this order, the assessee is in appeal before us.

“1. Additional income was offered in the settlement application merely to qualify for admission of the settlement application. Admittedly, both the Ld.AO and the ld. CIT (A) have concurred with the contention of the assessee that the income offered before the Hon'ble Income Tax Settlement Commission (herein after referred to as "Settlement Commission"] was an ad-hoc amount merely to qualify for admission of the settlement application by the Hon'ble Settlement Commission. Hence, the amount offered is not on account of any incriminating material found or any enquiry by the department.

2. Our case is not a case of abatement u/s 245H A(l) of the Act. The Ld .CIT(A) has referred to sub-section 3 of section 245HA of the Act which talks of abatement of proceedings before the Settlement Commission. If the proceedings before the Settlement Commission abates, the Assessing Officer can use the material or information which was available before the Settlement Commission. In the case before hand is not a case of abatement. Abatement takes-place only under the following conditions referred to under the clauses (i) to (iv) of section 245H A(l) of the Act. Relevant section is reproduced as under: "245HA. (1) Where— (i) an application made under section 245C on or after the 1st day of June, 2007 has been rejected under sub-section [1 ) of section 245D; or (ii) an application made under section 245C has not been allowed to be proceeded with under sub-section (2A] or further proceeded with under sub-section (2D) of section 245D; or (iii) an application made under section 245C has been declared as invalid under sub-section (2C) of section 245D; or [(iiia) in respect of any application made under section 245Can order under sub-section (4) of section 245D has been passed not providing for the terms of settlement or] (iv) in respect of any other application made under section 245C, an order under sub-section (4) of section 245D has not been passed within the time or period specified under sub-section (4A) of section 245D, the proceedings before the Settlement Commission shall abate on the specified date." Our case does not fall under any of the clauses of section 245HA (1) of the Act. Ours is a case where the Hon'ble High Court of Delhi did not find the disclosure made by the assessee vide the Settlement Application to be full and true under section 245C (1] of the Act and therefore, quashed the Settlement Order passed u/s 245D (4) of the Act dated 26.11.2014 and directed the Assessing Officer to frame a fresh assessment vide their order dated 15.04.2019. Hence it's not a case of abatement u/s 245HA(1) of the Act.

3. Income offered before the Settlement Commission is not an admission or confession u/s 132 f4) of the Act. Thirdly, this is not a case of any statement or admission made under 132(4] of the Act. Hence, there is nothing which binds the assessee vis a vis the amount offered before the Hon'ble Settlement Commission.

5. No addition can be made merely on basis of income offered by the assessee before the Settlement Commission in absence of any incriminating material. i. The judgment of the Hon’ble Gujarat High Court in the case of Commissioner v. Maruti Fabrics [2014] 47 taxmann.com 298 delivered in CESTAT proceedings squarely applies to our case. The Hon'ble Gujarat High Court has held that whatever is admitted by the assessee while submitting the application before the Settlement Commission straightway cannot be said to be admission on his behalf. ii. The Hon'ble Mumbai Tribunal in the cases of Anantnadh Constructions and Farms (P.) Ltd. v. DCIT [2017] 166 ITD 83 and Late Shri Sawarmal Hisaria v DCIT in order dated 05.04.2022 which has a very extensive discussion on the issue, held that the judgment of the Hon'ble Gujarat High Court in the case of Maruti Fabrics (supra) although pertaining to Central Excise should be applied to the cases under the Income Tax Act also. The Hon'ble Mumbai Tribunal in both the cases, following the decision of Maruti Fabrics (supra) have held that no addition can be made merely on basis of income offered by the assessee before the Settlement Commission in absence of any incriminating material. Following other decisions are also relied upon for the above legal proposition: a) ACIT v. Smt. Renu Sehgal I.T.A No. 837/JP/2018, ITA 708 & 709/JP/2018 ; order dated 19.08.2019 (Jaipur Trib.) b) M/s Dolat Investments Ltd. v. DCIT [2010] 38 SOT 123 (Mumbai Trib.)[21- 01-2010] c) Shri Sameer Maheswari v. ITO, I.T.A No.224/Ind/2019; order dated 27.07.2020 (ITAT Indore) 6. Judgment relied upon by the CIT (A) does not apply to our case. The judgment relied upon by the Id. CIT(A) of the Hon'ble Gujarat High Court in the case of Vikas Shipping Corporation vs. Union of India, reported as 86 taxmann.com 68, does not apply to our case since it applies to the cases abated u/s 245HA(1) of the Act and it merely reiterates the legal position stated in section 245HA(3) of the Act. As already stated above, our case does not fall u/s 245HA(1) and 245HA(3) of the Act.

