LODHA DESIGNED CONSTRUCTION P. LTD, MUMBAI V. DCIT CEN CIR 7(3), MUMBAI

ITA 5506/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0743 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 18-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 09-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MAHESH O RAJORA
• Keywords: Question of law; Reason to believe
• Section: 143(3); 32; 147; 148; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO.5505/M/2016 ASSESSMENT YEAR: 2009-10 M/S. ANANTNADH CONSTRUCTIONS AND FARMS PVT. LTD., 412, 4 TH FLOOR, 17G, VARDHAMAN CHAMBER, CAWASJI PATEL ROAD, HORNIMAN CIRCLE, FORT, MUMBAI 400 001 PAN: AAGCA5132J VS. DCIT, CENTRAL CIRCLE-7(3) (ERSTWHILE CENTRAL CIRCLE-42), ROOM NO.655, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (RESPONDENT) ITA NO.5510/M/2016 ASSESSMENT YEAR: 2008-09 M/S. AASTHAVINAYAK ESTATE COMPANY PVT. LTD., (EARLIER MERGED WITH LODHA LAND DEVELOPERS PVT. LTD. THEN MERGED WITH LODHA DEVELOPERS PVT. LTD.), 412, 4 TH FLOOR, 17G, VARDHAMAN CHAMBER, CAWASJI PATEL ROAD, HORNIMAN CIRCLE, FORT, MUMBAI 400 001 PAN: AAGCA2863C VS. DCIT, CENTRAL CIRCLE-7(3), ROOM NO.655, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (RESPONDENT) ITA NOS.5506 & 5507/M/2016 ASSESSMENT YEARS: 2009-10 & 2008-09 M/S. LODHA DESIGNER CONSTRUCTION PVT. LTD., (NOW MERGED WITH SHREE SAINATH ENTERPRISES CONSTRUCTION AND DEVELOPERS PVT. LTD.), 412, 4 TH FLOOR, 17G, VARDHAMAN CHAMBER, CAWASJI PATEL ROAD, HORNIMAN CIRCLE, FORT, MUMBAI 400 001 PAN: AABCL 2681G VS. DCIT, CENTRAL CIRCLE - 7(3) (ERSTWHILE CENTRAL CIRCLE-42), ROOM NO.655, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (RESPONDENT) ITA NO.5505/M/2016 & ITA NO.5510/M/2016 & ORS. M/S. ANANTNADH CONSTRUCTIONS AND FARMS PVT. LTD. & ORS. 2 ITA NO.5508/M/2016 ASSESSMENT YEAR: 2007-08 M/S. LODHA LAND DEVELOPERS PVT. LTD., (NOW MERGED WITH LODHA DEVELOPERS PVT. LTD.) 412, 4 TH FLOOR, 17G, VARDHAMAN CHAMBER, CAWASJI PATEL ROAD, HORNIMAN CIRCLE, FORT, MUMBAI 400 001 PAN: AABCL 2223J VS. DCIT, CENTRAL CIRCLE-7(3) (ERSTWHILE CENTRAL CIRCLE-42), ROOM NO.655, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (RESPONDENT) ITA NO.5511/M/2016 ASSESSMENT YEAR: 2008-09 M/S. LODHA BUILDING AND CONSTRUCTION PVT. LTD., (NOW MERGED WITH LODHA DEVELOPERS PVT. LTD.) 412, 4 TH FLOOR, 17G, VARDHAMAN CHAMBER, CAWASJI PATEL ROAD, HORNIMAN CIRCLE, FORT, MUMBAI 400 001 PAN: AABCL 2571K VS. DCIT, CENTRAL CIRCLE-7(3) (ERSTWHILE CENTRAL CIRCLE-42), ROOM NO.655, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI VIJAY MEHTA, A.R. & SHRI MAHESH O. RAJORA, A.R. REVENUE BY : SHRI RAHUL RAMAN, D.R. DATE OF HEARING : 18.04.2017 DATE OF PRONOUNCEMENT : 17.05.2017 O R D E R PER D.T. GARASIA, JUDICIAL MEMBER: THE ABOVE TITLED APPEALS OF DIFFERENT ASSESSEES BUT ARE RELATED TO ONE ANOTHER HAVE BEEN PREFERRED AGAINST THE SEPARATE OR DERS OF COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED AS CIT(A )] FOR ASSESSMENT YEARS 2007-08, 2008-09 & 2009-10. SINCE THE FACTS AND IS SUES INVOLVED THEREIN ARE IDENTICAL, THE SAME WERE HEARD TOGETHER AND ARE BEI NG DISPOSED OF BY THIS COMMON ORDER. FOR THE SAKE OF CONVENIENCE, WE TAKE UP THE FACTS OF THE CASE ITA NO.5505/M/2016 & ITA NO.5510/M/2016 & ORS. M/S. ANANTNADH CONSTRUCTIONS AND FARMS PVT. LTD. & ORS. 3 FROM ITA NO.5510/M/2016 FOR A.Y. 2008-09 IN THE CAS E OF ASHTAVINAYAK ESTATE COMPANY PVT. LTD. 2. THE SHORT FACTS OF THE CASE ARE AS UNDER: GROUND NO.1 THE ASSESSEE HAS FILED THE RETURN OF INCOME FOR A. Y. 2008-09 ON 10.06.2008 DECLARING LOSS AT RS.1,39,654/-. THE NO TICE DATED 09.10.2013 UNDER SECTION 148 WAS SERVED TO THE ASSESSEE AND REASONS RECORDED ARE AS UNDER: THE ASSESSEE I.E. M/S. AASTHAVINAYAK