M/s. S. R. Ferro Alloys & Others vs Income Tax Settlement Commission & Others

The petitioner before this Court is a partnership firm constituted under the Partnership Act has commissioned Ferro Alloys Plant for production of Manganese, Silico Manganese at Industrial Grown Centre at Plot No.101-102, Industrial Area, Meghnagar, District Jhabua (Madhya Pradesh).

The petitioners are aggrieved by order dated 17/02/2017 passed under Section 245D(4) by Income Tax Settlement Commission, Principal Bench, New Delhi declaring the settlement application filed by the petitioner as abated on account of it not being true and full disclosure of unaccounted income on the basis of a report submitted by the Income Tax Department i.e. Volumetric Report dated 24/07/2012.

The petitioners are also aggrieved by the Volumetric Report prepared by the Income Tax Department through a private Architect to determine the total volume of Manganese Ore extracted by the petitioner during December 2006 to June 2012 read with another report prepared by M/s. Geonko India Pvt. Ltd. on oral sub-contract given by the private Architect.

The facts of the case reveal that search and seizure operations were carried out on 20/06/2012 and 21/06/2012 under Section 132 of the Income Tax Act, 1961 at various business premises of the petitioner and no search was carried out at the mines. Along with the search and seizure operation in the group, survey under Section 133A was carried out at mines located at Kajli Dongri on 20/06/2012. The respondent Income Tax Department thereafter, issued notices to the managing partner and all the partners of petitioner firm on 07/06/2012 requiring the presence of partners at the mines for on-spot investigation of the Mining Lease. Later on, the investigation was postponed and a fresh notice was issued by the Income Tax Department on 10/07/2012 requiring the presence of the partners for on-spot verification of the mines. In the notice dated 10/07/2012 it was mentioned that in case the petitioners fail to remain present at the designated place, it will be presumed that they are in agreement with the inferences arrived at by the investigation wing of the Income Tax Department pertaining to on-spot investigation.

The petitioner has further stated that some of the petitioner''s partner remained present during the exercise conducted by the Department. The petitioner has further stated on 12/07/2012 and 13/07/2012 survey proceedings under Section 133A of the Act at the mines of the petitioner took place in exercise of power conferred under Section 133A and a "record of proceedings" was drawn.

The petitioners thereafter challenged the survey proceedings by filing a writ petition at Indore i.e. Writ Petition No.7187/2012 and by an order dated 31/07/2012 the matter was decided on the ground that the respondents therein were competent to carry out the survey and as and when valuation report will be prepared, the petitioner will have a liberty to challenge the same before the appropriate forum.

The petitioners have further stated that Income Tax Department conducted a volumetric exercise and before completion of valuation report no notice was issued to the petitioners nor any opportunity of hearing was given by the Valuation Officer before finalizing the report. The petitioners have further stated that survey manual issued by the Income Tax Department requires that before finalizing the survey report, the assessee must be given a copy thereof and points of discrepancies should be sorted out and thereafter, inventory should be finalized. The petitioners'' contention is that in their case nothing was done. Thereafter, on 13/12/2012 by approaching the Income Tax Department the petitioner requested for a certified copy of the survey and material gathered during the search and subsequent search and a prayer was made for grant of opportunity to submit counter reply and to controvert the survey report and the documents.

It has been further stated that there was no response from the respondent Income Tax Department and therefore another letter was written by the petitioners on 17/12/2012 with a prayer to grant of opportunity to represent and to submit objections in respect of Volumetric Measurement taken from the Meghnagar mines of the petitioner.

On 26/12/2012, the respondent No.3 - Deputy Commissioner of Income Tax, Bhopal sent a sealed envelope to the petitioners which contained report of survey which was conducted on 13/07/2012 and the valuation report dated 24/07/2012. The petitioners were given time till 07/01/2013 to submit reply to the Valuation Report.

The petitioners in turn submitted a request letter dated 07/01/2013 requesting the respondents to provide data collected on the date of survey so that the petitioners could file their objection as the said data was missing from the report. Thirty days time was also sought to file counter report. The Income Tax Department on 09/01/2013 informed the petitioners that the data cannot be provided to the petitioners and time was extended up to 17/01/2013.

The petitioners on 17/01/2013 submitted a counter reply in the matter objecting the valuation report prepared by the Department. Another letter was written by the petitioners on 29/01/2013 to grant opportunity of hearing against the valuation report and to file a counter valuation report and to file counter valuation report.

The order passed in Writ Petition No.7187/2012 was modified by this Court on 08/03/2013 in Review Petition No.448/2012 and this Court made it clear that the order passed on 31/07/2012 shall not in any way come in way of the concerned authorities for deciding the petitioner''s objections as already directed and the authorities shall be free to pass appropriate order in accordance with law.

The petitioners thereafter, intimated the department about the order dated 08/03/2013 passed in Review Petition No.448/2012 and requested the respondents to decide the earlier objections in accordance with law. The petitioners on 11/04/2013 submitted a letter to the department pointing out that report of private Architect is illegal, void and without jurisdiction and the same is contrary to the provisions of the Act and various administrative instructions issued by Central Board of Direct Taxes. As nothing was being done, the petitioners again preferred a Writ Petition No.8898/2013 challenging the report dated 24/07/2012 and during the pendency of the writ petition an application was filed for withdrawal of the writ petition with a liberty to approach the Settlement Commission and to raise all grounds therein. Request of the petitioners was allowed and the petition was dismissed as withdrawn with a liberty to approach the Settlement Commission.

The petitioners thereafter, approached the Settlement Commission raising all the contentions raised in the writ petition against the survey report and at the same time the petitioners also disclosed unaccounted income to the tune of Rs.23 Crores before the Settlement Commission on the basis of entire record of documents recovered from the petitioners during the search and also accounted for all the assets acquired out of this unaccounted income. It has further been stated that the petitioners have paid the taxes to the tune of Rs.12 Crores along with settlement application. The settlement application was preferred under Section 245D(1) vide order dated 04/03/2015 and the Settlement Commission further passed an order for proceeding ahead in the matter under Section 245D(2C) vide order dated 24/04/2015.

The Income Tax Department preferred a writ petition i.e. Writ Petition No.4589/2015 against the order dated 04/03/2015 and the writ petition preferred by the Income Tax Department was dismissed at the admission stage itself on 14/05/2015. The Income Tax Department has also preferred another writ petition being aggrieved by order dated 24/04/2015 passed by the Settlement Commission to proceed with the hearing and the settlement application and the second writ petition of the Income Tax Department i.e. Writ Petition No.3759/2016 was again dismissed by this Court directing the Income Tax Department to raise their objections before the Settlement Commission and a liberty was granted to the Settlement Commission to pass a final order.

The petitioners have further stated that Settlement Commission on 3rd, 7th, 8th and on 9th February, 2017 heard the matter and a final order was passed on 17/02/2017. The petitioner''s contention is that during the course of hearing before the Settlement Commission, the Settlement Commission indicated that writ petition challenging survey report (volumetric analysis) was withdrawn by the petitioner, therefore, they would not go into the validity of the survey report.

The petitioners filed their written response to show that withdrawal of the writ petition was with a specific liberty and was done because of unfortunate circumstances wherein the petitioner''s main partner was under judicial custody. A request was also made for appointment of third individual agency to determine the excavated volume. The petitioner''s further contention is that the Settlement Commission without considering the grounds raised by the petitioner on 09/02/2017 pronounced the order that they will like the mater to go back to the Assessing Officer as they cannot discard the volumetric report of a private Architect.

The Settlement Commission has finally treated the application for settlement by order dated 17/02/2017 as abated on account of it not being true and full disclosure of unaccounted income on the basis of volumetric report dated 24/07/2012. The petitioners have raised various grounds before this Court. The petitioner''s contention is that the Settlement Commission was not justified in rejecting the application filed under Section 245(C) by the petitioners on the basis of a report by a private Architect who did not even possess the basic qualifications of a mining expert under the MMDR Act or even under the Income Tax Act and such a person cannot be even called a domain expert.

The second ground raised by the petitioner is that the Settlement Commission erred in law and facts in upholding the survey report prepared by a private Architect without considering the fact that the person preparing the said report was incompetent and did not possess the necessary qualifications to prepare the said report and gross inaccuracies were writ large on the face of the report, like calculation of Manganese Ore being 83% and waste being 27% which is impossible since the stripping ratio i.e. the ratio of Manganese to waste varies between 10% to 25% of the total volume and thus Manganese cannot be more than the waste and this aspect shows the basic fallacy in the report of the private Architect.

His further contention is that the Settlement Commission erred in rejecting the report dated 17/06/2012 prepared by the State Government at the directions of this Hon''ble Court in Writ Petition No.8898/2013, since the said report was prepared by competent revenue and mining officers and that too at the direction of this Hon''ble Court and the report of the State Government highlighted the fact of inaccuracies in using total station and 3D technique. It has been further contended that the Settlement Commission arrived at a perverse finding in respect of the signature of IBM officials and partners of the petitioner on the survey report and the finding is perverse on account of the simple reason that survey was done on 12/07/2012 while the ex-parte report was prepared on 24/07/2012 and thus, it is obvious that report dated 24/07/2012 cannot be signed on 12/07/2012.

