The Settlement Commission's acceptance of additional income was upheld as just and proper, with the court affirming that the petitioner failed to provide evidence contradicting the respondent's claims.

ORDER :

BHARGAV D. KARIA, J.

1. Heard learned Senior Standing Counsel Mr.Karan Sanghani for the petitioner and learned Senior Advocate Mr.Tushar Hemani with learned advocate Mr.Hiren Trivedi for respondent No.1.

2. Rule returnable forthwith. Learned advocate Mr.Hiren Trivedi waives service of notice of rule for respondent No.1.

3. Having regard to the controversy involved which is in narrow compass, with the consent of learned advocates, the matter is taken up for hearing.

4. The brief facts of the case are as under.

4.1 The search and seizure action under Section 132 of the Income Tax Act, 1961 (for short “the Act”) was carried out at the premises of the assessee – respondent No.1 on 17.08.2016. During the course of search, various incriminating documents were found and seized pertaining to the unaccounted income of the assessee – respondent No.1 and assessment proceeding under Section 153A of the Act was initiated.

4.2 During pendency of the assessment proceedings, respondent No.1 filed application under Section 245C(1) before the Income Tax Settlement Commission (for short “Settlement Commission”) offering additional income of Rs.17 Crores for the assessment years from 2011-12 to 2017-18.

4.3 The Settlement Commission admitted the application filed by respondent No.1. The application filed by respondent No.1 – assessee was admitted under Section 245D(1) vide order dated 02.01.2019 and vide order dated 20.02.2019 passed under Section 245D(2C) of the Act, the application of the assessee was treated as “not invalid”.

4.4 The petitioner thereafter filed Rule 9 report before the Settlement Commission. The petitioner – Principal Commissioner of Income Tax (Central), Surat filed Rule 9 report before the Settlement Commission. It was brought to the notice of the Settlement Commission that additional income of Rs.17 Crores offered by the assessee in statement of facts was only in respect of his unaccounted income from real estate business based on the documents found and seized from the office premises of K Star Group of Surat.

4.5 It was also brought to the notice of the Settlement Commission that mobile phone seized from Shri Kishor P. Koshiya had several documents pertaining to the purchase and sale of rough diamonds and stock of rough diamonds. The documents extracted from the mobile phone was explained by Mr.Kishor Koshiya which contains the details of share of each persons, particulars of the grade and quality of rough diamond, rate or total value, payment terms etc.

4.6 It was, therefore, pointed out by the petitioner before the Settlement Commission that respondent No.1 is also involved in the diamond trading as his initial is extracted from the documents found from the mobile phone and the assessee had not taken into consideration such documents found from the mobile phone of Shri Kishor Koshiya while declaring total income in the settlement application, the same is required to be taken into cognizance by the Settlement Commission.

4.7 Respondent No.1 submitted explanation in response to the Rule 9 report on 24.09.2019 contending that the documents found from the mobile phone of Shri Kishor Koshiya were required to be explained by him and such documents produced on page 10 to 13 of Rule 9 report do not contain any reference of the assessee and there was failure on the part of the department to point out any correlation of the seized material with the assessee.

4.8 The rebuttal report was also filed by the petitioner to the reply of the assessee. The Settlement Commission passed the impugned order on 29.01.2021 accepting the settlement amount of Rs.17.25 Crores offered by the assessee under Section 245D(4) of the Act.

4.9 Being aggrieved, the petitioner has challenged the said order by this petition.

5. Learned advocate Mr.Sanghani for the petitioner submitted that whil