“A. JURISDICTION OF THE CASES/APPEALS

16. This Court is of the opinion that the approach of the ITSC was flawed throughout. Apart from brushing aside the fact that the retraction took place close to two years after the statement was made, the commission overlooked that nowhere did the assessees complain that the statement of the first respondent was recorded under coercion..... The SLP of assessee against the aforesaid order of HC has been dismissed in Om Prakash Jakhotia v. PCIT (2019) 418 TR 18 (St) (SC). II. Hon’ble Madras HC’s order in the case of B. Kishore Kumar v. Deputy Commissioner of Income-tax. Central Circle-IV (1). Chennai [2014] 52 taxmann.com 449 (Madras): The Hon’ble High Court of Madras in its order dated 03.11.2014 in the case of B. Kishore Kumar v. Deputy Commissioner of Income-tax, Central Circle-IV (1), Chennai in 273 CTR 468 has held as under:

.......Therefore, admission of undisclosed income of Rs.52,73,920/- is categoric and undisputed. The assessee in the sworn statement made onl0.10.2006, stated that outstanding loans to the tune of Rs.25Lakhs to 30 Lakhs are to be recovered with interest at the rate ofl8%. This is a clear admission. This amount has also been calculated and added as undisclosed income. When there is a clear and categoric admission of the undisclosed income by the assessee himself, in our considered opinion, there is no necessity to scrutinize the documents. The document can be of some relevance, if the undisclosed income is determined higher than what is now determined by the department. Moreover, it is not the case of the assessee that the admission made by him was incorrect or there is mistake. In fact, when there is a clear admission, voluntarily made, by the assessee, that would constitute a good piece of evidence for the Revenue. The SLP of assessee against the aforesaid order of HC has been dismissed in B. Kishore Kumar v. Deputy Commissioner of Income- tax, Chennai [20151 62 taxmann.com 215 (SC). III. Hon’ble ITAT. Pune, Bench A’s order in the case of Sinhagad Technical Education Society v. Deputy Commissioner of Income-tax f20221 139 taxmann.com 270: The Hon’ble ITAT, Pune, Bench ‘A’ in its order dated 01.04.2022 in the case of Sinhagad Technical Education Society v. Deputy Commissioner of Income-tax, in 195 ITD 683 has held that where AO considered statements recorded under section 132(4) of the Act which confirmed that assessee was collecting capitation fees/ donation in cash from students for admission under management quota in various institutions run by assessee and retraction statements were identically worded and filed after 7 months gap; recorded statements would carry more evidentiary value and could not be discarded merely because retraction statements were filed. 2.2 Similarly, the income disclosed by assessees/appellants before ITSC (which has not been disclosed before the AO) in Form No. 34B voluntarily on their own volition and under their own signatures without any pressure or coercion, wherein they have solemnly declared that to the best of their knowledge and belief, what has been stated in the application and in the Annexure [including the statement(s) and documents accompanying such Annexure] was correct and complete, has probative and evidentiary value which could not be cast aside. For ready reference, the verification which is duly signed by the applicant in Form No. 34 B is reproduced as under: VERIFICATION I,................ son/daughter/wife of.................do hereby solemnly declare that to the best of my knowledge and belief, what is stated above and in the Annexure [including the statement(s) and documents accompanying such Annexure] is correct and complete. I further declare that I am making this application in my capacity as................................................. [write your designation] and that I am competent to make this application and to verify it. I also certify that the proceedings for which this application is being made is not covered by the proviso to clause (b) of section 245A of the Income-tax Act.