Learned counsel for the petitioner submits that the Settlement Commission erred in upholding the survey report merely on the basis of withdrawal of Writ Petition No.8898/2013 earlier filed before this Hon''ble Court without appreciating the fact that the withdrawal of writ petition was with a specific liberty to raise all objections to the survey report before the Settlement Commission. He further submits that the Settlement Commission was not justified in simply brushing aside the mining plan which was approved by IBM in 1998 and also in 2008 without considering that the mining plan is a statutory document prepared under MMDR Act.

His contention is that the Settlement Commission has erred in terming the private Architect as an expert since a person who does not even possess the necessary qualification to work as a geologist cannot be termed as an expert and even the basic findings of this private Architects'' report are flawed and demonstrates that he is no expert.

His further contention is that the petitioner''s application has been wrongly treated as not being full and true by the Settlement Commission merely on the basis of the report dated 24/07/2012 since all the facts were fully disclosed before the Settlement Commission including the factum of wrong allegations of excess mining being levied by the Income Tax Department and the Settlement Commission has not even discussed how the contentions of the petitioner are wrong in so far as secondary evidence was concerned, since it has simply reproduced in a columnar form, the submissions of the Income Tax Department and the averments of the petitioner without pointing out as to how the petitioner is at fault and the entire order does not discuss the petitioners submissions or why the submissions were not true and full and this approach shows that the Settlement Commission was predetermined not to pass the final order but proceeded with single minded determination to send the petitioner back to the Assessing Officer.

The petitioner besides the aforesaid ground has raised other grounds also in the present writ petition and a relief has been prayed for quashment of order dated 17/02/2017 passed under Section 245D(4) of the Income Tax Act by the Settlement Commission, Principal Bench, New Delhi. The petitioner has also prayed for quashment of Volumetric Report dated 24/07/2012 prepared by the Income Tax Department thorugh a private Architect. A further prayer has been made to quash the survey carried out under Section 133A by the Income Tax Department on 12/07/2012 at the mines of the petitioner for preparation of Volumetric Measurement Report for the period w.e.f. December 2006 to June 2012 holding the same to be beyond the scope of Section 133A.

A detailed and exhaustive reply has been filed by the Income Tax Department and the stand of the Department is that the petitioners were allotted Manganese Mine located at District Jhabua (Madhya Pradesh) and gross irregularities were committed by the competent authority in allotment of mine lease to the petitioner. It has been further state that search and seizure operations under Section 132 were carried out at the residential premises of the petitioner and its partners on 20/06/2012 wherein voluminous paper, documents and digital data contained on Hard Disks, Pen Drive, Laptops, Servers, Mobiles etc. were seized during the course of search.

It has further been stated that on a preliminary examination of the documents so seized, it was revealed that the petitioners have suppressed their actual income and their books of accounts / accounts disclosed to the Income Tax Department did not reflect the true status of its business affairs. It has been further stated that the petitioner firm had not only been grossly suppressed the actual quantity of production of Manganese Ore situated at Kajli Dongri, Jhabua but it had also suppressed the actual rate at which the Manganese Ore was being sold.

The respondents have further stated that the seized documents prima-facie indicated that systematic and regular payments were being made by the petitioners group to various officers / officials of the Central Government as well as the State Government including regulatory authorities and it was also detected that accounted production expenses which were several times higher than that recorded in the books of account.

The respondents have further stated that it was considered necessary to conduct a survey under Section 133A of the Income Tax Act, 1961 at the Kajli Dongri Mine of the firm so that apart from other verification, physical verification of the stock could be undertaken. The survey under Section 133A on 12/07/2012 was an exercise in verification of stock and extent of excavation in continuation and in consequences to searches which commenced on 20/06/2012.

The respondents have also stated that during the course of survey the stock lying at the mining site was duly quantified by employing the services of domain experts. As per his report, the stock of Manganese Ore lumps found during physical verification was 23302.74 cubic meters which was multiplied by specific gravity of 3.0 and the same works out to 69908.22 MT. The respondents have stated that inventory of stock was duly taken.

The respondents have also stated that as per the volumetric measurement done by them at Jhabua, it is established that the petitioners have not show the correct figures in the books maintained by them. The actual physical stock is more than as reflected in the books.

The respondents have further stated that the sole object and intention of the Income Tax Act is to determine the true and correct income and Section 133A is also directed to achieve the same object through inter-alia verification of stock. The respondents have further stated that verification by definition requires matching the true state of affairs with the declared state of affairs. The provision of survey is essentially to verify whether the books prepared by the petitioners are in accordance with the reality as it exists at the premise.

The respondents have further stated that based upon the volumetric measurement it is established that the petitioner has not disclosed the correct amount of stock and the actual physical stock is more than that reflected in the books. The physical verification carried out during the survey is in the nature of verification and investigation on the issue of unaccounted production and stock of Manganese Ore, evidence of which were found galore during the searches at the different premises of the petitioner firm and its associates.

The respondents have further stated that the petitioner firm was informed in advance about the survey proposed to be conducted at its mine and the petitioners were requested to ensure the presence of its technical experts and all the partners during the survey. The entire exercise of volumetric measurements was done in presence of the technical person of the petitioner firm namely Shri K. S. S. Reddy, General Manager who as present full time during the exercise. Four partners of the petitioners firm along with their counsel Shri Sumit Nema were also present for a major part of the survey period. Before the start of the survey, calibration of the equipments being used was demonstrated to the representatives of the petitioners.

On the request of Shri Reddy, this process was done twice and he was fully satisfied. The print outs of the coordinates taken at the time of survey were duly signed by them in token of this fact. Due opportunity was given and it reflects that the entire process of volumetric measurement was done in presence of the representatives of the petitioners and no secrecy was required in the matter as alleged in the petition.

The respondents have further stated that so far as the survey operation under Section 133A is concerned, this issue has been examined and decided by this Court in Writ Petition No.7187/2012 decided on 31/07/2012. The respondents have further stated that volumetric measurements were carried out with the assistance of the domain experts, namely the team of Geonko India Pvt. Ltd. and officers of the Indian Bureau of Mines and the technique used was Total Stationed Technique. The respondents have stated that volumetric analysis done by them does not suffer from any infirmity and therefore, the question of interference by this Court does not arise.

His further contention is that all the arguments raised by the petitioners against the survey operation and the volumetric measurement report have been considered and are found to be devoid of any merit. The objections filed by the petitioners were not found acceptable as mining plan is only an estimation which can be revised later. Hence, the mining plan does not present a true and correct picture of estimation. It is liable to be revised as per ground realities. The quantity of minerals is not freezed by mining plan and actual availability of minerals may be different.

It has been further stated that the so called claim of inspections by the competent authority and the Collector of the District finding no illegality to the petitioners'' mining operation is a facade, since incriminating evidences have been seized to establish that the petitioners was indulging in cash payments for illegal gratification including District Collector to facilitate the suppression of production at its mines. Thus, the so called inspection reports are all farce and therefore, no cognizance can be taken to such reports which have been prepared in connivance. Further, the department has also found discrepancy in the production of Ore declared in the mining returns vis a vis declared in the books of accounts. Thus, the mining returns also do not come to the rescue of the petitioners.

It has been further stated that the method of volumetric measurement adopted by the department is Total Station Method which has been done in the presence of officials from IBM. It is to be noted that Kajli Dongri Mines is related to Manganese Ore, which is scheduled mineral and IBM is the regulatory authority for scheduled minerals. Hence, the report prepared with the help of IBM officials is very scientific and authentic and cannot be challenged as the entire exercise was done in the presence of the petitioners and their representatives during the course of survey.

It has been further submitted that in the Volumetric Measurement Report, an image of 22/01/2007 was taken from Catosat and another image was taken of 12/07/2012. The surfaces of the mine of these two different dates were generated using Terrestrial Laster Scanning technology as well as Satellite based Photogrammetry. These two surfaces were brought together by common points available on both the 3D surface data. Hence, whatever data is available in the Report is the data of excavation from mine between January 2007 till 12/07/2012. Accordingly, there is no point of excavation prior to December, 2006. The petitioners contention is this regard are false and misleading.

The respondents have further stated that Volumetric Measurements were made for the excavated area, heaps of Manganese Ore, ROM & over burden lying in the mine area alloted to M/s. S. R. Ferro Alloys. Volumetric Measurements were also made for the heaps of over burden lying in the area outside the mine area in village Pipalkhunta where permission for dumping overburden has been granted to M/s. S. R. Ferro Alloys by the Collector, Jhabua. Volumetric Measurements were also made for the heaps of over burden lying in the area outside the mine area in village Pipalkhunta where no permission for dumping over burden has been granted to M/s. S. R. Ferro Alloys by the Collector, Jhabua or any other government authority. Repeated opportunity was given to the partners and General Manager of the petitioner firm to inform whether the over burden was lying at any place other than the places mentioned above but they categorically stated that the over burden was not lying at any other place.

