S. K. SHADIJA GLOBAL PRIVATE LIMITED V. UNION OF INDIA

WPT/125/2021

AI Insights

The case involves a dispute between S. K. Shadija Global Private Limited and others against the Union of India and other respondents concerning an order passed by the Income Tax Settlement Commission, Kolkata. The petitioners challenged the commission's order dated 02.02.2018, which was related to the settlement application of the respondents. The main contention was that the petitioners were not noticed in the proceedings before the commission, and there were undisclosed material facts regarding the shareholding of the companies involved. The court found that the commission's order was preliminary and had been superseded by a subsequent order, which was not contested by the petitioners. Additionally, the court observed that the dispute seemed to be of a personal nature within the family, as indicated by parallel proceedings under the Companies Act, 2013.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 724812 (HC-CHHATTISGARH)
• Appeal Type: Others
• Pronouncement Date: 31-01-2022
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: APURV GOYAL; AMIT CHAUDHARI
• Assessee Lawyers: KISHORE BHADURI; SUDEEP JOHRI
• Keywords: Income tax settlement commission; Settlement application; Share capital; Validity of Application; Preliminary order
• Section: 245D(4); 245D(2C); 245D(1); 245D(2B); 245(c)

Judgement Text

"1 NAFR HIGH COURT OF CHHATTISGARH, BILASPUR WPT No. 125 of 2021 1. S. K. Shadija Global Private Limited Through Its Director Suresh Shadija, Age 55 Years, S/o. Late D.D. Shadija, R/o. 501, Metro Height, Telibandha, Ring Road No. 1, Raipur, Distt. Raipur (Chhattisgarh), 2. Suresh Shadija Director M/s. Akruti Trexim Private Limited, 501, Metro Height, Telibandha, Ring Road No. 1, Raipur, Distt. Raipur (Chhattisgarh) ---- Petitioners Versus 1. Union Of India Through The Secretary, Department Of Income Tax New Delhi. 2. M/s. Akash Shadija Global Private Limited Through The Director Pawan Kumar Shadija, Aged 57 Years, S/o. Late D.D. Shadija, R/o. House No. 18, Samta Colony, Raipur, Distt. Raipur (Chhattisgarh) 3. Shri Pawan Kumar Shadija S/o. Late D.D. Shadija Aged About 57 Years Director Akash Shadija Global Private Limited, R/o. House No. 18, Samta Colony, Raipur, Distt. Raipur (Chhattisgarh) 4. Smt. Sandhya Shadija W/o. Pawan Shadija Aged About 54 Years Director Akash Shadija Global Private Limited, R/o. House No. 18, Samta Colony, Raipur, Distt. Raipur (Chhattisgarh) 5. Principal Commissioner Of Income Tax-1 Raipur, Distt. Raipur (Chhattisgarh) 6. Commissioner Of Income Tax (DR) Income Tax Settlement Commission, Addl. Bench, Kolkata, West Bengal. 7. The Director Of Income Tax (Investigation) Income Tax Settlement Commission, Additional Bench, Kolkata. 8. The Addl. Director Of Income Tax (Investigation) Income Tax Settlement Commission, Additional Bench, Kolkata. 9. The Assessing Officer I.T.O.-2 (1), Income Tax Office, Civil Lines, Raipur (Chhattisgarh) ---- Respondents For Petitioners :Shri Kishore Bhaduri, learned Senior Advocate appears along with Shri Sudeep Johri, Advocate. For Respondents 2 to 4 :Shri Apurv Goyal, Advocate For Respondents 5 & 9 :Shri Amit Chaudhari, Advocate. 2 Hon'ble Shri Justice Sanjay S. Agrawal Order on Board 31.01.2022 1. Challenge to this petition is the order dated 02.02.2018 passed by the Income Tax Settlement Commission (IT & WT), Additional Bench Kolkata in the settlement application of the Respondents No. 3 & 4 in case No. CHH/Raipur-PCIT-1/2017-18/110/IT/2100-2107. 2. Learned counsel appearing for the Petitioners submits that the Respondents No. 3 & 4, who are Directors of Respondent No.2 – M/s. Akash Shadija Global Private Limited, have share capital of 5000 shares each in their names out of 10 lakh shares and rest of it, i.e., 9,90,000 shares have been sold to other companies, namely, M/s Credence Project Private Limited, M/s Desire Vincom Private Limited , M/s Gravity Barter Private Limited and M/s Murlidhar Sales Private Limited to the tune of 4,30,000, 2,70,000, 1,70,000 and 1,20,000 respectively, from whom, the Petitioners have purchased the same in the year 2010 and became major share holders. However, in the year 2016, the Respondents No.3 and 4 have raised a dispute before the Income Tax Settlement Commission (IT & WT), Kolkata by filing an application, wherein the Settlement Commission has passed the order impugned without noticing the Petitioners. Further contention of the Petitioners is that 4,95,000 shares have been sold to M/s. Akruti Trexim Private Limited, wherein Suresh Shadija and the Respondent No.3 – Shri Pawan Kumar Shadija (both real brothers) are the Directors of the said Company (M/s. Akruti Trexim Private Limited) and without disclosing these material facts before the said authority, the order impugned has been passed on the basis of the application filed by the Respondents No. 3 & 4, and therefore, it is liable to be set aside. 