ESTATE COMPAN Y PRIVATE LIMITED FILED RETURN OF INCOME FOR A.Y. 2008-09 ON 10/06/2008, DECLARING A LOSS OF RS. 139654. AN APPLICATION FOR SETTLEMENT WAS FILED BY M/S AAST HAVINAYAK ESTATE COMPANY PRIVATE LIMITED BEFORE THE HON'BLE INCOME TAX SETTLEMENT CO MMISSION U/S 245C OF INCOME TAX ACT, 1961 ON 30.01.2013 VIDE APPLICATION NO. MH /MUCC-4/127/2012-13/IT. THE APPLICATION BEFORE THE SETTLEMENT COMMISSION INCLUD ED A PRAYER MADE BY M/S AASTHAVINAYAK ESTATE COMPANY PRIVATE LIMITED FOR A. Y 2008-09 ALSO WHEREIN AN ADDITIONAL INCOME OF RS.501,049 WAS DISCLOSED BEFOR E THE COMMISSION, WHICH WAS EARLIER, NOT DISCLOSED BEFORE THE ASSESSING OFFICER . THE APPLICATION OF M/S AASTHAVINAYAK ESTATE COMPANY PRIVATE LIMITED BEFORE THE SETTLEMENT COMMISSION FOR A Y 2008-09 HAS NOT BEEN ALLOWED TO BE PROCEEDED WITH VIDE ORDER U/S 245D(1) DATED 12.02.2013 OF THE HON' BLE SETTLEMENT COMMISSION. IN VIEW OF REJECTION OF THE APPLICATION OF THE ASSESSE E FOR AY 2008-09 BY THE HON'BLE COMMISSION, AND THE FACT THAT THE DECLARATION OF TH E ASSESSEE BEFORE THE SETTLEMENT COMMISSION CLEARLY SHOWS EVIDENCE OF UNDISCLOSED IN COME WHICH HAS NOT BEEN DECLARED BEFORE THE ASSESSING OFFICER, IT IS APTLY CLEAR, THAT INCOME TO THE EXTENT OF RS. 501,049 HAS ESCAPED ASSESSMENT FOR A Y 2008-09. THIS CASE WAS NOT SCRUTINIZED U/S 143(3) OF THE INC OME TAX ACT, 1961. SINCE NO SCRUTINY WAS DONE THEREFORE NO ASSESSMENT HAS BEEN MADE TO EXPRESS THE CORRECTNESS OF THE INCOME AS DECLARED IN THE RETURN OF INCOME FOR A Y 2008-09. SINCE NO SCRUTINY WAS DONE IN THE CASE FOR A Y 2008-09, H ENCE REOPENING THE SAME WITHIN THE MEANING OF SECTION 147 DOES NOT NEED TO MEET TH E STRINGENT REQUIREMENTS OF PROVISO TO SECTION 147/148. RELIANCE IS PLACED ON THE CASE LAW IN THE CASE OF A CIT V. RAJESH JHAVERI STOCK BROKERS P. LTD 291 ITR 500(SC). HENCE, I HAVE REASON TO BELIEVE THAT INCOME CHARGEA BLE TO TAX HAS ESCAPED ASSESSMENT FOR AY 2008-09 IN THE CASE OF THE ASSESS EE WITHIN THE MEANING OF SECTION 147 OF THE INCOME-TAX ACT, 1961 3. THE ASSESSEE HAS FILED THE WRIT BEFORE THE HIGH COURT AND IT WAS DISMISSED. THE NOTICE WAS ISSUED AND ASSESSEE DID NOT OBJECT THE PROCEEDINGS INITIATED UNDER SECTION 147 OF THE ACT. THE ASSESS ING OFFICER (HEREINAFTER REFERRED TO AS THE AO) HAS REINITIATED THE PROCEEDI NGS UNDER SECTION 147 OF THE ITA NO.5505/M/2016 & ITA NO.5510/M/2016 & ORS. M/S. ANANTNADH CONSTRUCTIONS AND FARMS PVT. LTD. & ORS. 4 ACT. THE ASSESSEE WENT IN APPEAL BEFORE THE LD. CI T(A) AND THE LD. CIT(A) DISMISSED THE OBJECTION OF THE ASSESSEE REGARDING R EOPENING OF THE ASSESSMENT. 4. THE LD. A.R. SUBMITTED THAT ASSESSEE FILED PETIT ION BEFORE SETTLEMENT COMMISSION OFFERING INCOME OF RS.5,01,059/- OUT OF RS.5 LAKHS WAS TOWARDS LAND AND BROKERAGE INCOME AND RS.1,059/- WAS TOWARD S DISALLOWANCE UNDER SECTION 35D. THE SAID AMOUNT WAS OFFERED AS INCOME BEFORE THE SETTLEMENT COMMISSION FOR THE SAKE OF MEETING THE THRESHOLD LI MIT OF MAINTAINABILITY OF THE PETITION BEFORE THE SETTLEMENT COMMISSION. THE ASSESSEE HAS NEITHER EARNED THE INCOME NOR ANY INCRIMINATING MATERIAL WA S FOUND DURING THE SEARCH RELATING TO THE BROKERAGE INCOME. THE LD. A.R. SUB MITTED THAT THERE IS NO REASON TO BELIEVE FOR REOPENING THE ASSESSMENT UNDE R SECTION 148 OF THE ACT, THEREFORE, IT MAY BE QUASHED. 5. ON THE OTHER HAND, THE LD. D.R. RELIED UPON THE ORDER OF THE AO. