GALAXY PREMISES P. LTD,MUMBAI vs. DCIT CEN CIR 7(3), MUMBAI

Narrating the back ground facts of these appeals, Ld AR submitted that these assesses relate to the Lodha group of cases. There was search and seizure operation on the said ground and the said group preferred and filed an application before the Incoem Tax Settlement Commission (ITSC). All these nine assesses also filed the application before the ITSC offering meagre income on account of brokerage etc. However, the Hon’ble ITSC rejected these nine applications for not meeting the requirements of the provisions of section 245C r.w.s 245A(b) of the Act. Hon’ble ITSC held that in all these cases, there is no pendency of any proceedings in said cases and the “case” as defined in section 245A(b) and 245C of the Act. The “case” means any proceedings for assessment under this Act, of any person in respect of any assessment year or assessment years which may be pending before the AO on the date on which an application u/ss (1) of section 245C is made.” Thus, these applications abated before the ITSC.

During the assessment proceedings in these cases, in response to the AO’s proposal to make addition of the income - brokerage etc, assessees submitted that no addition can be made merely because of the income disclosed in the said Application before the ITSC. According to the assesses, AO must have an independent incriminating material or evidences in his possession before any addition on that account is made in support of earning of such income by the assessee. Bringing our attention to the assessment order, Ld Counsel for the assessees submitted that the AO does not possess any documentary evidence in support of the additions made in these nine assessees. Therefore, Ld AR prays for the deletion of the additions in all these cases.

Bringing our attention to the Gujrath High Court Judgement in the case of Maruthi Fabrics 47 TAXMAN.COM 298, Ld AR submitted that the honble High Court analysed the provisions of section 32L of the Central Excise Act and brought analogy of the same with the provisions of section 245 HA(5) of the Income tax Act 61 and mentioned that the provisions are applicable to the facts of the present case under the I T Act provisions. Therefore, it is the case of the assessee’s Counsel, all these nine appeals are required to be allowed in favour of the assessee as covered cases by the said Honble HC of Gujarath.

On the contrary, Ld DR for the SMC Bench relied heavily on the orders of the AO and the CIT (A). Without conceding on the absence of any incriminating or evidences in support of the said additions of income in all these assessments, Ld DR submitted that the said assessees made a statement on oath and duly verified the same in the VERIFICATION column of the Application before ITSC. According to Ld DR, these assessees cannot be permitted to retract the said statements. In fact, AO mistakenly referred to certain Affidavits which were never in existence. Actually, AO mistook the statement in verification for the Affidavits. Ld DR also submitted that the said Gujarat High Court judgment (supra) is delivered in the context of the Central Excise provisions and therefore, the same is inapplicable to the proceedings under I T provisions.

Replying to the same, Ld AR for the assessee brought my attention to the said provisions of section 32L of Central Excise Act and the section 245HA(5) of the I T Act and demonstrated that the language is para materia and therefore the ratio of the said judgment applies to the present cases under the I T Act provisions.

On hearing both the parties with reference all the nine appeals, I find the core facts are identical but for the figures involved are different. The provisions of section 32L of Central Excise Act are para materia with the provisions of section 245HA of the Income tax Act. Therefore, the ratio of the judgment (supra) is applicable to the nine appeals under consideration.