It has been further stated by the respondents that during the course of survey, all the objections of the petitioner firm relating to classification of heaps into over burden, ROM or clean ore were duly considered and necessary corrections were made in the classification of heaps to the full satisfaction of the partners and General Manager Of the assessee firm. Detailed record of proceeding was made at the time of survey which bears testimony to this fact. The detailed statement of the partners and General Manager of the assessee firm also bear testimony to this fact. Thus, the objections raised by the petitioners are baseless and devoid of any merit.

In respect of writ petition preferred by the petitioners earlier i.e. Writ Petition No.7187/2012, which was disposed of with a liberty to challenge the proceedings before the appropriate forum, the respondents have stated that thereafter, a review petition was also preferred by the petitioner and the Review Petition No.448/2012 was decided on 31/07/2012. The respondents have furnished details of the partners / persons who were present at the time the volumetric analysis was done. The respondents have also placed reliance upon an order passed in Writ Petition No.8898/2013 decided on 13/04/2015. The respondents have placed heavy reliance upon an order passed by the Settlement Commission dated 17/02/2017 and the same reads as under:- "It was observed by us that the survey report of the domain expert M/s. Manish Pilliwar has indicated that the Total Station Method used by him and the 3D Terrestrial Laster Scanning carried out by M/s. Geonka India Pvt. Ltd. have both confirmed that the Total Excavated volume is to the tune of 14916770.55 cumt. In the expert''s report, it has been clarified that the Volume of pit existing in 1998 has already been deducted while arriving at the above figure, i.e. the total excavated Volume mentioned above is that which has been excavated after 2007. Reports of M/s Geonko India Pvt. Ltd. which carried out the 3D Terrestrial Laster Scanning Photogrammetry in continuation to the survey carried out by M/s. Pilliwar has clarified that the survey has been conducted thus:-

"Determination of the Volume of the pit by utilizing the techniques of 3D Terrestrial Laster Scanning (present day) and Satellite date from NRSC (Satellite image of December 2006/January 2007)" [further, determination of Volume of at lease on heap by utilizing the techniques of 3D Terrestrial Laster Scanning (present day) for corroborative purposes.]

In spite of the clear indication as above, the Applicant insisted that the Volume of Pit existing in 1998 should be deducted from the total excavated Volume as calculated in the domain expert''s report. Apart from the above, they have said that the production of ore as shown in their books in the period from November 2006 till the date of the search i.e. 13.07.2012 should be reduced by the production of ore from 1998 to 2006 to arrive at the actual excavation for the period Nov. 2006 to July, 2012. We fail to appreciate the reason for this.

It has also been observed by us that the Department had got the survey conducted by the domain expert, after giving an advance notice to appellant and taking the following measures:

Ensuring the presence of personnel from the regulatory authority i.e. Indian Bureau of Mines (IBM)

Ensuring the presence of the partners and GM of the Firm.

Videography of the entire proceedings.

Employing the latest technology which has the highest degree of accuracy to arrive at the result.

It is seen that soon thereafter, the applicant approached the Hon''ble High Court of Madhya Pradesh in a writ petition stating that this survey report should not be given any credence.

The applicant was confirmed with these facts and our inference. Instead of coming up with cogent reasons to disprove the survey results, the applicant sought to persuade us to disregard the report on the following grounds:

a) Qualification of the Surveyors;

b) Affidavit of IBM before High Court;

c) The surveyor must have inadvertently, taken ore to be the overburden and overburden to be ore.

d) In any case, the quality of the ore excavated is poor and should not have been valued at these exorbitant rates.

We find the above arguments to be unacceptable. Shri Manish Pilliwar was competent to conduct the Total Station Method Survey and the Company engaged to carry out the 3D terrestrial laser scanning, M/s Geonko India Pvt. Ltd. is being run by IIT graduates. In the affidavit filed by IBM before the High Court, the IBM official have sworn that they stand by the measurements, but are not trained to understand all the aspects of technology used therein. As for the third point, regarding inadvertent mistake, we are not inclined to accept the applicant''s claim, as the survey report was signed by the IBM officials, the partners and GM of the Group as well as the surveyors. If such a blunder was committed, this would have been pointed out immediately. We have also been told the entire proceeding was videographed. Evidence would be available there too.

As far as the rates are concerned we communicated that for the purpose of valuation, the average / lowest rate can be applied to the extra ore found mined on the premises. The applicants did not agree to the offer. They insisted that since no extra ore was found at all, no addition can be made."

The contention of the respondent is that as per the finding of Settlement Commission it is clear that the report of the domain experts was held to be scientific and authentic and all the objections raised by the petitioners in this regard have been over ruled by the Commission. The respondents have further stated that Shri Manish Pilliwar was engaged as domain expert for doing volumetric measurement and not in his capacity as a registered valuer. It has also been stated that Shri Manish Pilliwar has filed an affidavit on 16/08/2013 before the High Court and has stated on oath that he has experience of making volumetric measurement by the Total Station Technique and has earlier undertaken the same job in twelve other cases for volumetric measurements for stock of Iron Ore, Coal, Dolomite, Dolochar etc.

It has also been stated that Manish Pilliwar has the qualification and experience for carrying out volumetric measurements. The respondents have also stated that the qualification of registered valuer imported from Wealth Tax Act read with Wealth Tax Rules is applicable only when Section 142A is invoked. The provisions of section 142A of the Income Tax Act and the provisions of Wealth Tax Act and the Wealth Tax Rules are not at all applicable in the present case i.e. a case where survey is conducted under Section 133A of the Income Tax Act.

It has also been stated that Central Board of Direct Taxes has issued instructions i.e. instruction No.5/2011 for taking opinion of technical experts and bringing on record technical evidence in cases involving complex issue of technical nature and substantial revenue after following the directions of the Hon''ble Supreme Court dated 12/08/2010 in the case of CIT, Delhi Vs. Bharti Cellular Ltd. reported in (2010) 193 Taxman 97 (SC). The respondents have further stated that taking help of technical experts of different fields during the course of survey has been an established practice in the Income Tax Department and such help of technical experts is taken when the case involves revenue running into crores. In the present case, the revenue involved was running into crores of rupees and therefore, the action of the department was fully justified in the eyes of law.

It has also been stated that a report was prepared by the domain expert with the help of IBM officials and the entire report cannot be put aside. It has also been stated that the respondents have also denied the petitioner''s averment that competent authority to do the volumetric measurements is State Government. Much has been said in the return about the report prepared by Shri Pilliwar and associates. It has been stated that assistance was sought from various government organization by Shri Pilliwar and report submitted by Shri Pilliwar is authentic report and has rightly been relied upon by the department as well as by the Settlement Commission.

A rejoinder has been filed by the petitioner and it has been stated that the petitioner has offered income of Rs.23.53 Crores before the Settlement Commission and has deposited the tax to the tune of Rs.12.61 Crores and the interest of the revenue is fully protected. The petitioner has further stated that the respondents have made an attempt to mislead this Court and the report of so called domain expert cannot be relied upon. Shri Pilliwar does not even possess basic qualification under Rule 8A of the Wealth Tax Rules and twelve cases in which he has done volumetric analysis are all of heaps of materials lying at the factory and / or godown premises.

It has also been stated that Shri Pilliwar does not have domain knowledge nor past experience can be attributed to Mr. Pilliwar and by no stretch of imagination can he be called a domain expert. Moreover, his reputation is also questionable as would be evident from the decision rendered in Writ Petition No.4186/2004. It has also been stated that the partners of the petitioner firm and Shri K. S. S. Reddy were given only the coordinates which do not denote any head or tail of the final result. In fact the objection of the petitioner is to the preparation of the final report dated 24/07/2012 by an incompetent person who has no expertise in geology or mining.

It has also been stated that the question of basic qualification arose in Writ Petition No.1146/2015 whrein the petitioner was qualified as B. E. but did not hold the relevant degree in mechanical or civil engineering and was not found qualified by this Court to be a registered valuer for the purposes of Income Tax Department. It has been further stated that Shri Pilliwar does not have the basic qualification of a geologist and he is merely qualified as ''Bachelor in Civil Engineering''.

It has been further stated that even the certificate issued to Shri Pilliwar by the Income Tax Department authorizes him to value immovable property other than agricultural lands, plantations, forests, mines and quarries. It has been stated by the petitioner that Shri Pilliwar is not authorized even by the Income Tax Department to value mines and quarries.

It has also been stated that Shri Pilliwar is not an expert in respect of total station method and 3D Terrestrial Laster Scanning Method. His contention is that the State Government has also filed a report on 05/07/2013. Lastly it has been stated that the order of Settlement Commission as it is based upon the use of technology by Shri Pilliwar without considering whether he has the necessary qualification or not is bad in law. It has also been stated that the Settlement Commission without considering the fact that IBM personnel have stated in the affidavit that they were not aware of the technology used by Shri Pilliwar as given to the IBM officials at the time of volumetric analysis was carried out, has erred in law and facts. It has also been stated that the Settlement Commission has safely ignored the factum of withdrawal of Writ Petition No.8898/2012 by the petitioner without considering the specific liberty granted by this Court to raise all contentions before the Settlement Commission. It has also been stated that the report of the State Government was erroneously turned down as it was filed in judicial proceedings by the State of Madhya Pradesh.

