Law:

Section:

Second Schedule of the Companies (Profits) Surtax Act, 1964 - Capital - Computation of - Assessment years 1968-69 to 1975-76 - Whether additional income shown by assessee before Settlement Commission after finalisation of balance sheets for respective assessment years and accepted by Settlement Commission could be treated as reserve for purpose of inclusion in assessee's capital - Held no - Whether balance sheets modified by order of Settlement Commission can be treated as valid for purpose of computation of capital for surtax purpose - Held, no Section 245BA of the Income-tax Act, 1961 - Settlement commission - Jurisdiction and powers of - Whether Settlement Commission can order settlement of surtax proceedings or waive penalties under any Act other than Income-tax Act - Held, no FACTS A search was conducted at the assessee's godown by the officers of the income-tax department on 25-2-1976 when discrepancy between stock of goods in godown as per accounts was detected on physical verification. In order to avoid trouble, the assessee made an application under section 245C before the Settlement Commission wherein the assessee's request that undisclosed stock should be spread over nine assessment years 1968-69 to 1976-77 was acceded to. Moreover, the assessee's request for permission to recast its balance sheets for the various previous years in the light of the present settlement for assessing the surtax liability, was also accepted. During the assessment under the Surtax Act, the assessee made the following claims: (i) the order of the Settlement Commission was conclusive as to matters stated therein in view of section 245-I under the Income-tax Act, therefore, the order of the Settlement Commission was binding, (ii) the recast balance sheet and not the balance sheet of the assessee-company audited and passed as per the Companies Act was to be considered in making the surtax assessment. The ITO disallowed the assessee's claim. The Commissioner (Appeals) upheld the ITO's order. On further appeal, the Tribunal also rejected the assessee's plea. On reference: HELD The Settlement Commission may pass any order for the purpose of giving relief to the…

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