M/S.lion Dates Impex (P) Ltd v. The Chairman, Income Tax Settlement Commission, Principal Bench, New Delhi. Income Tax Settlement Commission, Principal Bench, New Delhi

IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated: 03.09.2021 CORAM: THE HON'BLE MR. JUSTICE S.M.SUBRAMANIAM W.P. No.36950 of 2016andW.M.P.Nos.31747, 31748 of 2016 & 7723 of 2017 M/s.Lion Dates Impex (P) Ltd.,No.4, Sterling Road, Nungambakkam,Chennai – 600 034,Rep.by its Managing Director P.Ponnudurai Vs 1. The Chairman, Income Tax Settlement Commission, Principal Bench, New Delhi. Income Tax Settlement Commission, Principal Bench, New Delhi. .. Petitioner 2. Income Tax Settlement Commission, Additional Bench, 640, Anna Salai, Chennai – 35. Additional Bench, 640, Anna Salai, Chennai – 35. 3. Principal Commissioner of Income Tax, Central – II, Chennai – 600 034. Central – II, Chennai – 600 034. 4. The Assistant Commissioner of Income Tax (AO), Central Circle-I, Trichy... Respondents Central Circle-I, Trichy... Respondents PRAYER: This Writ Petition is filed under Article 226 of theConstitution of India, praying to issue a writ of CertiorarifiedMandamus calling for the records relating to the order of the 2[nd]respondent made in Settlement Application Nos.TN/CN52/2014-15/57/IT dated 30.09.2016 and quash the same and consequentlydirect the 1[st] respondent to constitute a Special Bench underSection 245BA (5) of Income Tax Act, 1961 to hear thepetitioner'sSettlementApplicationdated02.03.2015uninfluenced by the findings of the impugned order of the 2[nd]respondent dated 30.09.2016 and forbearing the 4[th] respondentfrom proceeding further with Assessment Proceedings in pursuanceto the Assessment Notices dated 03.10.2016, 05.10.2016 &06.10.2016 issued under Section 142 (1) of r/w Section 129 ofIncome Tax Act, 1961 in respect of the petitioner's assessmentfor Assessment Years 2007-08 to 2014-15. For Petitioner : Mr.Palani Selvarajfor Mr.R.G. NarendhranFor Respondents: Mr.A.P.SrinivasSenior Standing Counsel for IT O R D E R The lis on hand is instituted challenging the orderpassed by the Income Tax Settlement Commission on 30.09.2016 andfurther relief is sought for forbearing the fourth respondentfrom proceeding with the Assessment proceedings. 2.The petitioner is a company engaged in the businessof purchase and sales of dates, oats and honey and themanufacture of syrups, jams and squash. The petitioner’s brand‘Lion’ is well known brand in the retail dates market in India.The main business of the petitioner is of dealing in dates,which are mainly imported from Middle East, largely from Oman,while purchases are also made from the Mumbai market. Theimported dates are stored in cold storage immediately at thereceiving station. After clearing, they are transported to theprocessing and manufacturing units at various places forcleaning, sorting, deseeding and packing. The packed dates arestored and delivered to the various centers in the country forsupply to the market. The factory and processing units of thepetitioner are situated at various places. The petitioner claimsthat from April 2011, the petitioner has started manufacture ofdates, syrups and jams at its dedicated international standardsunit situated at Ward-A, Block 6, T.S.No.21, Kallanai Road,Devadanam Village, Trichy Taluk, and more than thousand workersare employed for these purposes. 3.The learned counsel appearing on behalf of thepetitioner contended that the Income Tax Settlement Commissionrejected the application filed by the petitioner under Section245C of the Income Tax Act, as not maintainable and thus, thepetitioner is constrained to move the present Writ Petition. 3.The learned counsel appearing on behalf of thepetitioner contended that the Income Tax Settlement Commissionrejected the application filed by the petitioner under Section245C of the Income Tax Act, as not maintainable and thus, thepetitioner is constrained to move the present Writ Petition. 