A reply to the rejoinder has been filed and this Court really don''t understand as to why the learned counsel for the Income Tax Department has filed her affidavit alongwith the reply to the rejoinder. Such a practice is never heard of. The officers of the department should have filed an affidavit along with the reply to the rejoinder. However, in the reply to the rejoinder the respondents have defended the report submitted by the Shri Manish Pilliwar and have stated that Shri Manish Pilliwar is listed in the panel of Bank approved valuers of Bank of India, Punjab National Bank, Oriental Bank of Commerce, Indian Oil Corporation, Hindustan Petroleum Corporation Ltd., Bharat Petroleum Corporation Ltd, etc. It has been stated that the report submitted by Shri Pilliwar does not warrant any interference as the IBM officials and M/s. Geonka India Pvt. Ltd. were also present at the time report was prepared. Learned counsel for the respondent has placed reliance upon a judgment delivered in the case of Ajmera Housing Corporation & Anr. Vs. Commissioner of Income Tax reported in (2010) 234 CTR (SC) 118 and his contention is that scope of interference under Article 226 is quite limited in the matter of order passed by the Settlement Commission. The respondents prays for dismissal of the writ petition.

Heard learned counsel for the parties and perused the record.

The undisputed facts of the case reveal that the petitioner No.1 is a partnership firm and the other petitioners are partners / erstwhile partner of petitioner No.1 firm. They are aggrieved by order dated 10/07/2012 passed by Settlement Commission, Principal Bench, New Delhi under Section 245D(4) of the Income Tax Act declaring settlement application filed by the petitioner as abated on account of it not being true and full disclosure of unaccounted income on the basis of a report submitted by the Income Tax Department i.e. Volumetric Report dated 24/07/2012.

In the present case search and seizure operations were carried out on 20/06/2012 and 21/06/2012 under Section 132 of the Income Tax Act, 1961 and thereafter, search was carried out under Section 133A at the mines located at Kajli Dongri on 20/06/2012. The Income Tax Department prepared a report through a private Architect to demonstrate the total volume of Manganese Ore extracted by the petitioner during December 2006 to June 2012 read with another report prepared by M/s. Geonko India Pvt. Ltd. on oral sub-contract given by the private Architect.

The petitioner has earlier also preferred a writ petition before this Court i.e. Writ Petition No.7187/2012 which was decided on 31/07/2012. The order passed by this Court dated 31/07/2012 reads as under:- "In this writ petition the petitioner has challenged the proceedings dated 12.7.2012 to 13.7.2012 filed as Annexure P/4. The petitioner, a partnership firm, is holding and operating the mining lease for extraction of Manganese ore situated at Kali Dongri village of district Jhabua. The search and seizure were carried out in the business premises of the petitioner including the aforesaid mines on 20.6.2012 and 21.6.2012 under Section 132 of the Income Tax Act, 1961 (for short "the Act"). The notice dated 10.7.2012 was given by Dy. Director of Income Tax (INV) II, Bhopal requiring the managing partners of the petitioner to remain present in person at the Kali Dongri mines for necessary on the spot verification scheduled to be carried out by the investigating wing of the income tax department on 12.7.2012. Thereafter the survey under Section 133 A of the Act was conducted on 12.7.2012 and 13.7.2012. The said survey proceedings Annexure P/4 are under challenge in the present writ petition.

Having heard the learned counsel for the parties, prima facie no jurisdictional issue affecting prejudicially any of the rights of the petitioner is involved, therefore, it would not be justified for this Court to interfere in the matter at this stage. Only for that limited purpose we have hereinafter examined the grounds raised by the petitioner, otherwise petitioner will have an opportunity to raise a challenge at an appropriate stage if any report is prepared and sought to be used against it. Under section 133A of the Act the income tax authorities have power of survey. The income tax authorities have been specified in the explanation to the section and it is not in dispute that at the time of survey the income tax authorities so specified in the explanation were present. We are of the opinion that to assist the specified income tax authority if the other income tax officials and the registered valuer of the Income Tax Department along with his team were also present, then the proceedings under Section 133A of the Act can not be faulted on that sole ground. In the judgment of the Orissa High Court in the matter of M/s. U.K. Mahapatra (supra), the income tax officer (Headquarters) who was authorized by the Joint Director of income tax unit-2 to conduct the surveys of the premises in question was not an income tax authority under the said explanation but that is not the present case. So far as the taking of volumetric measurement is concerned, it has been submitted by the learned counsel for the income tax department before this Court that it was done to ascertain the stock. Under section 133A of the Act the income tax authority can collect information to check or verify the stock. Thus we are of the opinion that it was open to the income tax authority to ascertain the stock position with the help of volumetric survey. So far as the issue relating to the exclusion of applicability of the provisions of Section 133A of the Act in view of the provisions contained in MMDR Act is concerned, we are of the opinion that both the Acts operate in different field and the province of MMDR act does not exclude the application of Section 133A of the Act when the same are applied in the business place, which is a mine.

The above view expressed by us is only for the purpose of deciding this petition. We have examined the aforesaid aspect of the matter and expressed tentative opinion only to find out if any case is made out for interference at this stage. The petitioner has challenged the proceedings dated 12.7.2012 to 13.7.2012 conducted under Section 133A of the Income Tax Act. As and when any report is prepared and used against the petitioner on the basis of the said survey, it would be open to the petitioner to raise all such grounds which are permissible in law before the appropriate forum. The concerned authority will decide such an objection independently without being influenced by the tentative opinion expressed by us in this order.

Thus we are of the view that no ground for interference at this stage is made out. The writ petition is accordingly dismissed in limine."

The aforesaid petition was preferred challenging the survey proceedings and a liberty was granted to the petitioner to challenge the valuation report so prepared before the appropriate forum. Thereafter, a review petition was also preferred i.e. Review Petition No.448/2012 and this Court in review petition has passed an order dated 31/07/2012 and the same reads as under:- "Shri RS Jaiswal, learned Senior Counsel with Shri Sumit Nema, learned counsel for the petitioner.

Shri RL Jain, learned Senior Counsel with Ms. Veena Mandlik, learned counsel for the respondents No.1 to 6.

With consent heard finally.

By filing this review petition the petitioner is seeking modification in the order dated 231.07.2012 passed by this Court in W.P. No.7187/2012. The operative paragraph of the said order dated 31.07.2012 reads as under :-

"The above view expressed by us is only for the purpose of deciding this petition. We have examined the aforesaid aspect of the matter and expressed tentative opinion only to find out if any case is made out for interference at this stage. The petitioner has challenged the proceedings dated 12.07.2012 to 13.07.2012 conducted under Section 133A of the Income Tax Act. As and when any report is prepared and used against the petitioner on the basis of the said survey, it would be open to the petitioner to raise all such grounds which are permissible in law before the appropriate forum. The concerned authority will decide such an objection independently without being influenced by the tentative opinion expressed by us in this order.

Thus, we are of the view that no ground for interference at this stage is made out. The writ petition is accordingly dismissed in limine."

The petitioner apprehends that the use of the words "tentative opinion" in the said order dated 31.07.2012 may be treated by the respondents as binding in nature for taking decision in the matter in terms of the directions issued by this Court.

The petitioner also apprehends that recording of the dismissal of the petition may also be treated by the respondents as if there is no merit in the petitioner''s contentions as may be raised at the appropriate stage before the authorities.

Learned Senior Counsel appearing for the respondents submits that the apprehension of the petitioner is wholly misconceived, as the opinion which has been expressed by this Court is merely a tentative opinion and a clear direction has been issued that the concerned authority will decide such an objection independently without being influenced by the tentative opinion expressed by this Court.

In the circumstances, according to him, there is no necessity of modifying the order as prayed for. However, he fairly stated that in place of the words "the writ petition is according dismissed in limine", it may be treated to and ordered to be "writ petition is accordingly disposed of".

We have considered the submissions made by the learned counsel for the parties and we are of the view that after examining the petitioner''s contention, this Court vide the aforesaid order dated 31.07.2012 has found that no case for interference at that stage is made out. In the circumstances, the observations as aforesaid have been made.

Be that as it may, we are making it further clear that whatever we have said in the order dated 31.07.2012 shall not in any way come in the way of the concerned authorities for deciding the petitioner''s objections as already directed and the authorities shall be free to pass order in accordance with law.

Making the aforesaid position clear we observe that in place of "the writ petition is accordingly dismissed in limine", it be treated and read as "the writ petition is disposed of". We would like to further make the position clear that the words "tentative opinion" will also not come in the way of the authorities while deciding the petitioner''s objections in accordance with law.

With the aforesaid modification, the review petition stands disposed of.

C.c. by tomorrow."

