Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI MAHAVIR SINGH, HON’BLE & SHRI MANOJ KUMAR AGGARWAL, HON’BLE
PER MAHAVIR SINGH, VICE PRESIDENT:
This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals)-13, Chennai, in dated 02.02.2018. The assessment was framed by the Income Tax Officer, Company Ward-III(1), Chennai, for the AY 2009-10, u/s.143(3) of the Income Tax Act, 1961 (hereinafter “the Act”) vide his order dated 28.12.2011.
At the outset, the Ld.Counsel for the assessee took us through Ground No.8, which reads as under:
The CIT(A) erred in his observation that the additions made in the present appeal is to be decided independently without recourse to the proceedings before the Settlement Commission which is ht subject matter of the WP No.566 of 2010 as well as the interim order of granting stay by the Madras High Court has a definite bearing in the impugned proceedings.
The Ld.Counsel for the assessee took us through the identical order passed by the Tribunal in for the AY 2007-08 dated 04.04.2022, wherein the Tribunal has considered the other group cases and remanded the entire appeal back to the file of the AO by observing in Para Nos.4-6, as under:
We find that the assessee has been assessed u/s 143(3) r.w.s. 147 on 29.11.2010. The assessee is stated to be engaged in mining activity. However, pursuant to survey action on assessee, it transpired that the assessee did not carry out any mining activity. Accordingly, entire expenditure of Rs.116.40 Lacs as claimed by the assessee for mining activities was disallowed and the commission income and interest receipts were brought to tax in its entirety. Shri Umed C. Mehta is stated to be authorized signatory of Smt. Prema U. Mehta, Director of the assessee company. During survey, Shri Umed C. Mehta admitted that he had floated many entities and was getting some receipts from M/s Kanwarlal & Sons for liasioning to introduce bogus credits and the income received from them was also inflated and to accommodate them, the non-existent mining business was brought into books to pay the tax on the actual income as received from Kawarlal & sons. The stand of Ld. AO, upon confirmation by Ld. CIT(A), is in further appeal before us.
5. We find that Shri Umed C. Mehta has preferred an Income Tax Settlement application before Ld. Income Tax Settlement Commission (ITSC). The undisclosed income was stated to be commission earned from accommodation transaction with Mr. Parasmal Jain of M/s Kawarlal Group. However, the application was rejected on 23.10.2019 which was challenged by the assessee in Writ Petition (supra). Allowing the petition, Hon'ble Court has noted that the transactions pertaining to the undisclosed income of the petitioner is also the subject matter of the Settlement Application in the case of Parasmal Jain. If that being so, there is a possibility that such a subsequent consideration by the settlement commission could be deemed as double taxation, in case the order dated 23.10.19 is upheld. It was also noted that the order passed by ITSC in Parasmal Jain has become final and the double taxation for one transaction may occur. Therefore, order dated 23.10.2019 rejecting the settlement application of Shri Umed C. Mehta was set aside and the matter was remanded back to ITSC for fresh consideration and to pass fresh orders in accordance with the law.
We also find that during the course of Writ Petition, a counter-affidavit has been filed by the revenue. Upon perusal of the same, it could be gathered that Shri Umed C. Mehta has owned up the entire responsibility to have routed the accommodation entries and transactions in various books and accounts of family group concerns. The assessee is one of such group entity.
6. Thus, the outcome of settlement application of Shri Umed C. Mehta would have material bearing on the additions made in the case of the assessee since the same may be subject matter of settlement application filed by Shri Umed C. Mehta. Therefore, accepting the submissions of the assessee, we set aside the impugned order and remand
the matter back to the file of Ld. AO to reframe the assessment in the light of outcome of settlement application filed by the assessee group. All the issues are kept open. 4. He requested that exactly on identical directions the matter can be restored to the file of the AO. When this was confronted to the ld.Sr.DR, he could not controvert the fact situation. We noted that the plea was also taken by the assessee before the Ld.CIT(A) that the assessee’s father Mr.Umed C. Mehta has made an application before the Settlement Commission wherein the Ld.CIT(A) held as under:
During the appeal proceedings, Shri Umed Mehta Father of the assessee appeared and argued the case. The AR contended that the assessee's father Shri Umed C Mehta has made an application before the Settlement Commission. However, the application was not admitted by the Settlement Commission, therefore, against the Hon'ble ITSC, the assessee has made Writ Petition before the Hon'ble High Court Madras. The Writ Petition No.566/2010 was admitted and stay was granted in MP. 1 of 2010. Accordingly, the status of the settlement application of Shri Umed C, Mehta is subjudice before the Hon'ble High Court. Therefore, requested that the subject may be kept in abeyance till the decision of Madras High Court.
We noted that in these group cases, these matters are remanded back to the file of the AO and we in this present case also set aside the order of the lower authorities and remand the matter back to the file of the AO to re-frame the assessment in light of outcome of settlement application filed by the assessee’s group.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on the 12th day of April, 2022, in Chennai.