4.It is contended that the petitioner was not providedwith an opportunity to defend their case on several stages andtherefore, the impugned order is in violation of the principlesof natural justice. The petitioner raised a ground of bias inthis Writ Petition. However, such an official bias was notraised before the Settlement Commission. The petitioner statesthat the Settlement Commission has violated the circular issuedby the CBDT on the Revenue. Despite the fact that the saidcircular is binding, valuation of assets and buildings estimatedby the petitioner has not taken into consideration by the https://hcservices.ecourts.gov.in/hcservices/ Settlement Commission, even after filing of additional documentsbefore the Commission. The deliberation made by the SettlementCommission with reference to Section 80IB of the Income Tax Actwas also improper. For all these reasons, the impugned orderpassed by the Settlement Commission is liable to be set aside. 5.The learned counsel for the petitioner drawn theattention of this Court with reference to the disputed factswhich all are raised between the parties. One hand, it issubmitted that the petitioner has filed an application with trueand full disclosure of Income and further submitted applicationdeclaring additional income. The petitioner clarified the doubtsraised by the Settlement Commission and participated in theadjudicatory process. Inspite of the co-operation extended bythe petitioner, the Settlement Commission, rejected theapplications as not maintainable, on the ground that thepetitioner has not disclosed all the material facts fully andtruly in order to substantiate and the petitioner has statedthat the details regarding the investments, profits and loss andother Books of Accounts were submitted before the Income TaxSettlement Commission. 6.It is contended that the Director General of IncomeTax (Investigation), took charge as Vice-Chairman subsequent tothe search conducted in the premises on 17.07.2013. Thus, thesubsequent proceedings based on the search operations wereinitiated within the knowledge of the Vice-Chairman of theIncome Tax Settlement Commission and the Administrativecirculars and directions were also made with his knowledge.Thus, there was an official bias and on that ground also theimpugned order is liable to be set aside. In order to establishthe ground regarding violation of principles of natural justice,the petitioner has stated that the last report was submitted on29.09.2016 after filing of written submission by the petitionerand therefore, he has not provided further opportunity to makehis submissions on the said Report. The CBDT Circular dated18.12.2014 in relation to admissions of undisclosed Income undercoercion/pressure during search/survey, the Board issuedguidelines and directed to convey that any instance of undueinfluence/coercion in the recording of the statement duringsearch/survey/other proceedings under IT Act, 1961 and / orrecording a disclosure of undisclosed income underpressure/coercion shall be viewed by the Board adversely. Thesaid circular has not been followed scrupulously by theAuthorities Competent. The petitioner filed an application underSection 245C before the Commission. Subsequent to the searchconducted in the premises, the petitioner approached theSettlement Commission with an intention to settle the issues. Hemade full and true disclosure in respect of the materials andinspite of that the application was rejected as not maintainable. 7.The learned counsel for the petitioner has statedthat dates and date syrup are not different products is purely alegal issue could be decided by the Courts. In this regard, thepetitioner has stated that they have not involved in anymanufacturing process and they have imported initially the datessyrup and packed the syrup and supplied in the retail market.Therefore, the findings with reference to Section 80IB made bythe respondent are not in consonance with the provisions of theIncome Tax Act. The facts, in this regard has established by thepetitioner were not considered. The petitioner purchased theequipments for producing dates, syrup and jam with an investmentof Rs.2.84 Crores. Subsequently, the old unit using conventionalprocess was dismantled and the new unit was brought intoexistence in March, 2011 when trial production was started afterpertaining central excise registration on 14.03.2011. Therefore,these facts established through documents were not considered bythe Settlement Commission and the application was rejectedmerely on the ground that the petitioner has not disclosed thematerial facts fully and truly. 