Verified today the .................................day of........................ Place Signature of applicant

2.3In the present cases, in the year 2013 the assessees/appellants have declared undisclosed income as under: Jakhotia Plastics Pvt. Ltd. Assessment Year 2010-11 2011-12 2012-13 Appeal No. 963/D/2021 964/D/2021 965/D/2021 Undisclosed income before 55,000 18,45,000 18,00,000 ITSC(in Rs.)

Jakhotia Plastics Pvt. Ltd. Assessment Year 2012-13 2011-12 Appeal No. 979/D/2021 967/D/2021 Undisclosed income 10,90,000 10,50,000 before ITSC (in Rs.)

2.4Thereafter, the ITSC passed orders u/s 245D(4) of the Act. But as the assessees had not made full and true disclosure, the impugned orders were set aside and quashed by the Hon’ble High Court of Delhi vide order dated 15.04.2019 in the case of Om Prakash Jakhotia (Managing Director of Jakhotia Plastics Pvt. Ltd and Director of Jakhotia Polymers Pvt. Ltd) and others in WP(C) No. 11859/2016. Thereafter, while completing assessments, the AO made additions on account of additional income disclosed before ITSC in form no. 34B. 2.5 As is evident from duly signed verification in form No. 34B filed by the assessees/appellants before ITSC, they have clearly admitted and solemnly declared their additional undisclosed income before ITSC voluntarily on their own and without any coercion or pressure. In the year 2013, these assessees/appellants have also paid additional taxes and interest on the income so disclosed before ITSC voluntarily and without any coercion or pressure. If the assessees/appellants did not have any undisclosed income, they would have not approached ITSC u/s 245C(1) of the Act. No person would pay taxes on income not belonging to him/her. 2.6 Now after 6 years, during assessment proceedings the assessees claimed that the income disclosed before ITSC was not their income, which can’t be accepted. Further, the assessees/appellants have also not brought out any evidence on record to show that such disclosure before ITSC was under coercion or pressure. 2.7 Therefore, the income disclosed by assessees/appellants voluntarily before ITSC in Form No. 34B on their own volition and after due verification under their own signatures without any pressure or coercion, has probative and evidentiary value and should be treated as income of the assessees/appellants. Therefore, its requested that additions made by AO on account of disclosure by the appellants in their form No. 34B before ITSC as per details in para 2.3 supra should be upheld. C. CASE LAWS RELIED UPON BY ASSESSEE: 3. The facts and circumstances of the case Commissioner vs. Maruti Fabrics of 2014, CA No. 331 of 2014 [2014] 47 taxmann.com 298 (Gujarat HC) relied upon by assessee/appellant are totally different. This judgment has been passed considering the provisions of section 32L of the Central Excise Act, 1944 (Excise Act), which gives power to the Settlement Commission to send a case back to the Central Excise Officer. For ready reference, the same are reproduced as under: 32L. Power of Settlement Commission to send a case back to the Central Excise Officer. — (1) The Settlement Commission may, if it is of opinion that any person who made an application for settlement under section 32E has not co-operated with the Settlement Commission in the proceedings before it, send the case back to the Central Excise Officer having jurisdiction who shall thereupon dispose of the case in accordance with the provisions of this Act as if no application under section 32E had been made. (2) for purpose of sub-section (1), the Central Excise Officer shall be entitled to use all the materials and other information produced by the assessee before the Settlement Commission or the result of the inquiry held or evidence recorded by the Settlement Commission in the course of the proceedings before it as if such materials, information, inquiry and evidence had been produced before such Central Excise Officer or held or recorded by him in the course of the proceedings before him.” 3.1As per section 32L(2) of the Excise Act, after an order is passed by the Settlement Commission under sub-section (1) of Section 32L thereby sending the case back to the Central excise Officer in case of non-cooperation by the applicant, then the adjudicating authority is required to adjudicate the case as if no application had been made under section 32E of the Excise Act, and such adjudicating authority i.e. Central Excise Officer shall be entitled to use all the materials and other information produced by the assessee before the Settlement Commission or the result of inquiry held or evidence