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. THE AO HAS RECORDED THE REASONS FOR REOPENING THE CASE WHICH I S REPRODUCED IN THE ORDER. IT IS EVIDENT THAT AO HAD PRECISE AND DEFINITE INFO RMATION AS REGARD TO ESCAPEMENT OF INCOME OF RS.5,01,049/- SINCE THE SAI D INCOME WAS DECLARED AS ADDITIONAL INCOME BEFORE SETTLEMENT COMMISSION. TH E ASSESSEE HAS NOT DISCLOSED ITS AMOUNT IN THE RETURN OF INCOME. THE AO HAD SUFFICIENT INFORMATION REGARDING REOPENING THE ORDER AND MOREO VER ASSESSEES WRIT PETITION BEFORE THE HIGH COURT WAS ALSO DISMISSED A ND THE DEPARTMENT WAS FREE TO INITIATE THE PROCEEDINGS UNDER SECTION 147 OF TH E ACT. THEREFORE, WE ARE OF THE VIEW THAT REVENUE IS JUSTIFIED IN REOPENING THE ASSESSMENT ORDER. THE GROUND NO.1 IS DISMISSED. GROUND NO.2 7. THIS GROUND RELATES TO ADDITION OF RS.5,01,049/- . BY RELYING ON APPLICATION UNDER SECTION 245C OF THE ACT FILED BY THE ASSESSEE BEFORE ITA NO.5505/M/2016 & ITA NO.5510/M/2016 & ORS. M/S. ANANTNADH CONSTRUCTIONS AND FARMS PVT. LTD. & ORS. 5 SETTLEMENT COMMISSION, THE AO HAS MADE THE ADDITION ON ACCOUNT OF BROKERAGE AND DISALLOWANCE UNDER SECTION 35D ON THE GROUND THAT A SEARCH IN THE CASE OF LODHA GROUP WAS CONDUCTED BY INVESTIGAT ION WING OF DEPARTMENT ON 10.01.2011 AND DURING THE SEARCH PROCEEDINGS SHR I ABHINANDAN LODHA, THE KEY PERSON OF LODHA MADE A DECLARATION OF ADDITIONA L INCOME ON 12.10.11 IN THE HANDS OF VARIOUS ENTITIES OF THE GROUP AMOUNTIN G TO RS.199.80 CRORES. ASSESSEE COMPANY IS CONNECTED TO LODHA GROUP. ASSE SSEE HAS DECLARED LOSS IN ORIGINAL RETURN FILED ON 06.01.08. IN THE COURSE O F ASSESSMENT PROCEEDINGS UNDER SECTION 147 ASSESSEE HAS SUBMITTED THAT ASSES SEE HAD NO BROKERAGE INCOME, THEREFORE HE DID NOT OFFER TO TAX IN THE OR IGINAL RETURN, THOUGH THIS WAS OFFERED BEFORE SETTLEMENT COMMISSION. THE AO, RELY ING UPON THE APPLICATION MADE BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSI ON, HAS MADE THIS ADDITION. THE ASSESSEE HAS TAKEN THE CONTENTION TH AT THE PROCEEDINGS BEFORE SETTLEMENT COMMISSION HAVE BEEN ABATED AND THERE IS NO EVIDENCE FOR EARNING SUCH UNDISCLOSED INCOME. THE LD. A.R. RELIED UPON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF MARUTI FABRICS (2 014) 47 TAXMANN.COM 298. BUT THE AO DID NOT ACCEPT THE DECISION AND MADE THE ADDITION OF RS.5,01,049/- IN THE HANDS OF THE ASSESSEE. 8. THE LD. CIT(A) ALSO DISMISSED THE APPEAL. THERE FORE, ASSESSEE IS IN APPEAL BEFORE US. 9. THE LD. A.R. HAS FIRSTLY ARGUED THAT BEFORE SETT LEMENT COMMISSION THE ASSESSEE HAD OFFERED RS.5 LAKHS AS LAND BROKERAGE A ND RS.1059/- UNDER SECTION 35D ON THE GROUND THAT FOR THE MAINTAINABILITY OF A PPLICATION BEFORE SETTLEMENT COMMISSION. THE ASSESSEE, THOUGH, HAS NOT EARNED S UCH INCOME, HAS OFFERED THIS INCOME BEFORE SETTLEMENT COMMISSION. THE LD. A.R. SUBMITTED THAT ASSESSEE HAS NEITHER EARNED SUCH INCOME NOR ANY INC RIMINATING DOCUMENT WAS FOUND SUGGESTING THAT ASSESSEE HAD EARNED SUCH INCO ME. THE LD. A.R. SUBMITTED THAT THE AO SOLELY RELYING UPON THE PETIT ION FILED BEFORE THE SETTLEMENT COMMISSION AND MORE PARTICULARLY THERE I S NEITHER ANY DIRECT ITA NO.5505/M/2016 & ITA NO.5510/M/2016 & ORS. M/S. ANANTNADH CONSTRUCTIONS AND FARMS PVT. LTD. & ORS. 6 EVIDENCE NOR ANY CORROBORATIVE PROOF THAT ASSESSEE HAS EARNED SUCH UNDISCLOSED INCOME. THE LD. A.R. HAS SUBMITTED THAT THE ASSESS EE HAS FILED THE APPLICATION UNDER SECTION 245C BEFORE SETTLEMENT COMMISSION AND THAT APPLICATION IS REJECTED UNDER SECTION 245D(I) OF THE ACT. SECTION 245HA IS THE SECTION WHICH RELATES TO ABATEMENT OF PROCEEDINGS BEFORE SETTLEME NT COMMISSION AND AS PER SECTION 245HA(2) WHERE A PROCEEDINGS BEFORE SETTLEM ENT COMMISSION ABATES THE AO OR AS THE CASE MAY BE ANY OTHER INCOME TAX A UTHORITY BEFORE WHOM THE PROCEEDING AT THE TIME OF APPLICATION WAS PENDING S HALL BE DISPOSED IN ACCORDANCE WITH THE PROVISIONS OF ACT AS IF NO APPL ICATION UNDER SECTION 245 HAS BEEN MADE. SECTION 245HA(3) IMPOSED THE RESTRI CTION AND AO OR ANY AUTHORITY SHALL BE ENTITLED TO USE THIS MATERIAL OR INFORMATION