8.The learned Senior Standing Counsel objected thecontentions raised on behalf of the petitioner by stating thatthe powers of the Settlement Commission and the scope ofsettling the issues between the assessee and the Department areclearly enumerated under the provisions of the Income Tax Act.Once the settlement Commission could able to arrive a conclusionthat the assessee has not disclosed all material facts fully andtruly, then a petition for settlement under Section 247 (1) ofthe Income Tax Act is not maintainable at all. The findings inthis regard made in the impugned order would reveal that thepetitioner has not only suppressed certain facts but notproduced all the materials truly and fully. Whenever, theDepartment confronted with the assessee, he made declaration inpiecemeal and therefore, the Settlement Commission arrived aconclusion that the issues cannot be settled and accordingly,rejected the application as not maintainable. Thus, there is noinfirmity as such in respect of the order passed by theSettlement Commission. 9.Considering the arguments as advanced by therespective learned counsel appearing on behalf of the parties tothe lis, this Court is of the considered opinion that theprovision for settlement is an enabling provision to settle thedispute between the parties. Therefore, law expects that theparties, who are approaching the Settlement Commission by way ofapplication, must disclose full and true income in the event ofany difference or confrontation in this regard such anapplication for settlement cannot be entertained. Contrarily,the Assessing Officer must be permitted to make regularassessment of income under Section 153A of the Act. It is further contended that the differential amount of income iscrossing Rs.25 Crores and all these facts were placed before theSettlement Commission by the Department. In this regard, it iscontended that the Settlement Commission has committed an errorin adopting the decision making process, as the process adoptedis totally in contravention to the facts and circumstancesestablished by the Department and further, such facts andcircumstances are not correlating with the application filed bythe assessee under Section 245C of the Act. When there arediscrepancies and doubt arises with regard to the true and fulldisclosure of income, then the natural course of action would bethat the Assessing Officer must be permitted to make a regularassessment under Section 153A of the Act and settlement cannotbe arrived under doubtful circumstances. In such circumstances,settlements are impermissible and cannot be construed assettlement at all. 10. The very concept of settlement is depending on themutual consensus and in the absence of element of mutualconsensus between the parties, the settlement by the SettlementCommission cannot be unilateral and in such an event, SettlementCommission is usurping the powers of the Assessing Officer underother provisions of the Act. In other words, every authorityunder the Income Tax Act, 1961 is expected to exercise thepowers as contemplated. 11. The question of exercise of excessive powers orjurisdiction would arise, if the authority made an attempt totravel beyond the scope of the provision under which, suchpowers are conferred to a particular authority. In the instantcase, the power of the Settlement Commission is well enumeratedunder Section 245C and 245D of the Act. The manner in whichsettlement is to be arrived is also contemplated under the Act.Certain pre-conditions are also stipulated. Thus, theSettlement Commission cannot enter into the venture ofassessment, which is the power of an Assessing Officer underSection 153A of the Act. Therefore, this Court is of an opinionthat in the absence of any true and full disclosure, theSettlement Commission cannot go beyond the scope of Section 245Cof the Act and adjudicate the additional income found by theDepartment during seizure, which is admittedly not disclosed inthe application filed at the first instance by the assessee. 