A third writ petition was also preferred i.e. Writ Petition No.8898/2013 challenging the report dated 24/07/2012 submitted by the person engaged by Income Tax Department and the writ petition was withdrawn with a liberty to approach the Settlement Commission and to raise all possible grounds therein. The order passed in Writ Petition No.8898/2013 reads as under:- "Shri Gopal Subramaniam, learned Senior Counsel, Shri R.S. Jaiswal, learned Senior Counsel with Shri Sumit Nema, Shri Mukesh Agrawal, Shri Talha Abdi; Rehman, Shri A. S. Hussain, counsel for the petitioners.

Shri K. Kaushik, Additional Solicitor General of India along with Shri Sanjay Lal and Ms. Anjana Singh for the respondents No.1, 2 and 3.

Parties are heard on I.A. No.13562/2013, an application for clarification of the order dated 10.7.2013, this application is filed by respondents No.1, 2 and 3; I.A. No.17309/2013 again an application filed by respondents No.1, 2 and 3 for disposal of I.A. No.13562/2013 and I.A. No.13670/2013 an application filed by respondents No.1, 2 and 3 for issuing directions to initiate proceedings against the petitioner.

As far as I.A. No.13670/2013 is concerned, this application has been filed to say that as the petitioners have filed certain documents by fabrication and commission of fraud, prayer made is for initiating proceedings against the petitioner for the same. A detailed order has already been passed on this application on 26.9.2013 and it has been ordered that this application shall be considered and looked into at the time of final hearing. That being so, we see no reason to pass any further orders on this application. As already directed on 26.9.2013, this application shall be considered at the time of final hearing.

As far as I.A. No.17309/2014 and I.A. No.10757/2014 are concerned, they are filed for disposal of I.A. No.13562/2013.

I.A. No.13562/2013 has been filed for clarification of an earlier order passed on 10.7.2013. Initially when this application I.A. No.13562/2013 was taken up for consideration on 26.9.2013, this Court did not pass any order as a decision was taken to finally hear and decide the writ petition. However, for certain reasons that are available on record, hearing of the writ petition could not be conducted, therefore, in I.A. No.17309/2013 and I.A. No.10757/2014 prayer made is that the order passed on 26.9.2013 for postponing hearing on I.A. No.13562/2013 be recalled and orders be passed on the said application on merits.

Even though the matter was heard at length by a coordinate Bench of this Court but now due to non availability of the Hon''ble Judges who heard the matter, the entire case has to be heard again. Accordingly, considering the facts as are available on record and taking note of the circumstances that have now emerged, we deem it appropriate to hear and decide I.A. No.13562/2013 on merit as early disposal of this case may not been possible now in the changed circumstances.

Accordingly, the prayer made in I.A. No.10752/2014 and I.A. No.17309/2013 are allowed and we proceed to decide I.A. No.13562/2013 on merits.

Learned counsel for the parties are heard at length on I.A. No.13562/2013. Petitioner an assessee under the Income Tax Act has filed this writ petition and the relief claimed in the writ petition is to issue a certiorari for quashing the valuation report dated 24.7.2012 and any other writ or orders as may be deemed fit and proper. The impugned report is dated 24.7.2012 and is referred to as "physical verification report" or valuation report. While admitting the petition and issuing notice to all concerned on 13.5.2013 a detailed order has been passed by this Court after it was found that prima facie the impugned report dated 24.7.2012 is found to be submitted by an unapproved valuer to the Income Tax Department. Accordingly, it was directed that the respondents shall also not proceed for preparation of apprisal report in the matter. Thereafter, on 10.7.2013 a complaint was made in the present proceedings that the Assessing Officer, relying on this report is proceeding to make certain assessment. Taking note of all the circumstances, it was directed that till the next date of hearing, status quo should be maintained and no further action shall be taken by the respondents. The matter was heard and finally I.A. No.13562/2013 was filed wherein it is pointed out that a show cause notice under Section 153A of the Income Tax Act calling upon the petitioner to file the return of Income Tax for the assessment year 2009-10 has been issued vide notice dated 28.5.2013. The proceedings under Section 153A is based on the result of a search operation conducted under Section 132 of the Income Tax Act on 20 th June, 2012. As these proceedings under Section 153A are not challenged in this petition or in any other proceeding, due to the order of status quo granted by this Court on 10.7.2013, the assessment is not possible. It is said that under Section 153B certain statutory period for completing the assessment is prescribed, which is adversely effecting to the status quo and accordingly, prayer made in I.A. No.13562/2013 is to clarify the order passed on 10.7.2013 and to indicate as to whether the proceedings initiated by issuance of notice under Section 153A of the Income Tax Act are also stayed or respondents can proceed in accordance with law for finalization of assessment proceeding initiated under Section 153A vide notice dated 28.5.2013.

During the course of hearing Shri Kaushik took us through various documents and material available on record, the provisions of Section 153A and emphasized that in this petition what has challenged by the petitioner is only the valuation or valuer''s report dated 24.7.2012 there is no challenge to the assessment proceedings initiated under Section 153A and as the assessment under Section 153A has to be concluded within the time schedule fixed under Section 153B, the order be clarified.

Shri Kaushik invited our attention to following judgments : Commissioner of Income Tax, Gujarat Vs. Vijay Bhai N. Chandrani - 2013(3)5 ITR 713; Raj Kumar Shivhare vs. Assistant Director, Directorate of Enforcement and Another -2010(4) SCC 772; Union of India Vs. Guwahati Carbon Ltd. -2012(11) SCC 651 in support of his contention and tried to emphasize that when only a show cause notice under Section 153A is issued, there cannot be any stay of the proceedings. He took us through various aspects of the matter in support of his contention.

For the present we do not deem it necessary to go into those questions as they are not necessary for decieding the present application, I.A. No.13562/2013.

Shri Gopal Subramaniam, learned Senior counsel appearing for the petitioner made a fair statement to say that petitioners have no objection if the assessment proceeding under Section 153A are proceeded with and they have no objection if a clarification is issued by this Court to say that interlocatory order of stay/ status quo granted on 10.7.2013 does not prohibit the assessment proceeding but he only submits that in view of the prima facie assessment made by this Court with regard to the impugned valuation report dated 24.7.2012 on 13.5.2013, the stay granted and its further confirmation, the assessment may go on without taking cognizance of this report. He argued that this is permissible and if such a clarification is issued, petitioners will have no objection. That apart, he tried to emphasize that the contentions of the respondents on various other grounds are not correct.

We have considered the rival contentions and we find that the valuer''s report is dated 24.7.2013 and the proceedings under Section 153A had been initiated on the basis of search operation conducted under Section 132 on 20th June 2012. Prima facie, therefore, for the purpose of assessment under Section 153A only such material can be relied upon which was found in the search operation conducted under Section 132. That apart, once this Court on prima facie assessment has found that the valuer''s report dated 24.7.2012 is unsustainable for certain reasons indicated on 13.5.2013, consideration of the said report for the present cannot be permitted. Even though Shri K. C. Kaushik indicated certain reservations to say that if the proceedings under Section 153A are not concluded within the time limit prescribed under Section 153B, interest of revenue would be adversely effected. But the explanation(i) to Section 153B fixing the time limit for completion of assessment under Section 153A clearly contemplates that the period during which the assessment proceeding is stayed by an order or injunction of any Court shall be excluded. That apart, if the petition is ultimately dismissed and the tenability of valuation report dated 24.7.2012 is upheld, the respondent department can always reopen the assessment to the limited extent of considering the said report and making a reassessment. There is no legal impediment in doing so.

Taking note of all these circumstances, we dispose of I.A. No.13562/2013 with the following clarification :

"The order passed by this Court on 10 th July, 2013 does not prohibit the department from proceeding with the assessment based on the notice under Section 153A issued on 28.5.2013. They are free to proceed with the assessment and as submitted by Shri Gopal Subramaniam, learned Senior Counsel appearing for the petitioners by granting them 15 days time to file their return from the date of receipt of certified copy of this order, the department is free to proceed with the assessment proceedings in accordance with law.

However, while making the assessment no cognizance shall be taken of the impugned report of the valuer dated 24.7.2012 or any other report submitted by the said valuer respondent No.4 or his agency subsequent thereto in continuation or otherwise the impugned report dated 24.7.2012. The question of consideration of these reports are kept open to be decided at the time of final hearing of the matter.

With the aforesaid the application I.A.No.13562/2013 stands disposed of."

As the matter has to be heard finally and records do indicate that final hearing in the matter had commenced, we direct the office to list the petition for orders on 9th of October 2014 on which date all the parties shall intimate to us the date on which the final hearing of the matter can be commenced.

List the matter on 9th October 2014 for further orders."

The aforesaid writ petition was withdrawn with a liberty to raise all grounds before the Settlement Commission. The petitioner has thereafter approached the Settlement Commission and has disclosed the unaccounted income to the tune of Rs.23 Crores and on the basis of the entire record and documents recovered from the petitioner during the search and seizure and also accounted for all the assets acquired out of this unaccounted income. The petitioner has also paid the taxes to the tune of Rs.12 Crores along with his application.