PRODUCED BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION OR THE RE SULT OF INQUIRY HELD OR EVIDENCE RECORDED BY SETTLEMENT COMMISSION IN THE C OURSE OF PROCEEDING BEFORE IT AS IF SUCH MATERIAL OR INFORMATION HAS BE EN PRODUCED BEFORE AO. THAT AMENDMENT HAS COME FROM 01.06.15. THEREFORE, THE A O HAS NO AUTHORITY TO USE THIS MATERIAL. THEREFORE, THIS REOPENING IS NO T JUSTIFIED. THE LD. A.R. HAS RELIED UPON THE DECISION OF HONBLE GUJARAT HIGH CO URT IN THE CASE OF CIT VS. MARUTI FABRICS47 TAXMAN.COM 298 (GUJ) WHEREIN THE H ONBLE GUJARAT HIGH COURT HAS CONSIDERED THE EVIDENCE WHICH WAS FILED B EFORE THE SETTLEMENT COMMISSION. THE SETTLEMENT COMMISSION IS IN RESPEC T OF 32L OF THE CUSTOM & EXCISE ACT BUT THE SUB SECTION 2 OF SECTION 32L O F SETTLEMENT COMMISSION AND THE SETTLEMENT COMMISSION IN THE INCOME TAX ACT ARE SIMILAR AND THE PROCEEDING BEFORE THE SETTLEMENT COMMISSION ARE AS PER SECTION 245C ARE SIMILAR. THEREFORE, THE JUDGMENT OF HONBLE GUJARA T HIGH COURT IS APPLICABLE AND THE HONBLE GUJARAT HIGH COURT HAS HELD THAT IF ANY ADMISSION MADE BEFORE SETTLEMENT COMMISSION IS NOT BINDING TO THE ASSESSEE. THE LD. A.R. HAS ALSO RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF DOLAT INVESTMENT VS. DY. COMMISSIONER OF INCOME TAX (2010) 38 SOT 123 (MUM) AND LD. A.R. SUBMITTED THAT WHATEVER ADMISSIO N MADE BEFORE THE SETTLEMENT COMMISSION IS NOT BINDING TO THE ASSESSE E AND WHATEVER THE ITA NO.5505/M/2016 & ITA NO.5510/M/2016 & ORS. M/S. ANANTNADH CONSTRUCTIONS AND FARMS PVT. LTD. & ORS. 7 INFORMATION DISCLOSED BY THE ASSESSEE IN SUCH PROCE EDINGS IT CANNOT BE USED AGAINST THE ASSESSEE FOR MAKING THE ASSESSMENT. TH E LD. A.R. SUBMITTED THAT THERE IS NO IOTA OF EVIDENCE WHICH PROVES THAT ASSE SSEE HAS NOT EARNED SUCH INCOME, THEREFORE ADDITION MAY BE DELETED IN FULL. 10. THE LD. D.R. SUBMITTED THAT IN THIS CASE, THE A SSESSMENT IS REOPENED UNDER SECTION 147 OF THE ACT AND WHEN IT IS REOPENE D UNDER SECTION 147, THE PROVISIONS OF SECTION 245HH SUB SECTION 234 OF SECT ION 245HH DID NOT APPLY. THE LD. D.R. FURTHER SUBMITTED THAT ASSESSEE HAS AD MITTED THE INCOME BEFORE SETTLEMENT COMMISSION THAT IS THE BEST EVIDENCE AND WHEN HE HAS DECLARED HE IS ABIDE BY THE DECLARATION BEFORE THE SETTLEMENT C OMMISSION. 11. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT A SSESSEE HAS DECLARED ADDITIONAL BROKERAGE INCOME BEFORE SETTLEMENT COMMI SSION UNDER SECTION 145D OF THE ACT. THE SETTLEMENT COMMISSION HAS REJ ECTED THE APPLICATION OF THE ASSESSEE AND THEREAFTER THE AO REOPENED THE ASS ESSMENT UNDER SECTION 147 OF THE ACT. AFTER REOPENING THE ASSESSMENT ORDER, THE AO HAS NOT BROUGHT ANY MATERIAL OR INFORMATION BUT RELIED ONLY ON THE BASI S OF DECLARATION MADE BY THE ASSESSEE BEFORE SETTLEMENT COMMISSION AND MADE THE ADDITION OF RS.5 LAKHS. WE FIND THAT SIMILAR ISSUE HAD COME UP BEFORE HONBLE GUJARAT HIGH COURT IN THE CASE OF MARUTI FABRICS WHEREIN THE ASSESSEE IN THAT CASE HAS GONE BEFORE THE HONBLE GUJARAT HIGH COURT AGAINST THE ADDITION MAD E BY THE AO ON THE BASIS OF DECLARATION MADE BY THE ASSESSEE BEFORE SETTLEME NT COMMISSION OF CENTRAL EXCISE AND CUSTOMS ACT AND THE HONBLE GUJARAT HIGH COURT DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE. 13. WE FIND THAT ASSESSEE HAS MADE DECLARATION AND FILED SOME INFORMATION BEFORE SETTLEMENT COMMISSION ADMITTED UNDER SECTION 245D OF THE ACT AND IT CAN BE USED ONLY FOR LIMITED PURPOSE FOR SETTLEMENT OF TAX DISPUTE AND PASSING AN ORDER UNDER SECTION 245D(4) OF THE INCOME TAX AC T AND NOT FOR OTHER ITA NO.5505/M/2016 & ITA NO.5510/M/2016 & ORS. M/S. ANANTNADH CONSTRUCTIONS AND FARMS PVT. LTD. & ORS. 8 PURPOSE. THE ASSESSEE HAS MADE A DISCLOSURE AND SU CH