DEBANGSU BASAK,J. - (1.) The petitioners have challenged an Order dated February 28, 2014 passed by the Settlement Commission exercising jurisdiction under the provisions of the Income Tax Act, 1961.
(2.) Learned Senior Advocate for the petitioners has submitted that, the petitioners had made a reference to the Settlement Commission in respect of six assessment years commencing from 2001-2002 to 2006-2007. The Settlement Commission had added Rs. 6.97 Crores as profit and had taken profit at the rate of 8 per cent of gross turn over and has calculated the income of the first petitioner on such basis. The reasons as to why the Settlement Commission had proceeded to add Rs. 6.97 Crore's as profit and had taken the net profit rate at 8 per cent of the gross turnover has not been stated in the impugned order. The Settlement Commission has proceeded on the basis of a report which is not a report under Rule 9 of the Income Tax Rules. The petitioners had made submissions with regard to the adjustments of Rs. 6.97 Crore's. Such submissions have not been dealt with in the impugned order. The impugned order does not reflect the submissions made and the manner in which the same have been dealt with. The Settlement Commission did not consider various material aspects of the matter. The sum of Rs. 6.97 Crore's has been treated in the balance-sheet and the revised balance-sheet of the petitioners in a particular way. The profitability of the first petitioner for the previous years has not been considered. The addition of the sum of Rs. 6.97 Crore's and introduction of a rate of 8% as net profit are arbitrary.
(3.) Relying upon (2009) 315 Income Tax Reports 328 (Madras) (Canara Jewellers v. Settlement Commission and Anr.) he has submitted that, the Settlement Commission has acted without jurisdiction, since the income disclosed by the assessees under section 245C of the Income Tax Act, 1961 has not been accepted to be full and true disclosure of their respective income. He has relied upon (2016) 380 Income Tax Reports 342 (Delhi) (Agson Global Pvt. Ltd. and Ors. v. Income-Tax Settlement Commission and Ors.) and has submitted that, the powers and functions of the Settlement Commissioner must be in the context of and have a nexus with the settlement. He has submitted that, the power of the Settlement Commission under Chapter XIXA of the Income Tax Act, 1961 can be exercised for the purpose of procedure of settlement of an application under Section 245C and not for reassessment of tax of a particular year. The power of reassessment is vested with the assessing authority. Relying heavily on (2013) 359 Income Tax Reports page 450 (Bombay) (Major Metals Ltd. v. Union of India and Ors.) learned Senior Advocate for the petitioners has submitted that, the Settlement Commission is empowered to call for a report of the Commission at two stages. In the present case, the Settlement Commission has not done so. The Settlement Commission has acted contrary to the statute in arriving at the order of settlement. Therefore, the impugned order of the Settlement Commission stands vitiated.;