The Settlement Commission by an order dated 24/04/2015 has passed an order for proceeding ahead in the matter under Section 245D(2C) of the Income Tax Act and the Department has preferred a Writ Petition No.4589/2015 and a second writ petition was also preferred by the Income Tax Department i.e. Writ Petition No.3759/2016. Both the writ petitions were dismissed by the Division Bench of this Court directing the Income Tax Department to raise their objections before the Settlement Commission and a liberty was granted to the Settlement Commission to pass a final order.

The Settlement Commission has rejected the petitioner''s application preferred under Section 245(C) based upon the report of a private Architect who does not possess the basic qualification of a mining expert under the MMDR Act or even under the Income Tax Act. He has been termed as Domain Expert which is a term alien to the Income Tax Act.

The record reflects that Shri Manish Pilliwar engaged by the Income Tax Department as a domain expert is an Architect. He is having Bachelor degree in Civil Engineering and as per the registration with Income Tax Department he is a valuer for the purposes of valuation of immovable property. The record also reveals that in Writ Petition No.4186/2004 the Division Bench of this Court has dealt with a report submitted by Shri Pilliwar and in the aforesaid case the Bank therein has categorically stated that valuation certificate obtained by the petitioner from Shri Pilliwar is incorrect. In fact the said Shri Pilliwar was earlier in the panel of respondent bank, but due to his bad reputation no work was entrusted to him and the process to remove him from the panel of bank approved valuers was in progress. The following order was passed by the Division of this Court:- "1. This petition filed under Article 226 of the Constitution of India takes exception to the order passed by the Debts Recovery Appellate Tribunal (hereinafter referred to as "Appellate Tribunal") dated 08.10.2004 (Annexure- /1), as also by the Debts Recovery Tribunal (hereinafter referred to "Tribunal") dated 12.03.2004 (Annexure-P/3) and of the Recovery Officer dated 12.01.2004 (Annexure-P/2). The petitioner by amending the petition has asked for further appropriate writ or direction in relation to the order dated 28.10.2004 passed by the Recovery Officer in O.A. Execution No.14/2002.

Briefly stated, the petitioner is a Certificated Debtor. For recovering the amount from the petitioner, the Recovery Officer issued a public auction notice dated 15.11.2003, which was published on 10.12.2003 in the local newspapers. The auction notice refers to four properties, which were ordered to be sold in auction. Out of that, only two properties are situated at Raipur (State of Chhattisgarh) and were made subject matter of objection filed by the petitioner regarding valuation thereof. From the objection filed by the petitioner, essentially, two points can be discerned. Firstly, that the properties were not properly valued and; secondly, the reserve price mentioned in the auction notice in respect of the said properties were based on valuation report of year 2002, which according to the petitioner, could not have been made the basis for determining the reserve price. This objection was considered by the Recovery Officer and has been answered as follows:-

"VERNACULAR MATTER OMITTED"

Against this decision, the petitioner carried the matter before the Debts Recovery Tribunal raising diverse pleas - firstly, that the valuation of the properties in question was not correct. Secondly, the same was based on valuation report of year 2002. Thirdly, the Recovery Officer was obliged to decide the objections taken by the petitioner, inter alia, non-compliance of Rule 53 of Schedule-II of the Income Tax Act, 1962 (for brevity "Income Tax Act") before proceeding with the auction process. Further, the Recovery Officer overlooked the formation of cartel by the participants during the auction. The Recovery Officer did not apply his mind and failed to stop the auction process in spite of such illegal activities and instead hastened the process within two minutes. The actual value of the properties was much more than the price offered during the auction. The Bank would be the looser - because of less amount recovered in the auction process. The petitioner made an offer before the Debts Recovery Tribunal that he would bear the expenditure incurred by the Bank for putting the properties to re-auction, if the sale was to be cancelled. The auction proceedings were in violation of principles of natural justice.

These contentions were refuted by the Bank firstly on the ground that the remedy of appeal against the order of Recovery Officer was pre mature. In that, the objection taken by the petitioner about the valuation of the properties was still undecided and pending for adjudication before the Recovery Officer. That the petitioner would get opportunity to apply for setting aside the auction sale under Rule 60 of Schedule-II of the Income Tax Act. Further, the petitioner has not disclosed all the material and relevant facts. The valuation report obtained by the Bank was from an approved Valuer. As the State of Chhattisgarh was established w.e.f. 01.11.2000 and Raipur was notified as the State Capital, there was spurt in the property price in Raipur. This was taken into account while fixing the reserve price and during the auction. It was contended on behalf of the Bank that the valuation certificate obtained by the petitioner from Pilliwar was incorrect. Infact, said Pilliwar was earlier in the panel of respondent-Bank, but, due to his bad reputation, no work was entrusted to him and the process to remove him from the panel of Bank approved valuers was in progress. The Bank contended that as the auction sale was fixed for 13.01.2004, no fault can be found with the view taken by the Recovery Officer to defer the consideration of objection regarding valuation of the properties, keeping in mind that the petitioner had approached only at the eleventh hour with the said objection (as objection was filed on 4.1.2004 before the Recovery Officer, though the auction notice was notified for 13.01.2004 and order of the Recovery Officer to auction the suit properties was passed on 15.11.2003). The attempt of the petitioner was to interdict the auction process and for which reason, had also issued a press note to create confusion. The petitioner tried his best to obstruct the auction sale. Notably, contended the Bank that the Recovery Officer gave full opportunity to the petitioner including to participate in the auction sale. The petitioner did not avail of the said opportunity or to offer higher price; and he was not ready to pay amount to the Bank as per the valuation report (as mentioned in valuation report relied by the petitioner) or 20% more than the auction price. Only then the Bank would have considered his request to set aside the auction sale.

After considering the rival contentions, the Debts Recovery Tribunal formulated only one issue for consideration - as to whether the order passed by the Recovery Officer dated 12.01.2004 was liable to be set aside. The Tribunal then proceeded to examine the matter in the context of the said issue for consideration. The Tribunal in paragraph 8 found that the valuation report of the Bank prepared in the year 2002 cannot be said to be on the lower side considering the fact that the State of Chhattisgarh was established on 01.11.2000. In paragraph 9 of the judgment, the Tribunal then considered the reasons why the reserve price for the concerned properties was fixed and found that the approach of the Bank in that behalf was correct. In paragraph 10 of the judgment, the Tribunal found that there may be several factors that would weigh with the bidders to bid low or high price for a particular property and in the absence of any material about the nexus between the officials involved in the bid and the purchasers, the allegation of the petitioner that particular property could have fetched more price, must be discarded as baseless and without any substance. In paragraph 11, the Tribunal then proceeded to consider the objection of the petitioner about the non-compliance of procedure stipulated in Rule 53, in the context of the fact that the reserve price was fixed by the Bank on the basis of valuation report of 2002. The Tribunal found that the petitioner did not file any valuation report of his own prior to issuance of auction proclamation, for which no infirmity can be found with the auction process in question merely because of fixing of reserve price on the basis of valuation report of 2002. The Tribunal also considered the grievance of the petitioner about the formation of cartel and rejected the same since the auction was an open auction and was done in the presence of the petitioner. The Tribunal held that auction proceedings were conducted in accordance with the Rules and established procedure. The Tribunal also recorded the offer given by the respondent-Bank that, if the petitioner is still interested in getting the sale set aside, is free to pay the amount as per the petitioner''s valuation report of Shri Pilliwar or 20% over and above the auction price. The petitioner, however, did not consent to that offer as well. Nevertheless, the Recovery Officer deferred the consideration of objection regarding valuation and for which reason, no fault can be found with that approach of the Recovery Officer. The Tribunal in pagaraph 12 of the judgment reiterated the position that the objection regarding correct valuation of the properties can still be considered by the Recovery Officer, which has been kept open. The Tribunal noted that the petitioner was not ready to get that objection decided before confirmation of sale as per Rule 60 of Schedule-II of the Income Tax Act. The Tribunal, thus, concluded that the appeal preferred by the petitioner was pre mature and dismissed the same being devoid of merits. The Tribunal has directed the Recovery Officer to dispose of the objections preferred by the petitioner without being influenced by the observations made in its judgment dated 12.03.2004.

Although, the Tribunal kept all the issues open, the petitioner still approached the Debts Recovery Appellate Tribunal. The pleas taken before the Tribunal and the objection before the Recovery Officer were reiterated by the petitioner even before the Appellate Tribunal. No other contention can be discerned from the judgment of the Appellate Tribunal. The Bank resisted the appeal on the same grounds and more particularly, because the appeal was pre mature - as the objection regarding proper valuation of the properties was yet to be adjudicated by the Recovery Officer and would be available to the petitioner before confirmation of sale. The Appellate Tribunal once again considered those points and has reiterated the opinion of the Tribunal and of the Recovery Officer. Leaving all questions regarding the said objection open, the appeal preferred by the petitioner came to be dismissed. The Appellate Tribunal also noted about the unwillingness of the petitioner to avail the offer given by the respondent-Bank and observed that the petitioner was indulging in dilatory tactics Against these concurrent decisions, the present writ petition has been filed.

