Wp/4875/2014 Of Commissioner Of Income Tax (Central), Pune v. Income Tax Settlement Commission (Itsc), Additional Bench And Anr

IN THE HIGH COURT OF JUDICATURE AT BOMBAYAPPELLAT SIDE CIVIL JURISDICTION WRIT PETITION NO. 4875 OF 2014 Commissioner of Income Tax (Central), Pune ..Petitioner.v/s.Income Tax Settlement Commission(ITSC), Additional Bench & Another ..Respondents. Mr. Tejveer Singh, for the Petitioner.Mr. V.S. Hadade, for Respondent No.2. P.C:- CORAM: M.S.SANKLECHA, & A.K.MENON, JJ.DATE : 25[th] JANUARY, 2017. This Petition under Article 226 of the Constitution of India,challenges a notice dated 14[th] October, 2013 issued under Section245(D4) of Income Tax Act, 1961 (the Act) passed by the SettlementCommission (Commission). The impugned order dated 14[th] October, 2013settles the dispute between the Assessee and the Revenue for theAssessment Years 2006-07 to 2012-13. 2The grievance of the Petitioner before us is that the impugnedorder dated 14[th] October, 2013 of the Commission settling the dispute hasbeen passed, ignoring the statutory provisions of the Act. This ignoring ofthe statutory provisions is in defiance of the mandate of Section 245D(4)of the Act which requires the settlement to be done in accordance with theprovisions of the Act. 3In support of the above grievance, Mr. Tejveer Singh, learnedCounsel appearing for the Petitioner states that certain expenditureclaimed by the Respondent-Assessee could not be allowed in view ofExplanation-I to Section 37 of the Act. It is submitted that a statement wasrecorded of the Managing Director of the Respondent-Assessee during thecourse of a search wherein it was stated that certain expenditure havebeen incurred in cash and partly are not allowable as businessexpenditure under the Act. We asked Mr. Tejveer Singh whether it wasever the submission of the Revenue before the Commission at the hearingthat in view of the above statement, the expenditure claimed should bedisallowed. 4Mr. Tejveer Singh, in response to the above, invited ourattention to paragraph 9.4 of the impugned order which records thesubmission made on behalf of the Revenue before the Commission, whichreads as under:- “9.4:-In this context, CIT(DR) has submitted that the expenses asper the paper must be proved to have been incurred by theapplicant and the recipients should confirm having received theseamounts. CIT(DR) further contended that the paper does not givethe details of amount, how much has been received by whom,and in what capacity he was connected with the applicant. It wasfurther submitted that this paper may not be a genuine one. Itwas argued by CIT(DR) that Shri Tapadia or Shri VineetMalhotra might have accepted the payments in their hands tosubstantiate a much bigger claim of expenditure of the applicantcompany. He further stated that their statement of acceptanceshould not give credence to the story of the applicant. It wasstretched further that the claim should not be allowed becausethe amount is not specified to be in crores, lacs, thousands etc.” From the reading of the paragraph, one cannot even inferthat any submission was made on behalf of the Revenue that expenditureclaimed by the Assessee, cannot be allowed, as it is hit by Explanation-I toSection 37 of the Act. 5As against the above, we notice that the Applicant-Respondent had contended before the Commission in response to theabove submission by the Petitioner-Revenue that there is no requirementto prove the expenditure. This for the reason that the statement ofexpenditure on which a reliance is placed, was found during search andwould be covered by Section 132(4A) of the Act which requires apresumption to be drawn that, it is true, genuine and correct. From the reading of the paragraph, one cannot even inferthat any submission was made on behalf of the Revenue that expenditureclaimed by the Assessee, cannot be allowed, as it is hit by Explanation-I toSection 37 of the Act. 5As against the above, we notice that the Applicant-Respondent had contended before the Commission in response to theabove submission by the Petitioner-Revenue that there is no requirementto prove the expenditure. This for the reason that the statement ofexpenditure on which a reliance is placed, was found during search andwould be covered by Section 132(4A) of the Act which requires apresumption to be drawn that, it is true, genuine and correct. 6We find that the Commission on consideration of the rivalsubmission concluded that out of total amount of expenditure of Rs.21.5Crores written on paper only Rs.19.6 Crores have been claimed by theRespondent-Asssessee as an expenditure in determining expenditure onwhich the tax is paid. The Commission allowed the expenditure asclaimed on the basis of the seized document found during the course ofsearch. The Commission was not at any point of time called upon by theRevenue during the hearing before it to disallow the expenditure becauseit does not satisfy the test of Explanation -I to Section 37 of the Act. Theonly contention on behalf of the Revenue before the Commission was thatthe Assessee must be asked to prove the expenditure, it claims to haveincurred. It was in that context, that the Commission held that there is norequirement to prove the expenditure, as the noting found in the seizeddocuments during search, are presumed to be true and correct. Therefore, the grievances made by the Revenue before us, cannot be sustained inview of the fact that the issue which is now urged before us, was noturged before the Commission during the course of hearing. Thus, therewould be no occasion for the Commission to give a ruling on the issuenow raised before us by the Petitioner. 7In the above view, we see no reason to entertain the presentPetition. 8Accordingly, Writ Petition disposed of. No order as to costs. (A.K.MENON,J.) (M.S.SANKLECHA,J.)