CIT Vs. INCOME TAX SETTLEMENT COMMISSION

JUDGEMENT

(1.) This is a group of petitions filed by the CIT challenging the orders dated 29-1-1999 passed by the IT Settlement Commissioner/respondent No. 1.

(2.) All these petitions pertain to the applications made by the Ajmera Group of firms and their partners under Section 245C of the Income Tax Act for settlement of the tax liability for the assessment years 1989-90 to 1993-94. Ajmera Group consisted of mainly four firms, namely, Ajmera Housing Corporation, Bombay, Yogi Corporation, Vijay Nagar Corporation and Ajmera Housing Corporation, Pune. They are all engaged in the business of land developers, builders and contractors. Main business was run by Ajmera Housing Corporation, Bombay and had undertaken development and construction of majority projects in Shastri Nagar, Andheri, Bombay. Project was under development and construction in phases since 1986. In January, 1989 and again in December, 1992, searches were conducted in the premises of Ajmera Group under Section 132(1) and voluminous books of accounts, loose papers and other documents were seized during the second search. 16 such files and loose papers were seized during search of the residence of one B.L. Vora, accountant of this Ajmera Group, who was their confidant. A computer was also found at the residence of said Vora from which hard disc was taken out and seized. Papers were seized including trial balance dated 31st Aug., 1992 which was allegedly prepared in the normal course on the basis of information in the hard disc. Another trial balance sheet was prepared on the basis for the period on 17-11-1992 on the basis of receipts and expenses accounts from 1-4-1981 to 17-11-1992. At the time of search, said Vora had tried to run away with several documents and papers and during the chase, he had thrown the same in some gutter but they were finally retrieved. Vora admitted in his statement that he was maintaining secret books and documents in code words as per the instructions given to him by Chhotalal Ajmera, who was controlling the whole Ajmera Group.

(3.) For the sake of convenience, facts related to Ajmera Housing Corporation, Bombay, which is the main firm and in which other firms and partners have stakes, may be taken up. Ajmera Housing Corporation, Bombay disclosed additional income of Rs. 1,94,33,580 for the assessment years 1989-90 to 1993-94, in addition to the income already shown in the returns submitted by them, with their application under Section 245C. They claimed to have received certain on-money, out of which 90 per cent was spent for the purpose of business and only 10 per cent was the actual income. However, on 19-9-1994, they revised additional income to Rs. 11.41 crore for the aforesaid period. It is material to note that total disclosure of Rs. 17.03 crore was made for entire group including the amount of Rs. 11.41 crore for Ajmera Housing Corporation, Bombay. In the report of the CIT dated 27-1-1994 under Section 245D(1), the total income of Ajmera Housing Corporation, Bombay was to the tune of Rs. 223.56 crore. Another report dated 30-8-1995 submitted by the CIT (departmental Representative) to the Settlement Commission pointed out undisclosed income of Rs. 114.85 crore, which included on-money, investment in business properties and business assets and loans received. As per r. 8, another report dated 30-8-1995 was submitted by the CIT. It appears that certain duplication and mistakes were pointed out and, therefore, a rectified report with a note about re-conciliation was submitted on 20-10-1997 by the CIT to the Settlement Commission and as per this final report, total undisclosed income was to the tune of Rs. 187.20 crore. It included amount of Rs. 42.57 crore towards on-money and also several investments and amounts received as well as unjustifiable expenses and withdrawals shown in the books. Respondents offered additional income of Rs. 2.76 crore and further amount of Rs. 7 crore to cover up certain discrepancies or other disputable additions to the revised additional income as per Annexure dated 19-9-1994 to settle the case. As per this final revision, besides the amount of income shown in the returns, an amount of Rs. 21.17 crore as additional income on completed projects and further an amount of s Rs. 20.36 crore on incomplete projects was disclosed/offered.