Although diverse grounds have been raised in the writ petition, during the arguments learned counsel for the petitioner confined to only two points. The first contention is that the petitioner was not given prior notice before the reserve price was fixed by the respondent-Bank in respect of the suit properties. That entailed in infraction of Rule 53 of the Income Tax Act. The second contention raised is again reiteration of ground taken in the objection filed before the Recovery Officer. In that, the valuation of the suit properties was not correct. Further, the reserve price was erroneously fixed on the basis of valuation report obtained by the respondent-Bank in the year 2002, though the auction was to be held on 13.01.2004.

The respondent-Bank has opposed this writ petition. Preliminary objection regarding the jurisdiction of Madhya Pradesh High Court has been raised on the ground that the suit properties are situated in the State of Chhattisgarh and also the Debts Recovery Appellate Tribunal, which decided the appeal by the impugned judgment is at Allahabad (State of Uttar Pradesh). On merits, the respondent-Bank has reiterated the arguments, as were canvassed before the Recovery Officer and upto the Appellate Tribunal - qua the objection of correct valuation of the property. As regards the first point argued by the counsel for the petitioner in this writ petition, it is submitted that this plea was not taken before the Recovery Officer or for that matter before the Tribunal or the Appellate Tribunal; and, therefore, should not be permitted for the first time before this Court. Besides, reliance is placed on the decision of the Supreme Court in Samir K. Shah and Another v. Union of India and Others, to buttress the argument that the petitioner was not entitled to notice or opportunity before determining the reserve price of the properties.

The Counsel appearing for the private respondent has adopted the arguments of the respondent-Bank, but, further submits that said respondent has acted upon the auction notice not only by participating in the auction process, but has also invested huge amount. Further, there is no merit in the objection taken by the petitioner.

Having considered the rival contentions, we may first take up the preliminary objection regarding the maintainability of this writ petition. Indeed, the suit properties put-up for auction are situated in the State of Chhattisgarh. The auction notice in respect of those properties and also bidding was held in the State of Chhattisgarh. However, part of the cause of action for filing this writ petition has arisen within the jurisdiction of this Court as the petitioner had filed appeal bearing Appeal No.01-2004 before the Debts Recovery Tribunal at Jabalpur. The counsel for the respondent-Bank, therefore, did not pursue this objection further.

Accordingly, the matter proceeded on merits. As regards merits - from the factual narration, it is evident that right from the Recovery Officer till the Appellate Tribunal, every Forum has observed that the objection regarding correct valuation of the suit properties raised by the petitioner would be adjudicated by the Recovery Officer at the appropriate stage. This view taken by the Recovery Officer and as affirmed by the Tribunal as well as Appellate Tribunal commends to us. We hold that no other opinion is possible. The Appellate Tribunal has restated the clarification noted by the Recovery Officer and the Tribunal that all aspects with regard to the objection regarding improper valuation of the suit properties will be considered on its own merits by the Recovery Officer.

The question is: whether the petitioner is right in contending that the entire auction process has vitiated due to noncompliance of Rule 53 and in particular, not giving notice or opportunity to it, before determining the reserve price. This plea has been rightly countered by the respondents by relying on the exposition in the case of Samir K. Shah (supra). In para 10 and 11, the Supreme Court observed thus:-

"10. The Rules do not require the grant of any opportunity to the debtor of being heard before the valuation is made and the reserve price fixed. The debtor is entitled to notice only for the drawing up of the proclamation sale. Presumably, the intention is to keep the debtor informed of the steps taken by the creditor to realise a fair value of the debtor''s property. There is no requirement for the creditor to consider any alternative valuation filed at the instance of the debtor. The reference to the decision of this Court in Desh Bandhu Gupta v. N.L. Anand and Rajinder Singh by the appellant, is inapt. The decision relates to a sale in execution of a decree under Order 21 Rule 66 of the Code of Civil Procedure which expressly requires that the sale proclamation shall include the estimate of the value of the property if any given by either or both of the parties. It was in that context that this Court had said;(SCCp.132)

"It is very salutary that a person''s property cannot be sold without his being told that it is being so sold and given an opportunity to offer his estimate as he is the person who intimately knewthe value of his property and prevailing in the locality though exaggeration may at times be possible."

There is nocorresponding provision in Rule 52 or 53 of the Schedule to the Income Tax Act, 1961 or in any other provision which has been incorporated into the Act by Section 29. It cannot, therefore, be said that Regulation 60 is violative of Section 29 of the Act." (emphasis supplied)

In the light of the decision of the Supreme Court and the unambiguous opinion that there is no requirement of giving opportunity to the Debtor before the valuation is made and the reserve price is fixed or to consider the alternative valuation filed at the instance of the Debtor, this grievance of the petitioner about denial of opportunity due to non-issuance of notice or not deciding the objection taken in that behalf, cannot be taken forward. As a consequence of that finding, the argument of the petitioner that entire auction process is vitiated on that count, will have to be stated to be rejected. Notably, the petitioner has not taken this specific plea before the Recovery Officer or the Tribunal as well as the Appellate Tribunal. In any case, this contention does not deserve any further consideration.

Reverting to the argument of the petitioner about the incorrect valuation of the suit properties - that issue will have to be considered by the Recovery Officer on its own merits and in accordance with law. Whether the sale should be confirmed, set aside or otherwise, would depend on the opinion of the Recovery Officer to be given after considering the said objection. Although the Recovery Officer will have to consider the said objections afresh, as observed by the Tribunal as well as the Appellate Tribunal, that, however, does not mean that the factual narrations mentioned hitherto and available from the record would get effaced. The same, nevertheless, will have to be reckoned for deciding the matter in issue before the Recovery Officer, to form an independent opinion on that basis as well. Besides this, nothing more is required to be said at the instance of this petitioner.

As no other contention has been raised and arises for our consideration, the petition must fail. However, we must advert to the decision of the Supreme Court cited by the petitioner in the case of Ram Kishun & Ors. v. State of U.P. & Ors.2 in particular, observations found in paragraphs 8, 9, 12, 17 and 19 thereof. The Supreme Court considered the argument of the appellant that no recovery could have been made from the appellant (guarantor), as Debtor has had huge movable/ immovable property and other livestocks which could satisfy the demand of bank loan. Besides, there were two guarantors and the appellant''s father was not the only guarantor. In this factual background, it was contended that the entire liability of remaining unpaid amount could not have been fastened upon the appellant. Further objection was taken on behalf of the appellant that the properties of the appellant were worth Rs.2 lac which had been sold in auction at a throw-away price of Rs.25,000/- only, that too, without following the procedure prescribed by law. For recovery of balance amount of loan, only a part of suit land could be sold. The Supreme Court no doubt referred to the provisions of the Act and the Rules and in paragraph 8 observed that merely because the recovery is in respect of public money, it should not mean that financial institutions which are concerned only with the recovery of their loans, may be permitted to behave like property dealers and be permitted to dispose of the secured assets in any unreasonable or arbitrary manner, in flagrant violation of the statutory provisions. This question does not arise for consideration in the present petition, especially when, the petitioner''s objection regarding incorrect valuation of the suit properties is still pending before the Recovery Officer.

The argument proceeded that right to hold property to be enjoyed by the petitioner is a constitutional right as observed in para 9 of the same judgment. Indeed, right to hold property is a constitutional right as well as a human right, but that is not an absolute right. The properties so held will be subject to the procedure established by law. In the present case, the auction has been conducted by following due process and as per Rules. Hence, even this observation will be of no avail to the petitioner. Much emphasis was placed on the dictum in paragraphs 12, 17 and 19, to contend that the valuation of the suit properties was incorrect. Once again those observations need not detain us from answering the present petition, which is directed against the decision of the Recovery Officer, who has deferred the consideration of that objection and is yet to adjudicate the same.

Suffice it to observe that the Recovery Officer may have to consider all matters, which are germane for deciding the objection filed by the petitioner - which is still pending for adjudication.

For the reasons mentioned hitherto, the petition is dismissed being devoid of merits with cost quantified at Rs.25,000/- to be paid to the respondent- Bank, in the facts of the present case."

Much has been stated by the Income Tax Department stating that Shri Pilliwar is a domain expert. The Domain Expert is defined in Wikipedia and the same reads as under:- "A subject-matter expert (SME) or domain expert is a person who is an authority in a particular area or topic. The term domain expert is frequently used in expert systems software development, and there the term always refers to the domain other than the software domain. A domain expert is a person with special knowledge or skills in a particular area of endeavour. (An accountant is an expert in the domain of accountancy, for example.) The development of accounting software requires knowledge in two different domains: accounting and software. Some of the development workers may be experts in one domain and not the other. A SME should also have basic knowledge of other technical subjects."

Shri Pilliwar does not possess the qualification as prescribed under Rule 8A of the Wealth Tax Rules. There is no certificate on record to establish that he has carried out any work relating to mines previously. In fact the documents which are on record reflects that the survey done by Shri Pilliwar relates to twelve cases and in all these twelve cases heaps of material was lying at the factory and/or godown premises and volumetric analysis of the same was done by Shri Pilliwar. They do not relates to mines but they relates to godown.

