The main legal point established in the judgment is the Settlement Commission's authority to consider undisclosed income and loans not found during the search operation, and the treatment of loans as deemed dividends based on the petitioner's substantial interest in the companies.

JUDGMENT :

DINESH KUMAR SINGH, J.

1. The present writ petition has been filed by the petitioner, who is the Managing Director of M/s Delta Aggregators and Sand Pvt. Ltd. with 70% shareholding and M/s Delta Msand Pvt. Ltd. with 70% shareholding impugning the Order passed by the Settlement Commission dated 22.12.2023 in Ext.P8 in respect of the Assessment Years 2012-13 to 2018-19.

2. A search and seizure action under Section 132 of the Income Tax Act 1961 (for short, ‘the Act’) was carried out on 13.10.2017 at several premises of the Delta Group and the petitioner’s residence. Consequent to the search, notices under Section 153A were issued on 07.06.2018 to the aforesaid two companies as well as to the petitioner for the Assessment Years 2012-13 to 2017-18. Notice under Section 143(2) was issued on 23.09.2019 for the Assessment Year 2018-19.

2.1 The petitioner had filed Settlement Applications twice, i.e. on 26.12.2019 and 02.03.2020, respectively, before the Settlement Commission. However, the same was rejected on account of the failure of the petitioner to satisfy the criteria prescribed under Section 245(1) of the Act. Thereafter, the petitioner filed another application for the third time on 26.02.2021. Consequent to the abolition of the Settlement Commission with effect from 01.02.2021, the petitioner's application was dealt with by the Interim Board for Settlement. The petitioner, in his application dated 26.02.2021 in SA No. KL/KO51/2020-21/40-IT, admitted an undisclosed income of Rs.44,00,000/- towards remuneration earned outside the banking channels for the Assessment Years 2013- 14 to 2018-19.

3. The Principal Commissioner of Income Tax (Central), Kochi, submitted a report under Rule 9 of the Income Tax Settlement Commission (Procedure) Rules on the Settlement Application of the petitioner. In the report, it was opined that the petitioner had not disclosed the additional income before the Income Tax Settlement Commission to the extent of Rs.10,52,32,443/- from the Assessment Years 2012-13 to 2018-19.

3.1 The petitioner filed a detailed objection to the said Report under Rule 9A in Ext.P6. After hearing the petitioner, the Interim Board for Settlement-II, New Delhi, has passed the impugned order. As there was no search operation in respect of the Assessment Year 2012-13, the undisclosed income for the said year was not considered. In respect of the undisclosed income offered during the course of survey proceedings for the Assessment Years 2013-14 to 2018-19, as in respect of unaccounted remuneration, it was opinioned that in all the aforesaid Assessment Years, the petitioner had offered the unaccounted remuneration as additional income and therefore, no adverse view was warranted. In respect of the undisclosed income offered during the course of survey proceedings in Assessment Years 2013-14, 2015-16 and 2016- 17, the Interim Board for Settlement held that Rs.25,00,000/- remuneration received by the petitioner in the Assessment Year 2013-14 is included in the total income of Rs.44,00,000/-. Therefore, no adverse view on the same can be taken.

3.2 The petitioner had offered a sum of Rs.1,25,00,000/- , and for that sum, the Assessing Officer, in his factual report dated 18.11.2023, has merely objected that no evidence like sales ledger/cash book has been produced to show that the same is earned by way of unaccounted sales. The fact that the petitioner has offered this sum of Rs.1,25,00,000/- as unaccounted sales is not in dispute. As the petitioner had duly offered the sum of Rs.1.25 crores, the same is not required to be added again. As the petitioner has added a sum of Rs.1,75,00,000/- during the course of the survey, which has been paid from the admitted remuneration of Rs.5.6 crores, the same cannot be added again in the hands of the Company.

3.3 The petitioner is a majority shareholder in M/s Delta M Sand Pvt. Ltd. with a 99.65% stake and M/s Delta Aggregates and Sand Pvt. Ltd. with a 70% stake. He is also the Managing Direc