12.It is not in dispute that for entertaining anapplication for settlement under Section 245C of the Income TaxAct, the assessee must disclose true and full income enablingthe Commission to settle the issues. If any non-disclosure isidentified during the course of proceedings, that itself issufficient to reject the application as not maintainable. TheCommission is not empowered to proceed further as in the event of identifying non-disclosure of income, since the AssessingOfficer is the Authority to proceed with reassessment. In thepresent case, action has been initiated under Section 147 & 148of the Act. 13.Therefore, this Court has to primarily find outwhether the application filed by the petitioner under Section147 (C) of the Act is entertainable or not with reference to theconditions stipulated in the provision itself. Once it is foundthat the application is entertainable then alone the question ofadjudication of further merits would arise. Therefore, othergrounds raised on merits are to be considered only if theapplication before the Settlement Commission is maintainable. 14.In this regard, it is relevant to consider thefindings of the Settlement Commission in its order and theSettlement Commission considered the following issues, whichreads as under: “6.0. In the SOF, the Applicant has made thefollowing prayers:a) To settle the total income offered in respect of Ays2007 – 08 to 2014 – 15 on the basis of the disclosuresmade and to determine the consequential tax and interestchargeable thereon under the Income Tax Act, 1961. b) To allow the telescoping and capitalization of theincome offered.c) To grant waiver of interest leviable under the IncomeTax Act, 1961.d) To grant waiver of penalty under the I.T.Act in termsof section 245H. e) To grant immunity from prosecution in terms ofsection 245H.” 14.In this regard, it is relevant to consider thefindings of the Settlement Commission in its order and theSettlement Commission considered the following issues, whichreads as under: “6.0. In the SOF, the Applicant has made thefollowing prayers:a) To settle the total income offered in respect of Ays2007 – 08 to 2014 – 15 on the basis of the disclosuresmade and to determine the consequential tax and interestchargeable thereon under the Income Tax Act, 1961. b) To allow the telescoping and capitalization of theincome offered.c) To grant waiver of interest leviable under the IncomeTax Act, 1961.d) To grant waiver of penalty under the I.T.Act in termsof section 245H. e) To grant immunity from prosecution in terms ofsection 245H.” 7.1. Serious issues cropped up in this case. Themain issue that arose for consideration is whether themethodology adopted by the applicant to disclose incomein the application is correct or not. Claim of 80IBdeduction is another bone of contention Additional claimof depreciation on account of capitalisation, based onself-serving valuation reports was another majorproblem. Applicant stated that for two A.Ys 2012-13 and2013-14 the returns are to be accepted in 115JB withoutany alteration in view of the judgment of the apex courtin the case of Apollo Tyres. Adding back ofdepreciation or adding back unexplained investment etc.are difficult. These issues are discussed below andfindings given as to the fact whether the fact whetherthe applicant disclosed full and true income or not. 7.2.The applicant commenced his business in theyear 2000. It was processing and selling dates:According to para 3 of the application, after cleaningdeseeding and packing the product was stored andmarketed. The applicant is involved in the business ofprocessing, preservation and packaging of dates (fruit).It has also cold storage facility. According to theseized material enclosed to the AO's report dated19.09.2016 it was involved in FYs 2007-08 & 2008-09 insyrup production. These documents are enclosed in pages70 to 79 of this order. It has also disclosed theexpenditure under the head Machinery Maintenance insyrup unit in these two Asst years. This is seen as perthe seized material. The applicant admits that it wasinvolved in syrup production earlier but it wasdiscontinued in the intervening two years and againstarted from March 2011.The applicant claimed nearly Rs.55 Crores of Sec.80IB(11A) deduction for the AYs.2012-13, 2013-14 and 2014-15. The Department objected to this claim. Detailedreport of the AO was enclosed by the C.I.T.Sec.80IB(11A) reads as follows:Section 80IB(11A): [(11A) The amount of deduction in a case of [anundertaking deriving profit from the business ofprocessing, preservation and packaging of fruits orvegetables or [meat and meat products or poultry ormarine or dairy products or] from] the integratedbusiness of handling, storage and transportation