KESARIA MARKETING PVT LTD,CHENNAI vs. DCIT CORPORATE CIRCLE 2(4), CHENNAI

Having heard rival submissions and after going through the orders as cited before us, our adjudication would be as given in succeeding paragraphs.

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 3 - 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.

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 4 - books and accounts of family group concerns. The assessee is one of such group entity.

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.

The appeal stand allowed for statistical purposes in terms of our above order.