DISCLOSURE ULTIMATELY ENDED IN SETTLEMENT ORDER UNDER SECTION 245D(4) OF THE ACT. THE DISCLOSURE CAME TO THE POSSESSION OF AO. THE FACT THAT THE DI SCLOSURE MADE UNDER SECTION 245D(1) OF THE ACT EVEN IF CONSTRUCTED AS IF NO ORD ER UNDER SECTION 245D(4) HAS BEEN PASSED IT WILL NOT GIVE A LICENSE TO THE A O TO USE THE CONFIDENTIAL INFORMATION DISCLOSED IN AN ANNEXURE TO THE APPLICA TION OF THE SETTLEMENT COMMISSION. IF THE APPLICATION IS TREATED AS NOT A DMITTED UNDER 245D(1) OF THE ACT, THEN THE PROVISIONS ARE CLEAR THAT CONFIDENTIA L INFORMATION CAN NEVER BE PASSED ON TO THE AO NOR CAN IT BE USED IN EVIDENCE AGAINST THE ASSESSEE. SECTION 245D(4) HAS CLEARLY HELD THAT ADMISSION OF ASSESSEES APPLICATION UNDER SECTION 245(1) WAS INCORRECT. WE FIND THAT A NY CONFIDENTIAL INFORMATION DISCLOSED IN ANNEXURE TO THE SETTLEMENT APPLICATION BEFORE INCOME TAX SETTLEMENT COMMISSION CAN NEVER BE THE BASIS TO MAK E THE ADDITION. WE FIND THAT IN THE INSTANT CASE, THE AO HAS REOPENED THE A SSESSMENT UNDER SECTION 147. THEREAFTER, AO HAS NOT BROUGHT ANY EVIDENCE OR MADE ANY INQUIRY THAT ASSESSEE HAS EARNED ADDITIONAL INCOME OF RS.5 LAKHS AS BROKE RAGE INCOME. IN THE INSTANT CASE, AFTER REOPENING THE ASSESSMENT ORDER, THE AO HAD NOT MADE ANY INQUIRY AND NOT EXAMINED THE MATERIAL WHICH WAS BEFORE HIM THAT HOW THIS INCOME WAS DECLARED BY THE ASSESSEE AND ADDITION HAS BEEN MADE SIMPLY RELYING UPON THE DECLARATION MADE IN THE APPLICATION BEFORE THE SETT LEMENT COMMISSION UNDER SECTION 245D. THE AO WAS IN POSSESSION OF THE PAPE R RELATING TO THE INCOME BUT IN ABSENCE OF ANY MATERIAL NO ADDITION CAN BE M ADE. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF COMMISSIONER VS. MARUTI F ABRICS 47 TAXMANN.COM 297 HAS HELD THAT WHATEVER MATERIAL IS PRODUCED ALO NG WITH APPLICATION BY THE ASSESSEE BEFORE SETTLEMENT COMMISSION OR RESULT OF INQUIRY HELD OR EVIDENCE RECORDED BY THE SETTLEMENT COMMISSION IN COURSE OF PROCEEDINGS BEFORE IT CAN BE USED BY THE ADJUDICATING AUTHORITY AS IF SAME HA D BEEN PRODUCED BEFORE SUCH CENTRAL EXCISE OFFICER. ONCE APPLICATION OR PROCEE DINGS BEFORE SETTLEMENT COMMISSION FAILS, CENTRAL EXCISE OFFICER IS REQUIRE D TO ADJUDICATE ENTIRE ITA NO.5505/M/2016 & ITA NO.5510/M/2016 & ORS. M/S. ANANTNADH CONSTRUCTIONS AND FARMS PVT. LTD. & ORS. 9 PROCEEDINGS AND SHOW CAUSE NOTICE AND HONBLE GUJAR AT HIGH COURT HAS HELD AS UNDER: CONSIDERING SUB-SECTION (2) OF SECTION 32L OF THE ACT , IN A CASE WHERE AN ORDER IS PASSED BY THE SETTLEMENT COMMISSION UNDER SUB-SECTION (1) OF SECTION 32L AND THEREAFTER ADJUDICATING AUTHORITY IS REQ UIRED TO ADJUDICATE THE CASE, THE CENTRAL EXCISE OFFICER SHALL BE ENTITL ED TO USE ALL THE MATERIALS AND OTHER INFORMATION PRODUCED BY THE ASSESSEE BEFO RE THE SETTLEMENT COMMISSION OR THE RESULT OF INQUIRY HELD OR EVIDENC E RECORDED BY THE SETTLEMENT COMMISSION IN THE COURSE OF THE PROCEEDING S BEFORE IT AS IF SUCH MATERIALS, INFORMATION, INQUIRY AND EVIDENCE HAVE B EEN PRODUCED BEFORE SUCH CENTRAL EXCISE OFFICER OR HELD OR RECORDED BY H IM IN THE COURSE OF THE PROCEEDINGS BEFORE HIM ON FAIR READING OF SUB-SECTIO N (2) OF SECTION 32L OF THE ACT WHATEVER IS ADMITTED BY THE ASSESSEE WHILE SUBM ITTING THE APPLICATION BEFORE THE SETTLEMENT COMMISSION SUBMITTED U NDER SECTION 32E(1) OF THE ACT STRAIGHTWAY CANNOT BE SAID TO BE ADMISS ION ON BEHALF OF THE ASSESSING ACCEPTING THE LIABILITY. WHATEVER THE MATERIAL IS PRODUCED ALONGWITH THE APPLICATION AND/OR ANY MATERIAL AND/OR OTHER INFORMATION PRODUCED BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSIO N OR THE RESULT OF THE INQUIRY HELD OR EVIDENCE RECORDED BY THE SETTLEM ENT COMMISSION IN THE COURSE OF THE PROCEEDINGS BEFORE IT CAN BE USED BY TH E