recorded by the Settlement Commission in the course of the proceedings before it as if such materials, information, inquiry and evidence have been produced before such Central Excise Officer or held or recorded by him in the course of the proceedings before him, while adjudicating the show cause notice and the proceedings. In this context, the Hon’ble Gujarat HC held that whatever is admitted by the assessee while submitting the application before the Settlement Commission submitted under Section 32E(1) of the Act straightway cannot be said to be admission on behalf of the assessing accepting the liability because then there was no question of further adjudication by the Central Excise Officer u/s 32L(2)Act of the Excise Act. For ready reference, the relevant part of the Hon’ble HC’s order is reproduced as under as under: ........Considering sub-section (2) of Section 32L of the Act, in a case where an order is passed by the Settlement Commission under sub-section (1) of Section 32L and thereafter adjudicating authority is required to adjudicate the case, the Central Excise Officer shall be entitled to use all the materials and other information produced by the assessee before the Settlement Commission or the result of inquiry held or evidence recorded by the Settlement Commission in the course of the proceedings before it as if such materials, information, inquiry and evidence have been produced before such Central Excise Officer or held or recorded by him in the course of the proceedings before him on fair reading of sub-section (2) of Section 32L of the Act whatever is admitted by the assessee while submitting the application before the Settlement Commission submitted under Section 32E(1) of the Act straightway cannot be said to be admission on behalf of the assessing accepting the liability. Whatever the material is produced along with the application and/or any material and/or other information produced by the assessee before the Settlement Commission or the result of the inquiry held or evidence recorded by the Settlement Commission in the course of the proceedings before it can be used by the adjudicating authority as if such materials, information, inquiry and evidence has been produced before such Central Excise Officer, while adjudicating the show cause notice and the proceedings. If the contention on behalf of the appellant is accepted, in that case, there is no question of further adjudication by the Central Excise Officer with respect to the amount admitted by the assessee while submitting the application before the Settlement Commission submitted under Section 32E(1) of the Act. 3.2 But in the Income-tax Act, 1961, there is no such provision which gives power to the Settlement Commission to send a case back to the AO for adjudication using all the materials and other information produced by the assessee before the Settlement Commission or the result of inquiry held or evidence recorded by the Settlement Commission in the course of the proceedings before it as if such materials, information, inquiry. Therefore, the ratio of case of Maruti Fabrics supra quoted/relied upon by the assessees/appellants does not apply to the appeals under consideration. 3.3 The other case laws relied upon by assessee are based on Maruti Fabrics supra and hence the ratio of these cases also does not apply to that of the appellants. D. CBDT INSTRUCTION/LETTER RELIED UPON BY ASSESSEE: 4. The reliance of assessee on the CBDT Instruction dated 10.03.2003 and letter dated 18.12.2014 has no relevance in the present appeals, because both of these make distinction between the voluntary statement and one under duress. The object of the aforesaid Instruction and letter is to prevent recording of statement under duress. Once it was declared that the statement was not recorded under duress, the question of ignoring it does not arise. 4.1 In the present appeals also, the income has been disclosed by assessees/appellants voluntarily before ITSC in Form No. 34B on their own and after due verification under their own signature without any pressure or coercion, has probative and evidentiary value and should not be ignored.

5. In view of detailed facts and discussion above, its requested that all these five appeals may be transferred to ITAT, Hyderabad, as current jurisdiction over these assessees now lie with ITAT, Hyderabad. Without prejudice to this, these appeals may be dismissed and order of the CIT(A) confirming the additions made by AO on account of additional income disclosed by the appellants in their form No.34B before ITSC as per details in para 2.3 supra should be upheld.”

