Case: Commissioner of Income-Tax - Central-I Vs. Income Tax Settlement Commission

failure to make a true and full disclosure was not an issue for consideration before the Apex Court. This is so as it was not a subject matter of challenge by the revenue either before the High Court or before the Supreme Court. In view of the above, the above observations of the Apex Court in the Ajmera Housing Corpn. (supra), cannot be said to be a ratio-decidendi of the decision. It is trite law that a decision of a Court is not to be read as a statutory provision. The observation of Court must be read in the context of the facts before the Court.10. The above observations equally apply to the present case. Moreover, the facts as pointed out herein above in the present case, are very different from the facts which arose for consideration before the Apex Court in Ajmera Housing Corpn. (supra). Consequently, the same in the peculiar facts of the present case, cannot be applied. Therefore we do not agree with the submission of the Petitioner that there has been a failure to disclose truly and fully undisclosed income in the settlement application in the peculiar facts of the Petitioners case.11. So far as the other objection is concerned viz failure to disclose the manner in which this income has been derived, we find that the application for settlement sufficiently explains the source of the income being declared. The application mentions how the additional income which is being disclosed as been derived i.e. on application of the ALP in respect of exports made to its Associated Enterprise viz holding company. We do not see any merit in the above submission on behalf of the petitioner.12. The other jurisdictional objection to the impugned order urged by the petitioner is the grant of immunity from penalty and prosecution under Section 245H of the Act. It is submitted that before immunity can be granted, the Statute requires the Commission to be satisfied that the person who has made an application for settlement:(a) has cooperated in the proceedings before the Commission;(b) has made a full and true disclosure of his income; and(c) disclosed the manner in which such income has been earned.Attention is invited to the impugned order to contend that the question of unbilled revenue was not raised in its application for settlement but raised only during the course of the hearing. Thus not a full and true disclosure. This is factually not correct. In fact in the statement of facts filed by Respondent No. 2 along with the application for settlement does mention at para 25 as under:" ** ** **In so far as the income which has been disclosed as per profit and loss Account is at a higher figure and the applicant cannot reduce its income, whether it would remain taxable as such or on its being abated could a lower figure be is a circumstance which deserves consideration by the Commission. In view of such concession which the applicant is willing to offer, the disputable issues regarding the taxability of real income and book profits requires settlement."In any event on consideration of the submissions made before it the impugned order at Para 47.3 records its satisfaction in respect of all the three prerequisites for grant of immunity from penalty and prosecution. Thus the immunity from penalty and prosecution was granted only on satisfaction of the jurisdictional requirements. This satisfaction has not been shown to be perverse.13. The last grievance of the petitioner is that the impugned order is bad on merits. It is submitted that concepts like real income have been invoked when the same has no application. In support reliance is placed upon the decision of the Apex Court in State Bank of Travancore v. CIT [1986]158 ITR 102 /24 Taxman 337 and CIT v. Shiv Prakash Janak Raj & Co. (P.) Ltd. [1996] 222 ITR 583 /88 Taxman 536 (SC) [relies upon State Bank of Travancore (supra)]. The decision of the Apex Court in State Bank of Travancore (supra) was reversed to the extent it held that accrued interest is real income in UCO Bank v. CIT [1999] 237 ITR 889 /104 Taxman 547 (SC) Be that as it may, the Counsel for the Revenue places reliance upon the propositions set out by the Apex Court in relation to the theory of real income. The Counsel for Respondent No. 2 also has no quarrel with the same and according to him the view on real income taken by Commission is in line with those directions/propositions. On application of the first proposition set out therein that real income is income which has really accrued or arisen to the assessee that is taxable. Whether the income has really accrued or arisen must be judged in the light of the reality of the situation. It is on application of the above principle that the Commission has come to the conclusion that unbilled revenue was only a book entry and no real income accrued or arose. This view of the Commission in the impugned order cannot be said to be perverse in the least. It is a possible view. Therefore, keeping in view the self imposed limitations as set out in Jyotinderesinhji (supra) we see no reason to interfere with the merits of the decision in the present facts.14. Before we close, one aspect of matter may be adverted to and that is the impugned order was passed on 28th December, 2012. It was on the basis of the impugned order that the Assessing Officer raised a demand upon Respondent No. 2, payable in installments up to 31st March, 2013. The impugned order was accepted by the Revenue and at no point of time, was the Respondent No. 2 informed of the likely challenge to the impugned order. It was only in July 2013 that this Petition was filed. Not a whisper in the Petition, why the delay occurred.15. In the above, view we see no reason to interfere with the impugned order of the Commission.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]13. The last grievance of the petitioner is that the impugned order is bad on merits. It is submitted that concepts like real income have been invoked when the same has no application. In support reliance is placed upon the decision of the Apex Court in State Bank of Travancore v. CIT [1986]158 ITR 102  /24 Taxman 337   and CIT v. Shiv Prakash Janak RajCo. (P.) Ltd. [1996] 222 ITR 583  /88 Taxman 536   (SC) [relies upon State Bank of Travancore (supra)]. The decision of the Apex Court in State Bank of Travancore (supra) was reversed to the extent it held that accrued interest is real income in UCO Bank v. CIT [1999] 237 ITR 889  /104 Taxman 547   (SC) Be that as it may, the Counsel for the Revenue places reliance upon the propositions set out by the Apex Court in relation to the theory of real income. The Counsel for Respondent No. 2 also has no quarrel with the same and according to him the view on real income taken by Commission is in line with those directions/propositions. On application of the first proposition set out therein that real income is income which has really accrued or arisen to the assessee that is taxable. Whether the income has really accrued or arisen must be judged in the light of the reality of the situation. It is on application of the above principle that the Commission has come to the conclusion that unbilled revenue was only a book entry and no real income accrued or arose. This view of the Commission in the impugned order cannot be said to be perverse in the least. It is a possible view. Therefore, keeping in view the self imposed limitations as set out in Jyotinderesinhji (supra) we see no reason to interfere with the merits of the decision in the present facts.14. Before we close, one aspect of matter may be adverted to and that is the impugned order was passed on 28th December, 2012. It was on the basis of the impugned order that the Assessing Officer raised a demand upon Respondent No. 2, payable in installments up to 31st March, 2013. The impugned order was accepted by the Revenue and at no point of time, was the Respondent No. 2 informed of the likely challenge to the impugned order. It was only in July 2013 that this Petition was filed. Not a whisper in the Petition, why the delay occurred.15. In the above, view we see no reason to interfere with the impugned order of theany event on consideration of the submissions made before it the impugned order at Para 47.3 records its satisfaction in respect of all the three prerequisites for grant of immunity from penalty and prosecution. Thus the immunity from penalty and prosecution was granted only on satisfaction of the jurisdictional requirements. This satisfaction has not been shown to be perverse.