ADJUDICATING AUTHORITY AS IF SUCH MATERIALS, INFORMATION, INQUIRY AND EVIDEN CE HAS BEEN PRODUCED BEFORE SUCH CENTRAL EXCISE OFFICER, WHILE ADJUDICATI NG THE SHOW CAUSE NOTICE AND THE PROCEEDINGS. IF THE CONTENTION ON BEHALF OF TH E APPELLANT IS ACCEPTED, IN THAT CASE, THERE IS NO QUESTION OF FURTHER ADJUDICATIO N BY THE CENTRAL EXCISE OFFICER WITH RESPECT TO THE AMOUNT ADMITTED BY THE ASSESSEE WHILE SUBMITTING THE APPLICATION BEFORE THE SETTLEMENT COMMISS ION SUBMITTED UNDER SECTION 32E(1) OF THE ACT. ONCE THE APPLICATION OR PROCEEDINGS BEFORE THE SETTLEMENT COMMISSION FAILS, THE CENTRAL EXCISE OF FICER IS REQUIRED TO ADJUDICATE THE ENTIRE PROCEEDINGS AND SHOW CAUSE NOTICE . UNDER THE CIRCUMSTANCES, SO FAR AS PROPOSED QUESTION OF LAW NO .1 IS CONCERNED, THE PRESENT TAX APPEALS DESERVE TO BE DISMISSED AND ARE, ACCORDINGLY, DISMISSED BY ANSWERING THE PROPOSED QUESTION OF LAW NO.1 AGAIN ST THE REVENUE. 14. RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT H ONBLE GUJARAT HIGH COURTS JUDGMENT IN THE CASE OF MARUTI FABRICS PERT AINS TO CENTRAL EXCISE BUT IF WE COMPARE CENTRAL EXCISE UNDER SECTION 32E OF THE CENTRAL EXCISE ACT THIS SECTION IS PARALLEL TO SECTION 245C OF THE INCOME T AX ACT. ONE PRIMARY CONDITION MENTIONED IN SECTION 32E FOR FILING CENTR AL EXCISE SETTLEMENT PETITION IS A SHOW CAUSE NOTICE FOR RECOVERY OF DUTY ISSUED BY CENTRAL EXCISE OFFICER HAS BEEN RECEIVED. IN INCOME TAX ACT SECTION 245C REQUIRES SOME PENDENCY OF PROCEEDINGS. THE CENTRAL EXCISE APPLICATION IS ALLOWED OR REJECTED VIDE ITA NO.5505/M/2016 & ITA NO.5510/M/2016 & ORS. M/S. ANANTNADH CONSTRUCTIONS AND FARMS PVT. LTD. & ORS. 10 ORDER UNDER SECTION 32F(1). THIS SECTION IS PARALL EL TO SECTION 245D(1). SECTION 32L GIVES THE POWERS AND PROCEDURE OF CENTR AL EXCISE SETTLEMENT COMMISSION. THIS SECTION IS SIMILAR TO SECTION 245 F OF THE INCOME TAX ACT. SECTION 32L GIVES THE POWERS OF THE SETTLEMENT COMM ISSION TO SEND THE CASE BACK TO THE CENTRAL EXCISE OFFICER. SECTION 32L RE ADS AS UNDER: 32L(1) THE SETTLEMENT COMMISSION MAY, IF IT IS OF OPINION THAT ANY PERSON WHO MADE AN APPLICATION FOR SETTLEMENT UNDER SECTION 32 E HAS NOT CO-OPERATED WITH THE SETTLEMENT COMMISSION IN THE PROCEEDINGS BEFORE IT, SEND THE CASE BACK TO THE CENTRAL EXCISE OFFICER HAVING JURISDICTION WHO SHAL L THEREUPON DISPOSE OF THE CASE IN ACCORDANCE WITH PROVISIONS OF THE ACT AS IF NO APPL ICATION UNDER SECTION 32E HAD BEEN MADE. 32L(2) FOR THE PURPOSE OF SUB-SECTION (1), THE CENT RAL EXCISE OFFICER SHALL BE ENTITLED TO USE ALL THE MATERIALS AND OTHER INFORMATION PRODUCE D BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION IN THE COURSE OF THE PROCEEDI NGS BEFORE IT AS IF SUCH MATERIALS, INFORMATION, INQUIRY AND EVIDENCE HAD BE EN PRODUCED BEFORE SUCH CENTRAL EXCISE OFFICER OR HELD OR RECORDED BY HIM IN THE CO URSE OF THE PROCEEDINGS BEFORE HIM. 15. WE FIND THAT SECTION 245HA(1) OF THE INCOME TAX ACT LISTS SEVERAL CIRCUMSTANCES IN WHICH THE CASE BEFORE THE SETTLEME NT COMMISSION WOULD ABATE; WHEREAS IN SECTION 32L(1) NON - COOPERATION OF THE PETITIONER IS THE ONLY GROUND. THE CENTRAL EXCISE OFFICER DERIVES ITS POWE R ITS POWER TO ASSESS SUCH ABATED PROCEEDING VIDE SECTION 32L(2) OF THE CENTRA L EXCISE ACT. THIS IS IDENTICAL TO POWERS VESTED WITH AN AO UNDER SECTION 245HA(2) AND 245HA(3) UNDER THE INCOME TAX ACT. IT IS THEREFORE VERY CLE AR THAT THE PROVISIONS OF CENTRAL EXCISE SETTLEMENT COMMISSION AND THAT FOR I NCOME TAX SETTLEMENT COMMISSION ARE IDENTICAL. THEREFORE, THE JUDGMENT O F HONBLE GUJARAT HIGH COURT IN THE CASE OF MARUTI FABRICS ALTHOUGH PERTAI NING TO CENTRAL EXCISE SHOULD BE APPLIED TO CASES ABATED UNDER SECTION 245 HA OF THE INCOME TAX ACT ALSO. 