Similar request was duly rejected on the facts of the case on same facts, the order of the ITAT in this case in this connection reads as under:-

“17 We have perused the request letter for transfer filed by the ld. CIT-DR and also the submissions made by the assessee vide his letter dated 25.11.2021 before us. 18 In our considered view, whence the assessments in respect of all the captioned assessment years have been made by the ACIT, Central Circle-26, New Delhi and the appeals against the assessments were also decided by the CIT (Appeals)-29, New Delhi and appeal has been filed before Delhi Benches, then we do not find any justifiable reasons for transfer, even if for the future years assessment years have been transferred to Hyderabad. We do not find any prejudice is caused when all the material record for adjudicating the issues involved are available and it is also not the case of Ld. CIT DR that assessment records are required which may have been transferred to Jurisdictional Assessing Officer at Hyderabad. Apart from that, as of now, we find that Hon’ble Bombay High Court in the case MSPL Ltd (supra) has questioned as far as the power of the Hon’ble President of the Tribunal to transfer an appeal from one bench to another bench in different State outside its headquarter is concerned, the Hon’ble High Court at paras 36, 37 and 38 of their order has held as under: “36. Sub section (1) of section 255 says that the powers and functions of the Appellate Tribunal may be exercised and discharged by Benches constituted by the President of the Appellate Tribunal from among the members thereof. As per sub section (5), subject to the provisions of the Act, the Appellate Tribunal shall have power to regulate its own procedure and the procedure of Benches in all matters arising out of the powers or of the discharge of its functions, including the places at which the Benches shall hold their sittings. To complete the narrative, we may also refer to sub section (6) of section 255 which clearly says that a proceeding before the Appellate Tribunal shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 and for the purpose of section 196 of the Indian Penal Code. It also says that the Appellate Tribunal shall be deemed to be a civil court for all the purposes of section 195 and Chapter XXXV of the Code of Criminal Procedure, 1898.

4. (1) A Bench shall hear and determine such appeals and applications made under the Act as the President may by general or special order direct. (2) Where there are two or more Benches of the Tribunal working at any headquarters, the President or, in his absence, the Senior Vice- President/Vice-President of the concerned zone or, in his absence, the senior most member of the station present at the headquarters may transfer an appeal or an application from any one of such Benches to any other." 41. From an analysis of rule 4 as extracted above, we find that as per sub rule (1), a Bench shall hear and determine such appeals and applications made under the Act as the President may by general or special order direct. Sub rule (2) says that where there are two or more Benches of the Tribunal working at any headquarters, the President or, in his absence, the senior Vice President or Vice President of the concerned zone or in his absence the senior most member of the station present at the headquarters may transfer an appeal or an application from any one of such Benches to any other. While sub rule (1) empowers the President to direct hearing of appeals by a Bench by a general or special order, sub rule (2) is more specific. It deals with a situation where there are more than two Benches of the Tribunal at any headquarter; when there are multiple Benches in a headquarter, the President or, in his absence the senior Vice President etc. may transfer an appeal or an application from one of such Benches to any other. Meaning thereby that it is a transfer of an appeal or an application from one Bench to another Bench within the same headquarters. For example, in Mumbai the number of Benches is twelve and in Bangalore, the number of Benches is three. Thus, this provision can be invoked to transfer an appeal from one Bench in Mumbai to another Bench in Mumbai or from one Bench in Bangalore to another Bench in Bangalore. But this provision cannot be invoked to transfer a pending appeal from one Bench under one headquarter to another Bench in a different headquarter.” 20. However, independent of the ratio of the above decision, we have already held that on the facts of the present case such a request for transfer cannot be accepted as the Assessing Officer who and CIT(A) of Delhi had jurisdiction

over the assessee when orders were passed and all the records for deciding the issues are already on record and no prejudice is caused to any of the parties. Accordingly, we reject the request made by the Ld. CIT DR and proceed to decide the appeals of the assessee.” 12. We find that facts and circumstances here being identical, we follow the same and find that request made by the ld. CIT DR is not sustainable.