offoodgrains, shall be hundred per cent of the profitsand gains derived from such undertaking for fiveassessment years beginning with the initial assessmentyear and thereafter, twenty-five per cent (or thirty percent where the assessee is a company) of the profits andgains derived from the operation of such business in amanner that the total period of deduction does notexceed ten consecutive assessment years and subject tofulfilment of the condition that it begins to operatesuch business on or after the 1[st] day of April, 2001;][Provided that the provisions of this section shall notapply to an undertaking engaged in the business ofprocessing, preservation and packaging of meat or meatproducts or poultry or marine or dairy products if itbegins to operate such business before the 1[st] day ofApril, 2009.]” 7.3.According to Sec.80IC(11A) once an assessee ininvolved in the processing preservation and packaging offruits or vegetables, he can claim deduction u/s 80IB.The AR pointed out that with respect to processing of dates, the applicant was involved in the business from2001 onwards and with respect to processing of dates andsyrup production, the applicant was involved in businessfrom FY 2007-08 (AY 2008-09) to the extent evidence isavailable. It may be that even earlier, the applicantwas involved in import and packaging of syrup. Thus theclaim that new unit was started only in FY 2011-12 (AY2012-13) is not factually correct. 7.9.1.There is no separate unit that has beenstarted in the A.Yr.2012-13 to make any claim. It isonly one or two other machinery that was added. Infact, production of syrup was shown in the profit andloss account for the A.Yr.2008-2009 & 2009-2010 itself.Even the maintenance on the machinery relating to syrupunit, expenditure was claimed in the profit and lossaccount. Thus, according to the CIT, the unit wasstarted long back and business activities were continuedsince several years because processing and packing wasinvolved. Hence, this cannot be the first year orinitial year. Moreover, there was a lull or stoppage ofactivity in the A.Yr. 2010-11 & 2011-12 and again in themonth of March, 2011, there was production. The A.Rstates it was trial production. The applicant's claimsthat only imported syrup was available as on 01.04.2011is correct/false. In the order sheet noting as per thepaper book of CIT dt. 29.09.2015 at page-13, it isadmitted by the applicant that stock was produced in themonth March, 2011. Hence, even in the past years i.e.-A.Y2011-2012 and earlier, there was production from outof the machinery in the factory. Moreover, importedsyrup was being processed and packaged and sold for thepast five years. According to the Section, thecommencement of the production is not the criteria butis is the commencement of business that is the criteria.The business was already being carried on since fewyears and this cannot be denied. The unit was inexistence and the addition of new machinery of Rs.2.8crores cannot be said to form a new unit. 7.9.2.It appears that the applicant while filingthe Excise returns under the new amended provisionsthought of this idea to claim 80IB deduction underI.T.Act. This is not sufficient in order to claim 80IBdeduction. The applicant itself pointed out the amendedprovisions in the Exice Act according to which even onthe packaged products excise duty was to be paid. Thisis referred above. IT is admitted that there is no rawmaterials/production register except for the exciserecord. 7.9.5.No additional staff were employed and therewas no additional registration for the purposes ofEPF/ESI etc. It is the same staff that were continued inthe same premise Depreciation of building is notidentified and separately debited to Sec. 80IB unit asagainst other unit. According to CIT vs Essar BulkCarriers, 238 ITR 186 (Mad), separate trading profit andloss account and balance sheet has to be filed for thepurpose of Sec.80IB units. Once this is not compliedwith the applicant is not eligible for this claim.7.9.6.When this was all pointed out by the CIT, theapplicant filed a fresh paper book calling backdepreciation and adding back certain other expendituresas taxable. The following is the additional incomeoffered as per the latest APB filed on 29.09.2016 whichis enclosed in pages 80 to 94 of this order claim ofdeduction u/s.80IB on that portion Depreciation syrupmachinery, wrongly claimed against taxable income nowoffered: A.Y. 2012-13.