The assessee was carrying on the business of purchase and sale of land and trading in textile items of art silk clothes. During the course of survey operation, various loose documents were found and impounded by the Department. While assessment proceedings were pending the assessee filed a settlement application under S. 245(1) before the Settlement Commission offering additional income for the assessment years 2012-13 to 2016-17. The assessee filed its statement of facts before the Commission, preparing a statement of sources and application of unaccounted income to demonstrate that investment, application and rotation of unaccounted funds was covered by the overall source of unaccounted funds generated and offered to tax. The assessee disclosed additional income during the course of hearing under S. 245D(4) aggregating to Rs. 12 crores for the five years from the assessment years 2012-13 to 2016-17. The Commission accepted the disclosures made by the assessee after considering the detailed item-wise explanation submitted by the assessee and accordingly the case of the assessee was settled on the terms and conditions stated in the order. On a writ petition challenging the order dismissing the petition the Court held that that the disclosure made during the course of the proceedings before the Commission was not a new disclosure. The Settlement Commission was right in considering the revised offer made by the assessee during the course of the proceedings in the spirit of settlement. On a perusal of the order passed by the Commission, it was apparent that the application submitted by the assessee had been dealt with in accordance with the provisions of S. 245C and 245D of the Act. The Commission had observed the procedure while exercising powers under S. 245D(4) by examining thoroughly the report submitted by the Department under rule 9 of the Income-tax Settlement Commission (Procedure) Rules, 1997. The Commission had also provided proper opportunity of hearing to the respective parties and therefore the amount which had been determined by the Commission was just and proper.( AY.2012-13 to 2016-17)
PCIT v. Shankarlal Nebhumal Uttamchandani (2020) 425 ITR 235 /186 DTR 169/ 114 taxmann.com 638/ 270 Taxman 41/313 CTR 184 (Guj) (HC), Editorial: SLP filed by the revenue ,notice issued , returnable on 12 -3 2021, in the meanwhile , the effect and operation of the order presently underchallenge shall remain stayed , PCIT v. Shankarlal Nebhumal Uttamchan ( 2021) 279 Taxman 326 ( SC)
S. 245D : Settlement Commission -Full and true disclosure-Income offered in application-Additional income offered during proceedings in order to avoid controversy – No new source of income —Acceptance of offer and passing of order by Settlement Commission is held to be justified .[ S. 133A, 245C , 245D(4) , ITSC (P)Rules, 1997. R.9 , Art , 226 ]