LexKULDEEP INDUSTRIAL CORPORATION versus INCOME TAX OFFICER AND ORS.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
A
KULDEEP INDUSTRIAL CORPORATION
v.
INCOME TAX OFFICER AND ORS.
DECEMBER 10, 1996
B
[B.P. JEEVAN REDDY AND K.S. PARIPOORNAN, JJ.]
Income Tax Act, 1961: Sections 144-B, 245-C and 245-D(l-A).
Income Ttu~Settlement of cases-Application for AYs 1977- 78, 1978-
C 79 and 1979-8()-Assessee claimed to be manufacturer of stainless steel
goods--Received substantial quantities of stainless steel sheets from
MMTC-Disclosed huge losses for AYs 1977-78 and 1978-79 and small profit
for AY 1979-8()-JTO found assessee not carrying on any manufactunng
activity and issued notice proposing addition of three items of income-At
D this stage, assessee filed application before Settlement Commission seeking
settlement for all three AYs-Assessee called upon ITO to stop all further
proceedings on ground of filing of settlement application-But despite
repeated request by ITO assessee neither replied to notices issued by ITO nor
furnished her copy of settlement applicatiolt-ln these circumstances, ITO
refused to stay further proceedings and communicated draft assessment order
E to assessee under S. 144-B for AY 1977-78 and detennined large amount as
income of assessee against a small loss returned by assessee-ln settlement
application assessee admitted that during accounting years relevant to said
three AYs it had not carried on any manufacturing activity and sold stainless
sheets to brokers in different cities and derived a profit in all AYs put
p togethei-Before Settlement Commission, CIT sought rejection of assessee's
application on ground of fraud by assessee for evading tax on a massive
scale-Settlement Commission rejected application in respect of AY 1977-78
but by majority admitted same in respect of AYs 1978-79 and1979-8(}-f{eld
: Neither settlement application nor facts and figures given therein relating to
stock received, their sale to different parties, the expenses paid and profits
G made were confined to one AY(l977-78) but extended to all threeAYs-Facts
stated in draft assessment order and admitted by assessee attracted S. 245-
D( 1-A)-Hence, assessee disentitled to claim admission of his application
even in respect of AYs 1978-79 and 1979-80.
H
Income TO:£-Settlement of cases by !To-Power of-lTO proceeded
782
KULDEEP INDL. CORPN. v. I.T.O.
783
with or collected material after assessee submitted application for settle-
A
ment-Held : ITO had power to do so.
Income Tax-Settlement Commission-Jurisdiction of Supreme Court
over orders of-Held : In the nature of judicial review.
The appellant-assessee, a partnership firm, claimed to be a manufac·
turer of stainless steel utensils and received substantial quantities of
stainless steel sheets from M.M.T.C. The appellant· assessee filed returns
disclosing huge losses for Assessment Years (AYs) 1977-78 and 1978-79
and a small profit for AY 1979- 80. The Income Tax Officer (ITO) found
that the appellant-assessee was not carrying on any manufacturing ac·
tivity. Accordingly the ITO issued a notice proposing addition of three
items of income. At this stage, the appellant-assessee filed an application
under Section 245-C of the Income Tax Act, 1961 before the Settlement
Commission seeking settlement for all the three AYs. The appellant-asses-
B
c
see then called upon the ITO to stop all further proceedings on the ground D
of filing of the settlement application. But despite repeated requests by the
ITO the appellant-assessee neither replied to the notices issued by the ITO
nor furnished her a copy of the settlement application. In these cir·
cumstances, the ITO refused to stay the assessment proceedings and
communicated a draft assessment order to the appellant-assessee under
Section 144-B of the Act for the AY 1977-78 and determined a large E
amount as income of the appellant-assessee against small loss returned by
the assessee. In the settlement application, the appellant·assessee ad·
mitted that during the accounting years relevant to the said three AYs it
had not carried on any manufacturing activity and sold stainless steel
sheets to brokers in different cities and derived a profit in all the AYs put F
together. Before the Settlement Commission, the Commissioner of Income
Tax (CIT) sought rejection of the appellant-assessee's application on the
ground of perpetuation of fraud by the assessee for evading tax on a
massive scale.
The Settlement Commission rejected the application of the G
appellant-assessee in respect of theExcerpt shown. Read the full judgment & AI analysis in Lexace.