- Rs.39,09,583A.Y. 2013-14.- Rs.33,23,146A.Y. 2014-15.- Rs.28,24,674**Depreciation of Rs.24,31,944 /- was also addedback in AY 2011-12 on syrup unit.Additional income offered on account ofdisallowance of expenses allocated to 80IB Unit;A.Y. 2012-13- Rs.5,45,00,000A.Y. 2013-14- Rs.3,60,00,000A.Y. 2014-15- Rs.3,02,00,000 7.9.7.The applicant, when pointed out the defectsin accounts and also the fact that around 54% of netprofit was declared in the 80IB unit as against 12% inteh regular business which was abnormal, sought tocorrect the claims made. Fundamentally, the departmentobjects to this type of apportionment and it stated thatseparate books of account ought to have been maintained.It is only on the last day of hearing just one daybefore the time barring date that such huge additionalincome is sought to be disclosed. According to thesection 80IB(11A) and rule 18BBB, the return shall beaccompanied by the Profit and Loss Account and BalanceSheet of the undertaking or enterprise as if theundertaking or the enterprise were a distinct entity.It is clearly seen that in the case of the applicantthis condition is not fulfilled. The adhocapportionment made is not acceptable. Moreover, theunit is not a new unit. Just because there is a changein Excise law the applicant cannot change its mind andclaim this benefit. There was production even in theearlier years and there was business of processing and packaging of dates and also syrup even in the earlieryears. For once of the years, the return is filedbelatedly and as per the judgment of the Supreme Courtreferred to by the AR this Commission has no power totake action u/s. 119 Sec 80AC is applicable. 7.9.8.Thus it is clearly seen that on account of80IB deduction, figures that were submitted are beingaltered after the department pointed out the same. Inall, the applicant withdrew Rs.12.07 crores for the3A.Ys and disclosed it as additional income on accountof withdrawal of deduction u/s.80IB to that extent.Thus on the same facts, additional income is disclosednow before the Commissioner at the last stage whenconfronted by the department. The Department cited thecase of Major Metals Limited vs. Union of India 19Taxmann.Com 176(Bombay) to state that penalty ought tobe levied since the applicant is making disclosure ininstalments. 7.9.10.Above all, it was clearly pointed out to theapplicant that u/s. 80IB benefit can be claimed onlywhen the output was fruit or vegetable and no otherproduct. When this was point out, the AR admitted on26.09.2016 that Sec. 80IB (3) is only applicable and notSec. 80A(11A). He requested that relief be given u/s.80IB(3). The production of syrup or jam amounts to adifferent product though there is processing involved.Sec. 80IB(3) is no longer in operation. However, in thehearing on 29.09.2016 he stated that in view of AdvanceRuling in the case of M/s. Delna Rustom 380 ITR 455 theyare eligible for the benefit. The CIT (DR) pointed outthat Advance Ruling is not binding on the Department.CIT(DR) referred to the decision in the following caselaws: (i) Decision of Bombay ITAT(J) Bench in the case of ITO-19(3)4 Vs. Shri Shankar K. Bhanage in 3216 & 3217 /Mumbai/2010. (ii) Decision of Madras ITAT(D) Bench in the case ofM/s. Aseptic Fruit Products (India) P. Ltd vs ACIT,Circle (1) dated 30.09.2015 in ITA No. 1136/MDS/2015. 7.9.11.We have given our anxious consideration tothis aspect. Whenever there is manufacture / productionof article or thing the deduction to be claimed onlyu/s. 80IB(3). This section is no longer in vogue onaccount of time limit. It was a conscious decision ofthe legislature to stop the benefit of Sec. 80IB(3) as (i) Decision of Bombay ITAT(J) Bench in the case of ITO-19(3)4 Vs. Shri Shankar K. Bhanage in 3216 & 3217 /Mumbai/2010. (ii) Decision of Madras ITAT(D) Bench in the case ofM/s. Aseptic Fruit Products (India) P. Ltd vs ACIT,Circle (1) dated 30.09.2015 in ITA No. 1136/MDS/2015. 