Law: Income Tax Act, 1961

Section: 245

(a) Income-tax-----Settlement of cases---Application for settlement---Income-tax Officer--¬Can continue proceedings till date of submission of report by Commissioner---Commissioner in his objections can refer to material collected after date of application---Indian Income Tax Act, 1961, S. 245-C. During the previous years relevant to the assessment `years 1977-78, 1978-79 and 1979-80, the assessee received substantial quantities of steel sheets from the Minerals and. Metals Trading Corporation claiming to be a manufacturer of sterilizers. It filed returns for the three assessment years disclosing losses for the assessment years 1977-78 and 1978-79 and a profit of Rs.7,340 (for the assessment year 1979-80). Certain inquiries were made in the month of December, 1979, by the Income-tax Officer who also impounded the account books of the assessee. On February 13, 1980, the Income-tax Officer visited the premises of the assessee where it was said to be carrying on manufacturing activity, but found no such activity being carried on there. On February 14, 1980, the Income-tax Officer issued a notice proposing addition of three items of income. On February 29, 1980, the assessee filed an application before the Settlement Commission seeking settlement of its case relating to all the three assessment years. In its application under section 245-C of the Income Tax Act, 1961, the assessee stated the following facts; that the assessee was engaged in manufacture and sale of stainless steel utensils, sterilizers and other items in its factory located at Chandigarh; that for the two assessment years 1977-78 and 1978-79, it had filed returns disclosing loss in sums of Rs.1,31,113.06 and Rs.39,939, respectively; that for the assessment year 1979-80, it returned a profit of Rs.7,340; that it held a quota for the purchase of stainless steel sheets from the Minerals and Metals Trading Corporation; that during the accounting years relevant to the three assessment years, the assessee could not carry on the manufacturing activity on account of acute shortage of funds, and with a view to ensure that its quota did not lapse, it obtained the sheets and sold them to various brokers in…

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