16. THEREFORE, WE ARE OF THE VIEW THAT THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IS APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. WE FIND THAT HONBLE GUJARAT HIGH COURT HAS HELD THAT IF THE PETITION FI LED BEFORE THE SETTLEMENT COMMISSION WHEREIN ASSESSEE HAS MADE DECLARATION BU T PROVES THAT ASSESSEE ITA NO.5505/M/2016 & ITA NO.5510/M/2016 & ORS. M/S. ANANTNADH CONSTRUCTIONS AND FARMS PVT. LTD. & ORS. 11 HAS NEITHER EARNED SUCH INCOME NOR ANY INCRIMINATIN G MATERIAL WAS FOUND DURING THE SEARCH RELATING TO UNDISCLOSED INCOME TH EN NO ADDITION CAN BE MADE. 17. WE HAVE ALSO GONE THROUGH THE JUDGMENT OF ITAT, MUMBAI IN THE CASE OF DOLAT INVESTMENT VS. DY. COMMISSIONER OF INCOME TAX WHEREIN THE ITAT HAS SPECIFICALLY HELD IN PARA 22 WHICH READS AS UND ER: 22. THE FIRST ISSUE IS WHETHER THE CASE OF THE ASSESSE E FOR ASSESSMENT YEAR 2005-06 WAS ADMITTED BY THE SETTLEMENT COMMISSION UNDER SEC TION 245D(1) OF THE ACT? ON THIS ISSUE, WE HAVE ALREADY SEEN THAT IN THE ORD ER DATED 30-11-2007 UNDER SECTION 245D(4) OF THE ACT, THE SETTLEMENT COMMISSI ON HAS CLEARLY HELD THAT THE ASSESSEE FOR ASSESSMENT YEAR 2005-06 DOES NOT SATIS FY THE CRITERIA OF OFFERING INCOME ON WHICH AT LEAST AN INCOME-TAX PAYABLE SHOU LD EXCEED RS. 1 LAKH. THE SETTLEMENT COMMISSION HAS FURTHER HELD THAT WHEN AD MITTING THE PETITION OF THE ASSESSEE FOR ASSESSMENT YEAR 2005-06, THIS ASPECT W AS OVERLOOKED AND THAT THEY ARE RECTIFYING THE APPARENT ERROR BY EXCLUDING ASSE SSMENT YEAR 2005-06 OF THE ASSESSEE FROM THE PROCESS OF SETTLEMENT. THUS, THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2005-06 CANNOT BE CONSIDERED TO HAV E BEEN ADMITTED FOR THE PROCESS OF SETTLEMENT UNDER SECTION 245D(1) OF THE ACT. CONSEQUENTLY, THE CONFIDENTIAL INFORMATION DISCLOSED IN THE ANNEXURE TO THE SETTLEMENT APPLICATION COULD NOT HAVE BEEN USED BY THE ASSESSING OFFICER A GAINST THE ASSESSEE TO MAKE THE IMPUGNED ADDITION. THEREFORE, THE ADDITION TO THE I NCOME MADE BY THE ASSESSING OFFICER IN ASSESSMENT YEAR 2005-06 WHICH IS BASED O NLY ON THE DISCLOSURE MADE IN THE ANNEXURE TO THE SETTLEMENT COMMISSION IS NOT VA LID IN LAW. CONSEQUENTLY, THE IMPOSITION OF PENALTY ON THE BASIS OF SUCH INVALID ADDITION CANNOT BE SUSTAINED. IN VIEW OF THE ABOVE CONCLUSION, WE DO NOT WISH TO GO INTO THE OTHER ALTERNATE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE RE GARDING ABATEMENT OF PROCEEDINGS BEFORE SETTLEMENT COMMISSION AND USE OF CONFIDENTIAL INFORMATION DISCLOSED BY THE ASSESSEE IN SUCH PROCEEDINGS BY TH E ASSESSING OFFICER IN MAKING ASSESSMENT. 18. FROM THE ABOVE DECISION OF THE TRIBUNAL WHERE T HEY HAVE DISCUSSED THE SECTION 245C(1) AND SECTION 245D(I) AND 245HA BY FO LLOWING OBSERVATION: 20. THE FINANCE ACT, 2007 MADE CHANGES TO THE PROVISIO NS FOR SETTLEMENT OF CASES CONTAINED IN CHAPTER XIX-A OF THE INCOME-TAX ACT 19 61. ONE CHANGE INVOLVES INTRODUCTION OF A NEW CONCEPT OF ABATEMENT OF PROCE EDINGS BEFORE THE SETTLEMENT COMMISSION FOR WHICH PROVISIONS HAS BEEN MADE IN TH E NEWLY INSERTED SECTION 245HA RELEVANT PORTION WHEREOF READS THUS : '245HA. ABATEMENT OF PROCEEDING BEFORE SETTLEMENT COMMISSIO N .(1) WHERE.... ( I )AN APPLICATION MADE UNDER SECTION 245C ON OR AFTE R THE 1ST DAY OF JUNE, 2007 HAS BEEN REJECTED UNDER SUB-SECTION (1) OF SECTION 245D; ITA NO.5505/M/2016 & ITA NO.5510/M/2016 & ORS. M/S. ANANTNADH CONSTRUCTIONS AND FARMS PVT. LTD. & ORS. 12 ( II )AN APPLICATION MADE UNDER SECTION 245C HAS NOT BE EN ALLOWED TO BE PROCEEDED WITH UNDER SUB-SECTION (2A) OR FURTHER PROCEEDED WI TH UNDER SUB-SECTION (2D) OF SECTION 245D; ( III )AN APPLICATION MADE UNDER SECTION 245C HAS BEEN DE CLARED AS INVALID UNDER SUB-SECTION (2C) OF SECTION 