7.9.11.We have given our anxious consideration tothis aspect. Whenever there is manufacture / productionof article or thing the deduction to be claimed onlyu/s. 80IB(3). This section is no longer in vogue onaccount of time limit. It was a conscious decision ofthe legislature to stop the benefit of Sec. 80IB(3) as it was not extended. A reading of Sec. 80IB(11A) showsthat only when processing preservation and packaging offruits or vegetables are done, the benefit can beclaimed. All three activities are to be arrived out andthe ultimate product should be fruits or vegetables andnot any other product. To this extent, event in termsof language of this section, the applicant is noteligible. 7.9.12.The Settlement Commission can settle mattersinvolving dispute of facts. It cannot lay downprinciples of law. It is only the High Courts andSupreme Court that are vested with the power of layingdown principles of law. Hence, there is difficulty. 7.9.13.Above all, on the basis of findings that,there is no new unit as claimed by the applicant, noseparate books of accounts were maintained, no profitand loss account and balance sheets were filed, basicregisters such as raw materials / production were notmaintained, expenditure were incurred in common withother business activities, depreciation etc. were alsonot strictly ascertainable and hence the claim of Sec.80IB(11A) is not valid. There is no case made out toclaim deduction u/s. 80IB for all the years. On hebelated return no benefit can be extended to theapplicant. It is also to be noted that this businessactivity was commenced long back i.e. in the year 2001or 2002 according to AR. The applicant was involved inprocessing and packaging of dates and also packaging ofimported syrup. Addition made of just Rs. 2.8 crores onaccount of machinery out of total machinery of Rs.7,36,55,743/- cannot be the basis to claim that new unithas been started from 10 CCB shows only machinery of Rs.1 Crore is used in this unit whereas AR claimed over Rs.3 Crores of machinery is involved. 7.9.14.One more abnormality is that the profit withrespect to Sec. 80IB unit is disclosed at 54% or sowhereas in the regular activity it is of the order of12%. This was starting point for investigation. Theapplicant itself admitted the mistakes / incorrectclaims and filed revised computation on 29.09.2016 justone day before the case gets time barred u/s. 245D(4). 7.9.15.The Department also pointed out thatdisclosure of additional income of Rs. 26,89,65,826/- inthe last hearing would amount to substantive disclosureof additional income after the Department has pointedout that this amounts to concealment. Accordingly, thecase of Major Metals would apply. 7.9.16.In view of this, it is clearly seen that theclaim u/s. 80IB is not tenable in law as well as on 7.9.14.One more abnormality is that the profit withrespect to Sec. 80IB unit is disclosed at 54% or sowhereas in the regular activity it is of the order of12%. This was starting point for investigation. Theapplicant itself admitted the mistakes / incorrectclaims and filed revised computation on 29.09.2016 justone day before the case gets time barred u/s. 245D(4). 7.9.15.The Department also pointed out thatdisclosure of additional income of Rs. 26,89,65,826/- inthe last hearing would amount to substantive disclosureof additional income after the Department has pointedout that this amounts to concealment. Accordingly, thecase of Major Metals would apply. 7.9.16.In view of this, it is clearly seen that theclaim u/s. 80IB is not tenable in law as well as on facts. The applicant’s disclosure of additional incometo the extent of Rs. 12 Crores on this account is aresult of the detection by the Department and is notvoluntary. The disclosure made in this regard in theapplication is to be held as not full and true. Theapplicant is once again relying its own asset method andvaluation report and continues to claim that Rs. 21.66crores of undisclosed income as invested in depreciablebuilding (fresh construction activity) for which thereis no evidence in the seized material. Once again, itis to be seen that the disclosure cannot be consideredas full and true because this is not substantiated.9.5.The valuation reports are not reliable.According to Hon’ble High Court of Delhi in the case ofAgson Global (P) Ltd. Vs. ITSC, the powers to refer to142(2A) order is not available to the SettlementCommission. Hence reference cannot be made to ValuationCell also. When the department does not have theopportunity to refer to the valuation cell, it isdifficult to admit valuer’s report and give relief tothe applicant. This anamoly was also pointed out by theCIT (DR). 