Prabhat Solvant Extraction Industries Ltd. Vs. S.S. Khan - Court Judgment

Excerpt:
- - 4. having given our anxious attention to the contentions raised before us and material referred to by the petitioner as well as respondents, in the reply, we are satisfied that no interference is called for. it has been clearly made out that during the course of search conducted on 28th april, 1995, the ao while examining the question of valuation closing stock for the financial year ending 31st march, 1995, found that the method adopted for closing stock by the assessee to be misleading.orderby the court : 1. this petition challenges the order dt. 8th march, 1999, by the designated authority under the kar vivad samadhan scheme introduced by the finance act, 1998. the petitioner has filed a declaration envisaged under s. 89 of the finance act, 1998, claiming the benefit of the claim for settlement of tax arrears. 2. the designated authority having considered the declaration and facts of the case accepted the declaration and computed the amount payable under s. 88 by holding that the addition relating to closing stock in the assessment for asst. yr. 1994-95 also arose from the materials discovered during the search. the additions made in asst. yr. 1994-95 are treated as made in consonance to search proceedings under s. 132 of the it act and the additional amount payable was determined as per sub-clause (v) of sub-s. (a) of s. 88. 3. the petitioner contends that search was conducted on 20th april, 1995, and all enquiries related to the valuation of stock for the financial year ending on 31st march, 1995, relevant to asst. yr. 1995-96. the completion of assessment thereafter for asst. yr. 1994-95, financial year of which closed on 31st march, 1994 cannot be said to be on the basis of search referred to above. 4. having given our anxious attention to the contentions raised before us and material referred to by the petitioner as well as respondents, in the reply, we are satisfied that no interference is called for. it has been clearly made out that during the course of search conducted on 28th april, 1995, the ao while examining the question of valuation closing stock for the financial year ending 31st march, 1995, found that the method adopted for closing stock by the assessee to be misleading. finding this, the investigation was also directed towards valuation of closing stock in respect of pending assessment years including asst. yr. 1994-95. for the purpose of kar vivad samadhan scheme which gives relief in the matter of clearing the arrears of tax already determined under the provisions of the act, the requirement is not that the assessment should be made directly as a consequence of search relating to the assessment year in question. it is sufficient if the determination of assessment for the relevant assessment year is on the basis of material information and opinions formed relating to the practice followed by the assessee in the matter of maintaining accounts that provides nexus between the search and the determination of tax if that nexus is established the designated authority was justified to determine the amount payable under the claim on that basis. that being the case, in the present case. we find no case for interference. 5. dismissed summarily. 6. notice discharged.

Judgment:
ORDER

BY THE COURT :

1. This petition challenges the order dt. 8th March, 1999, by the designated authority under the Kar Vivad Samadhan Scheme introduced by the Finance Act, 1998. The petitioner has filed a declaration envisaged under s. 89 of the Finance Act, 1998, claiming the benefit of the claim for settlement of tax arrears.

2. The designated authority having considered the declaration and facts of the case accepted the declaration and computed the amount payable under s. 88 by holding that the addition relating to closing stock in the assessment for asst. yr. 1994-95 also arose from the materials discovered during the search. The additions made in asst. yr. 1994-95 are treated as made in consonance to search proceedings under s. 132 of the IT Act and the additional amount payable was determined as per sub-clause (v) of sub-s. (a) of s. 88.

3. The petitioner contends that search was conducted on 20th April, 1995, and all enquiries related to the valuation of stock for the financial year ending on 31st March, 1995, relevant to asst. yr. 1995-96. The completion of assessment thereafter for asst. yr. 1994-95, financial year of which closed on 31st March, 1994 cannot be said to be on the basis of search referred to above.

4. Having given our anxious attention to the contentions raised before us and material referred to by the petitioner as well as respondents, in the reply, we are satisfied that no interference is called for. It has been clearly made out that during the course of search conducted on 28th April, 1995, the AO while examining the question of valuation closing stock for the financial year ending 31st March, 1995, found that the method adopted for closing stock by the assessee to be misleading. Finding this, the investigation was also directed towards valuation of closing stock in respect of pending assessment years including asst. yr. 1994-95. For the purpose of Kar Vivad Samadhan Scheme which gives relief in the matter of clearing the arrears of tax already determined under the provisions of the Act, the requirement is not that the assessment should be made directly as a consequence of search relating to the assessment year in question. It is sufficient if the determination of assessment for the relevant assessment year is on the basis of material information and opinions formed relating to the practice followed by the assessee in the matter of maintaining accounts that provides nexus between the search and the determination of tax if that nexus is established the designated authority was justified to determine the amount payable under the claim on that basis. That being the case, in the present case. we find no case for interference.

5. Dismissed summarily.

6. Notice discharged.