Hence, we proceed to decide the appeals here.

“13. We find that assessee has made declaration and filed some information before Settlement Commission admitted under section 245D of the Act and it can be used only for limited purpose for settlement of tax dispute and passing an order under section 245D(4) of the Income Tax Act and not for other purpose. The assessee has made a disclosure and such disclosure ultimately ended in settlement order under section 245D(4) of the Act. The disclosure came to the possession of AO. The fact that the disclosure made under section 245D(1) of the Act even if constructed as if no order under section 245D(4) has been passed it will not give a license to the AO to use the confidential information disclosed in an annexure to the application of the Settlement Commission. If the application is treated as not admitted under 245D(1) of the Act, then the provisions are clear that confidential information can never be passed on to the AO nor can it be used in evidence against the assessee. Section 245D(4) has clearly held that admission of assessee’s application under section 245(1) was incorrect. We find that any confidential information disclosed in annexure to the settlement application before Income Tax Settlement Commission can never be the basis to make the addition. We find that in the instant case, the AO has reopened the assessment under section 147. Thereafter, AO has not brought any evidence or made any inquiry that assessee has earned additional income of Rs.5 lakhs as brokerage income. In the instant case, after reopening the assessment order, the AO had not made any inquiry and not examined the material which was before him that how this income was declared by the assessee and addition has been made simply relying upon the declaration made in the application before the Settlement Commission under section 245D. The AO was in possession of the paper relating to the income but in absence of any material no addition can be made. The Hon’ble Gujarat High Court in the case of Commissioner vs. Maruti Fabrics 47 Taxmann.com 297 has held that whatever material is produced along with application by the assessee before Settlement Commission or result of inquiry held or evidence recorded by the Settlement Commission in course of proceedings before it can be used by the adjudicating authority as if same had been produced before such Central Excise Officer. Once application or proceedings before Settlement Commission fails, Central Excise Officer is required to adjudicate entire proceedings and show cause notice and Hon’ble Gujarat High Court has held as under: “Considering sub-section (2) of section 32L of the Act, in a case where an order is passed by the Settlement Commission under sub-section (1) of section 32L and thereafter adjudicating authority is required to adjudicate the case, the Central Excise Officer shall be entitled to use all the materials and other information produced by the assessee before the Settlement Commission or the result of inquiry held or evidence recorded by the Settlement Commission in the course of the proceedings before it as if such materials, information, inquiry and evidence have been produced before such Central Excise Officer or held or recorded by him in the course of the proceedings before him on fair reading of sub-section (2) of Section 32L of the Act whatever is admitted by the assessee while submitting the application before the Settlement Commission submitted under Section 32E(1) of the Act straightway cannot be said to be admission on behalf of the assessing accepting the liability. Whatever the material is produced alongwith the application and/or any material and/or other information produced by the assessee before the Settlement Commission or the result of the inquiry held or evidence recorded by the Settlement Commission in the course of the proceedings before it can be used by the adjudicating authority as if such materials, information, inquiry and evidence has been produced before such Central Excise Officer, while adjudicating the show cause notice and the proceedings. If the contention on behalf of the appellant is accepted, in that case, there is no question of further adjudication by the Central Excise Officer with respect to the amount admitted by the assessee while submitting the application before the Settlement Commission submitted under Section 32E(1) of the Act. Once the application or proceedings before the Settlement Commission fails, the Central Excise Officer is required to adjudicate the entire proceedings and show cause notice. Under the circumstances, so far as proposed question of law No.1 is concerned, the present Tax Appeals deserve to be dismissed and are, accordingly, dismissed by answering the proposed question of law No.1 against the Revenue.”

