Law:

Section:

Section 245D of the Income-tax Act, 1961 - Settlement Commission - Procedure on application under section 245C - Assessee was associated with a number of IMFL bars and restaurants either as partner or proprietor - A search operation was conducted at residential and business premises of assessee - Thereupon, assessment was completed under section 158BC wherein undisclosed income was determined at Rs. 43.92 lakhs - During pendency of appeal against said order, assessee filed a petition under section 245C(1) before Settlement Commission - Settlement Commission having admitted application, estimated net profit on total turnover at Rs. 12.09 lakhs - Against said order, revenue filed instant writ petition contending that Settlement Commission did not consider effect of sworn statement made by assessee - It was also pointed out that net income had been fixed at 3.75 per cent of total turnover by Commission, which was not supportable - It was noted from records that Settlement Commission had determined net profit at 3.75 per cent on total turnover in case of hotel 'V' and same method was adopted in case of assessee - There was no case for revenue that they had challenged method adopted in respect of hotel 'V' or same had been set aside in any proceedings - Whether on facts, method adopted by Settlement Commission could not be said to be arbitrary - Held, yes - Whether as regards other objection raised by revenue, it could not be said that Settlement Commission was bound by method adopted by Assessing Officer as to reliance upon voluntary statement of assessee - Held, yes FACTS The respondent No. i.e., assessee herein was associated with a number of IMFL bars and restaurants either as partner or proprietor. On 6-5-1999 a search operation was conducted at the residential and business premises of the assessee. The assessment was completed under section 158BC. The undisclosed income had been determined for the block period at Rs. 43.92 lakhs. It was challenged in appeal by the assessee. While the same was pending consideration, he filed a petition under section 245C(1) before the Settlement Commission. The Settlement Commission having admitted the application, estimated…

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