9.6.In fact, the main discovery in the searchaction was unearthing of undisclosed purchases which isshown in table below. Instead of disclosing the incomebased on the inflation of purchases which generated theundisclosed income, the applicant adopted its ownmethodology to suit its convenience and to claimdepreciation. 9.7.The below table gives the undisclosed purchasesdetected assessment year-wise When this was pointed out by the Department, a letterwith Annexures was filed by the applicant on 29.09.2016which is enclosed in part, to this order. Herein forA.Yr 2010-11, an amount of Rs. 8,55,03,998 an forA.Yr.2011-12, an amount of Rs. 4,29,17,481, totaling toRs. 12,84,21,479 is disclosed as additional income onaccount of inflation of purchases. 9.8.The department clearly argued its case statingthat penalty should be levied as per Major Metals Ltd. –Mumbai High Court Judgement. The disclosure earliermade to this extent is not full and true. The applicantcannot disclose additional income in installments. 10.0.On the issue of claim of depreciation, issuesrelating to other immovable properties such as AnnaNagar, Sterling Road, Kathalur, etc. there is nonecessity for us to give any findings as it is alreadyheld that the applicant did not disclose full and trueincome in its application and hence the application isnot maintainable. On all other related issue also thereis no necessity for us to give a finding as theapplicable is being rejected. There is also difficultywith regard to the AYs 2012-13 & 2013-14 as the incomeis disclosed u/s. 115JB and the modifications cannot bedone to the income according to the AR No finding needbe given in this regard as application is being rejectedas it is not full and true. 11.0.From the above it can clearly be seen thatdisclosure is not full and true and hence theapplication is also not maintainable. Reliance isplaced in the cases of CIT vs ITSC 310 ITR 10, ACEInvestments (2003) 264 ITR 571 (Mad) and Ajmeera Housing(2010) 193 TAXMN 193 (SC).” 11.0.From the above it can clearly be seen thatdisclosure is not full and true and hence theapplication is also not maintainable. Reliance isplaced in the cases of CIT vs ITSC 310 ITR 10, ACEInvestments (2003) 264 ITR 571 (Mad) and Ajmeera Housing(2010) 193 TAXMN 193 (SC).” 15.Close reading of the above findings of theSettlement Commission, would reveal that there are many lapsesestablished on the part of the petitioner / assessee indisclosing all the material facts truly and fully. It is not oneinstance wherein a doubt raised but on several issues theSettlement Commission could able to identify non-disclosure ofmaterial facts on the part of the Assessee. The Commission madea finding that the Assessee disclosed certain income only afterthe confrontation with the Department Officials. Certaindisclosures are made in piecemeal then and to suit theirconvenience. 16.This being the conduct of the assessee establishedbefore the Settlement Commission and the Settlement Commissionalso categorically made a finding, this Court has no reason tointerfere with such findings as the said findings are candid andconvincing and in consonance with the provisions of the IncomeTax Act. 17.In view of the fact that the application submittedby the petitioner under Section 254C of the Income Tax Act, wasrejected as not maintainable in view of the non-compliance ofthe Mandatory conditions stipulated under the provisions and thepetitioner/assessee could not able to establish that he hasfiled an application with true and full disclosure of facts.Thus, the petitioner is not entitled for any relief as suchsought for in the present writ petition. 18.Accordingly, the writ petition stands dismissed. Nocosts. Consequently, connected miscellaneous petitions areclosed. Sd/- Assistant Registrar(CS V) //True Copy// Pns Sub Assistant Registrar To 1. The Chairman, Income Tax Settlement Commission, Principal Bench, New Delhi.2. The Income Tax Settlement Commission, Additional Bench, 640, Anna Salai, Chennai – 35. 3. The Principal Commissioner of Income Tax, Central – II, Chennai – 600 034.4. The Assistant Commissioner of Income Tax (AO), Central Circle-I, Trichy.+1cc to Mr.A.P.Srinivas, Advocate Sr No.44513+1cc to Mr.R.G.Narendhran, Advocate Sr No.44712 https://hcservices.ecourts.gov.in/hcservices/