245D; ( IV )IN RESPECT OF ANY OTHER APPLICATION MADE UNDER SEC TION 245C, AN ORDER UNDER SUB-SECTION (4) OF SECTION 245D HAS NOT BEEN PASSED WITHIN THE TIME OR PERIOD SPECIFIED UNDER SUB-SECTION (4A) OF SECTION 245D, T HE PROCEEDINGS BEFORE THE SETTLEMENT COMMISSION SHALL ABATE ON THE SPECIFIED DATE. SPECIFIED DATE WOULD BE ( I ) IN RESPECT OF AN APPLICATION REFERRED TO IN SUB-S ECTION (2A) OR SUB-SECTION (2D), ON OR BEFORE THE 31ST DAY OF MARCH, 2008; ( II ) IN RESPECT OF AN APPLICATION MADE ON OR AFTER 1ST DAY OF JUNE, 20 07 WITHIN NINE MONTHS FROM THE END OF THE MONTH IN WHICH THE APPLICATION WAS MADE. (2) WHERE A PROCEEDING BEFORE THE SETTLEMENT COMMIS SION ABATES, THE ASSESSING OFFICER OR AS THE CASE MAY BE ANY OTHER INCOME-TAX AUTHORITY BEFORE WHOM THE PROCEEDING AT THE TIME OF MAKING THE APPLICATION WA S PENDING, SHALL DISPOSE OF THE CASE IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT AS IF NO APPLICATION UNDER SECTION 245C HAD BEEN MADE. (3) FOR THE PURPOSES OF SUB-SECTION (2), THE ASSESS ING OFFICER OR AS THE CASE MAY BE, OTHER INCOME-TAX AUTHORITY, SHALL BE ENTITLED TO US E ALL THE MATERIAL AND OTHER INFORMATION PRODUCED BY THE ASSESSEE BEFORE THE SET TLEMENT COMMISSION OR THE RESULTS OF THE INQUIRY HELD OR EVIDENCE RECORDED BY THE SETTLEMENT COMMISSION IN THE COURSE OF THE PROCEEDINGS BEFORE IT, AS IF SUCH MATERIAL, INFORMATION INQUIRY AND EVIDENCE HAD BEEN PRODUCED BEFORE THE ASSESSING OFF ICER OR OTHER INCOME-TAX AUTHORITY OR HELD OR RECORDED BY HIM IN THE COURSE OF THE PROCEEDINGS BEFORE HIM.' 21. THUS, WHEN A PROCEEDINGS BEFORE THE SETTLEMENT COM MISSION ABATES, IT REVERTS TO THE INCOME-TAX AUTHORITY BEFORE WHOM IT WAS PEND ING AT THE TIME OF MAKING THE APPLICATION FOR SETTLEMENT AND THE INCOME-TAX AUTHO -RITY HAS TO DISPOSE OF THE CASE IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AS IF NO APPLICATION FOR SETTLEMENT HAD BEEN MADE AND FOR THAT PURPOSE, IT IS ENTITLED TO U SE ALL THE MATERIAL AND OTHER INFORMATION PRODUCED BY THE ASSESSEE BEFORE THE SET TLEMENT COMMISSION OR THE RESULTS OF THE INQUIRY HELD OR EVIDENCE RECORDED BY THE SETTLEMENT COMMISSION IN THE COURSE OF THE PROCEEDINGS BEFORE IT. 19. WE FIND FROM THE ABOVE PROPOSITION OF LAW BY HO NBLE GUJARAT HIGH COURT AND TRIBUNAL THAT SIMPLY RELYING UPON THE DEC LARATION MADE BEFORE THE SETTLEMENT COMMISSION NO ADDITION CAN BE MADE. IN THIS GROUP CASE, THE SEARCH WAS CONDUCTED IN THE BUSINESS PREMISES OF LO DHA GROUP AND SUBSEQUENT TO SEARCH ACTION ASSESSEE COMPANY ALONG WITH OTHER COMPANIES OF LODHA GROUP FILED A PETITION UNDER SECTION 245C(1) OF THE ACT B EFORE SETTLEMENT COMMISSION. THE ASSESSEE HAS OFFERED ADDITIONAL IN COME OF RS.5 LAKHS TOWARDS THE LAND BROKERAGE INCOME. THIS OFFER WAS MADE FOR MAINTAINABILITY OF ITA NO.5505/M/2016 & ITA NO.5510/M/2016 & ORS. M/S. ANANTNADH CONSTRUCTIONS AND FARMS PVT. LTD. & ORS. 13 PETITION BEFORE SETTLEMENT COMMISSION AS STATED IN CLAUSE (I) AND CLAUSE (IA) OF SECTION 245C(1) OF THE ACT. WE ARE OF THE VIEW THA T AFTER REOPENING OF THE ASSESSMENT ORDER NO ADDITION CAN BE MADE ON THE BAS IS OF INCOME OFFERED BY THE ASSESSEE BEFORE SETTLEMENT COMMISSION. WE FIND THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH ACTI ON SUBSTANTIATING THAT ASSESSEE HAS ACTUALLY EARNED UNDISCLOSED INCOME. T HEREFORE, JUST BECAUSE ASSESSEE HAS OFFERED ADDITIONAL INCOME BEFORE SETTL EMENT COMMISSION, NO ADDITION CAN BE MADE WITHOUT BASIS. HENCE, THE ADD ITION MADE BY THE AO AND LD. CIT(A) IS DELETED. 20. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.05.2017. SD/- SD/- (N.K. PRADHAN) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 17.05.2017. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.