14. Respectfully following the same, we hold that Hon’ble Gujarat High Court’s judgment in the case of Maruti Fabrics pertains to Central Excise but if we compare central excise under section 32E of the Central Excise Act this section is parallel to section 245C of the Income Tax Act. One primary condition mentioned in section 32E for filing central excise settlement petition is “a show cause notice for recovery of duty issued by Central Excise Officer has been received”. In Income Tax Act section 245C requires some pendency of proceedings. The Central Excise application is allowed or rejected vide order under section 32F(1). This section is parallel to section 245D(1). Section 32L gives the powers and procedure of Central Excise Settlement Commission. This section is similar to section 245F of the Income Tax Act. Section 32L gives the powers of the Settlement Commission to send the case back to the Central Excise Officer. Section 32L reads as under: “32L(1) The Settlement Commission may, if it is of opinion that any person who made an application for settlement under section 32E has not co-operated with the Settlement Commission in the proceedings before it, send the case back to the Central Excise Officer having jurisdiction who shall thereupon dispose of the case in accordance with provisions of the Act as if no application under section 32E had been made. 32L(2) For the purpose of sub-section (1), the Central Excise Officer shall be entitled to use all the materials and other information produced by the assessee before the Settlement Commission in the course of the proceedings before it as if such materials, information, inquiry and evidence had been produced before such Central Excise Officer or held or recorded by him in the course of the proceedings before him.”

18. From the above decision of the Tribunal where they have discussed the section 245C(1) and section 245D(i) and 245HA by following observation: “20. The Finance Act, 2007 made changes to the provisions for settlement of cases contained in Chapter XIX-A of the Income-tax Act 1961. One change involves introduction of a new concept of abatement of proceedings before the Settlement Commission for which provisions has been made in the newly inserted section 245HA relevant portion whereof reads thus :— "245HA. Abatement of proceeding before Settlement Commission.—(1) where.... (i) an application made under section 245C on or after the 1st day of June, 2007 has been rejected under subsection (1) of section 245D; (ii )an application made under section 245C has not been allowed to be proceeded with under sub-section (2A) or further proceeded with under sub-section (2D) of section 245D; (iii)an application made under section 245C has been declared as invalid under sub-section (2C) of section 245D; (iv)in respect of any other application made under section 245C, an order under sub-section (4) of section 245D has not been passed within the time or period specified under sub-section (4A) of section 245D, the proceedings before the Settlement Commission shall abate on the specified date. Specified date would be (i) in respect of an application referred to in sub-section (2A) or sub-section (2D), on or before the 31st day of March, 2008; (ii) in respect of an application made on or after 1st day of June, 2007 within nine months from the end of the month in which the application was made. (2) Where a proceeding before the Settlement Commission abates, the Assessing Officer or as the case may be any other income-tax authority before whom the proceeding at the time of making the application was pending, shall dispose of the case in accordance with the provisions of this Act as if no application under section 245C had been made. (3) For the purposes of sub-section (2), the Assessing Officer or as the case may be, other income-tax authority, shall be entitled to use all the material and other information produced by the assessee before the Settlement Commission or the results of the inquiry held or evidence recorded by the Settlement Commission in the course of the proceedings before it, as if such material, information inquiry and evidence had been produced before the Assessing Officer or other income-tax authority or held or recorded by him in the course of the proceedings before him."

15. Other aspects of ld. Counsel of the assessee’s submissions are also germane and relevant. The same may gainfully be referred as under :-

(i) Additional income was offered in the settlement application merely to qualify for admission of the settlement application; (ii) The case is not a case of abatement u/s 254HA (1) of the Act; (iii) Income offered before the Settlement Commission is not an admission or confession u/s 132 (4) of the Act; (iv) CBDT Instruction F.No.286/2/2003-IT (Inv.II) dated 10.03.2003 also refers confessions or surrender obtained without any incriminating evidence to back the same, are to be ignored; and (v) No enquiry whatsoever has been done by the AO or the ld. CIT (A) to substantiate the addition.

16. In the backdrop of aforesaid discussion and precedents, we set aside the orders of authorities below and hold that the additions made solely on the basis of declaration before the Settlement Commission de hors any incriminating material or enquiry is not sustainable.

17. Our above order applies mutatis mutandis to all the appeals here.

Order pronounced in the open court on 21st October, 2022.