3. It, however, appears from perusal of the record that the Respondents 3 No. 3 & 4 being assessees have moved an application before the Settlement Commission under Section 245-C of the Income Tax Act, 1961 (for short, the Act, 1961) for settlement of their cases on 18.12.2017, who in turn, vide order dated 21.12.2017, allowed the said application under Section 245D(1) of the Act, 1961 and thereafter called for the report from the Principal Commissioner of Income Tax, Raipur in exercise of the powers enumerated under Section 245D(2B) of the Act, 1961. In pursuance thereof, the said authority has submitted the report vide letter dated 18.01.2018 and after perusal of the report, the learned Settlement Commission has passed the order impugned on 02.02.2018 (Annexure P/1) under Section 245D(2C) of the Act, 1961. It is to be noted at this juncture that the order impugned as passed under the said provision is preliminary in nature, as reflected from the said provision. Section 245D(2C) of the Act, 1961 is relevant for the purpose reads as under :- “Where a report of the [Principal Commissioner or Commissioner] called for under sub-section (2B) has been furnished within the period specified therein, the Settlement Commission may, on the basis of the report and within a period of fifteen days of the receipt of the report, by an order in writing, declare the application in question as invalid, and shall send the copy of such order to the applicant and the [Principal Commissioner or Commissioner]: Provided that an application shall not be declared invalid unless an opportunity has been given to the applicant of being heard; Provided further that where the [Principal Commissioner or Commissioner] has not furnished the report within the aforesaid period, the Settlement Commission shall proceed further in the matter without the report of the [Principal Commissioner or Commissioner]:] Provided also that where in respect of an application, an order, which was required to be passed under this sub- section on or before the 31st day of January, 2021, has not been passed on or before the 31st day of January, 2021, such application shall deemed to be valid.]” 4. It, thus, appears from a bare perusal of the aforesaid provision that the validity of the application as made by the assessees has been decided while 4 holding it to be valid one as reflected from paras 7 and 8 of the order impugned, which read as under :- “7. We have carefully considered the facts and the submissions made by both the parties. In view of the above reply of the applicants, we are of the opinion that prima facie the applicants have fulfilled all the conditions as laid down in Section 245C of the Act including full and true disclosure of income and the manner of earning such income and at this stage there is nothing adverse to hold the applications as invalid. As mentioned above, the CIT(DR) has also stated that the applications may be proceeded with further. The applications filed by the applicants for assessment year under reference are therefore, treated “not invalid” under Section 245D(2C) of the Act. This is without prejudice to the issues and findings that may arise in the proceedings u/s 245D(4). 8. The Secretary/AO shall pursue the matter for submission of report under Rule 9 by the Pr. CIT.” 5. After passing of the aforesaid order, the further order is required to be passed by the Settlement Commission upon examining the records and the report of the Principal Commissioner or Commissioner under Section 245D(4) of the Act, 1961. The said provision is also relevant for the purpose, reads as under :- “Section 245D(4) - After examination of the records and the report of the [Principal Commissioner or Commissioner], if any, received under: (i) sub-section (2B) or sub-section (3), or (ii) the provisions of sub-section (1) as they stood immediately before their amendment by the Finance Act, 2007, and after giving an opportunity to the applicant and to the [Principal Commissioner or Commissioner] to be heard, either in person or through a representative duly authorised in this behalf, and after examining such further evidence as may be placed before it or obtained by it, the Settlement Commission may, in accordance with the provisions of this Act, pass such order as it thinks fit on the matters covered by the application and any other matter relating to the case not covered by the application, but referred to in the report of the [Principal Commissioner or Commissioner].] ” 6. It appears further that the Settlement Commission, in exercise of the aforesaid provision, has already passed an order on 15.01.2019 (Annexure 5 R-3/1), which has been given to its effect vide order dated 14.03.2019 (Annexure R-5/5), even before filing of this petition, yet the same has not been challenged by the Petitioners irrespective of the fact that the order impugned dated 02.02.2018 (Annexure P/1) has been merged therein. 7. Pertinently to be observed here further that the Petitioner – Suresh Shadija and Respondents No. 3 & 4 (Shri Pawan Kumar Shadija and Smt. Sandhya Shadija) belong to the same family and it appears to be of their personal dispute as reflected from the proceedings (Annexure P/24) initiated by the Petitioner on 11.05.2017 before the National Company Law Tribunal under Sections 58 and 59 of the Companies Act, 2013, which is pending under consideration before the Tribunal. It, thus, appears that the petitioners have already approached the appropriate forum for the redressal of their disputes. 8. In view of the aforesaid background, I am not inclined to entertain this petition. The petition is accordingly dismissed. No order as to costs. Sd/- (Sanjay S. Agrawal) Judge Anjani 6 HIGH COURT OF CHHATTISGARH, BILASPUR Order Sheet WPT No. 125 of 2021 S. K. Shadija Global Private Limited Versus Union Of India Through Video Conference 31.01.2022 Shri Kishore Bhaduri, learned Senior Advocate appears along with Shri Sudeep Johri, counsel for the petitioners. Shri Apurv Goyal, counsel for respondents No. 2 to 4. Shri Amit Chaudhari, counsel for respondents No. 5 & 9. Heard on admission. Order dictated in open Court. Passed, signed and dated separately. Sd/- (Sanjay S. Agrawal) Judge Anjani "