There is no document on record to establish that domain expert was in fact an expert. The domain expert who is a private person was not an expert in conducting volumetric analysis and to submit volumetric analysis report. The Wealth Tax Act read with Wealth Tax Rules provides for qualification of registered valuers and Rule 8A(6) thereof provides for the following qualification of a valuer of Mines and Quarries. Rule 8A(6) reads as under:- "Rule 8A(6)-

A valuer of mines and quarries shall have the following qualifications, namely:- [(i) he must be a graduate in mining of a recognised university, or must possess a qualification recognised by the Central Government for recruitment to superior services or posts under the Central Government in the field of mining; and]

(ii) he must be a person formerly employed-

(a)in a post under Government as a gazetted officer, or

(b)in a post under any other employer carrying a remuneration of not less than Rs. [2,000] per month, and, in either case, must have retired or resigned from such employment after having rendered service as a mining engineer for not less than [ten] years."

The record of the case establishes that Shri Pilliwar does not have the basic qualification of a Geologist. He holds Bachelor Degree in Civil Engineering and the certificate issued to Shri Pilliwar by the Income Tax Department authorizes him to value immovable property (other than agricultural lands, plantations, forests, mines and quarries), therefore, on the basis of the record it is establishes that Income Tax Department has not authorized to Shri Pilliwar to value mines and quarries and in spite of the aforesaid fact, he is being called domain expert, though he does not have basic qualification for the purpose of mines and quarries.

Besides this, the petitioners have also raised various doubts and grounds in the methodology adopted by Shri Pilliwar, however, once this Court has opined that Shri Pilliwar who is a private person was not an expert in the subject and could not have carried out volumetric measurement, the comments on the procedure adopted by him are unwarranted.

The order of the Settlement Commission also suffers from perversity to the extent the validity of volumetric report has been admitted because of withdrawal of the writ petition by the petitioner. The objections to the validity of the volumetric measurement report did not stand withdrawn but were very much alive and were already raised before the Settlement Commission in the settlement application filed by the petitioner and the writ petition was also withdrawn with liberty to raise all the contentions before the Settlement Commission. The withdrawal of Writ Petition No.8898/2013 was made by the petitioners with a specific liberty to raise all contentions before the Settlement Commission. The withdrawal was permitted by this Hon''ble Court in view of the submissions made in the withdrawal application. Thus, the withdrawal of Writ Petition No.8898/2013 did not close any of the rights of the petitioner to raise the issue of illegality of the survey report before the Settlement Commission. It is pertinent to mention here that later on even vide order dated 02/09/2016 passed in Writ Petition No.3759/2016 this Hon''ble Court was pleased to direct as under:- "That apart we grant liberty to the parties to raise all the grounds before the Settlement Commission and it shall be for the Settlement Commission to proceed in accordance with law."

Thus, the contentions of the respondents that by withdrawal of Writ Petition No.8898/2013 the matter of challenge to the volumetric measurement report became final is incorrect both on facts and in law and is contrary to the liberty granted by this Hon''ble Court while permitting withdrawal on 13/04/2015 and also reiterated later on in its order dated 02/09/2016.

Volumetric Measurement Report has been relied upon in the order passed by the Settlement Commission and the Settlement Commission was so much influenced by the Volumetric Report submitted by a private person that statutory provision as contained under the Mineral Concession Rules, 1960 in respect of mining plan and in respect of mining operation has been brushed aside.

Not only this, there are fundamental errors in the Volumetric Measurement Report. The striping ratio has not been calculated properly and the petitioner has pointed out the following errors in the volumetric report in a tabulation form and they are as under:-

Sr. No. Para Name / No. in Pilliwar Report Extract from Pilliwar Report Discrepancies

Aim The aim of the report as explained to me by the Authorised officers of the Income Tax Department is to work out the total volume excavated in order to ascertain the quantity of manganese or lumps (clean ore) excavated in the Mining Lease Area by the lessee S R Ferro Alloys from the date of allotment till the date of above mentioned visits made by us. The very aim is an exercise in futility as there is no method by which the volume of material-ore as well as waster rock, removed from an area over a particular period of time can be ascertained with a fair degree of accuracy and confidence level. This is for several reasons such as (i) Measurement at any point in time, even using modern and highly sophisticated instruments can only indicate the topography and surface geometry of the area at that point of time and not its dynamic history.

(ii) Old maps/plans, even if available do not give correct, reliable and sufficiently detailed idea about the actual surface profile at different points in time to be usable for this purpose.

(iii) The volume so worked out can therefore only give an idea of the hypothetical volume of the void between an assumed upper level and the existing lower level and not the volume of excavation carried out over a period of time.

(iv) There is loss of excavated material due to natural flows, compaction and other uses including transportation outside the area. Even rocks undergo changes due to erosion and denudation caused by natural forces, broken material spread over an area in scattered dumps even more so.

Description That the concern Jalan Ispat Castings Limited has not carrier out any excavation in the form of opencast mining or underground mining. This is not factually correct. As confirmed by the State Government team, Jalan Ispat Castings Limited have mined 27389 tonnes of ore against collector permission and 5056.740 tonnes during their lease period. In addition to this, M/s. Quantity Steel Forgings have mined 1448.668 tonnes of ore against collector permission. Moreover the area has been under mining activity for more than 100 years. Commencing from 1902 and during this period, in addition to the 2 nos dump mining permit, 5 nos different parties have worked the area before S R Ferro Alloys.

Description In other works it can be safely concluded that the present lessee has carried out almost all of the mining in this mining lease area. This is not correct in the light of what has been clarified above. The extracts from the approved mining plan prepared by Shri Nikhil Pashine in 1998 read as follows "The area was previously held under mining lease for more than 20 years and large dimensional pits are developed all over the area. The area was subject to intensive mining for manganese ore most of the mineral bearing area was already worked and hardly any area remains left out for exploration." The mining plan gives details of 6 nos pre-existing pits.

Description It was observed that overburden is being stored at lands other than the approved land. This is not correct. Permissions were duly taken for keeping overburden at Pipal Kheda Village as well as Dinu''s Land.

Description Para 8 The other approach road is through Pipal Kheda Village. Incidentally no barrier or guard was found to be manning the entry and exit on this road. The approach road through Pipal Kheda Village is provided with a barrier which is normally manned.

Description Para 9 The mining is done with the help of excavators and large pieces are brought out by dumpers and mechanical crushing is done to break into smaller pieces. These small pieces are further manually broken by local labour to get the final products in the form of manganese ore. The process of extraction and recovery of manganese ore is in fact quite cumbersome. The ore occurs in discontinuous thin layers underneath thick layers of overburden waste rock and embedded with inter burden which is also waste rock. The grade/quality of ore also varies from place to place. Separate benches are made in overburden waste rock and in the mineralised/ore bearing zone. The mineralized zone is tracked with geological mapping and sampling and the benches oriented accordingly. The processes involved are drilling, blasting and removal of the blasted material. The blasted material from the overburden benches is removed to waste dumps. The mineralized material from the ore benches i.e. run of mine (r.o.m.) is taken to the crushing plant for primary crushing and for subsequent sizing and sorting thereafter.

Description Para 11 Certain quantity of overburden appears to have been used for the construction of road within this mining lease area. This quantity is negligible and insignificant and hence not considered in account for working out the physical verification volume. As already indicated in Sr.No.(1) above, substantial quantities of overburden waster material is lost due to natural flows (particularly the finer/smaller size material) compaction and other uses, including transportation outside the area. Mining is a dynamic activity and the mine layout and depth keeps on changing. This requires considerable road making during the life of a mine which is an almost continuous activity. Considerable overburden wast-rock material is therefore, required and is utilized for this purpose. Not taking the same into account for working out the physical verification volume is therefore not correct.

Description Para 12 As per McGraw Hill Dictionary of Architecture & Construction it is the ratio of the weight of a loose cubic yard (or meter) to the weight of the bank cubic yard (or metre). For the purpose of this report, the swell is taken and accordingly the correction is proposed to be carried out by multiplying the volume of excavated material by 0.7 to get the actual volume for consideration. (i) The swell factor is normally reckoned in terms of volume and not weight. (ii) The swell factor is different for soils and for rocks. For rocks, it also depends upon the type of rock.

(iii) For blasted rock it also depends upon the efficiency of blasting and for normal blasted rock in the mines it is around 0.6.

(iv) The McGraw Hill Dictionary of Architecture and Construction is not the right source for this reference relating to mining activity.

(v) Even if the swell factor at 30% swell is taken, the correct way to carry out the correction is by dividing the volume of broken excavated material by 1.3 and not by multiplying it by 0.7.

Data Collection The data collection has been done from all possible sources and for the sake of clarity, the collected sources have been classified in the two major heads- the primary i.e. survey with total station, 3D terrestrial laser scanner, photographs and measurements like measurement of depth of water-body etc., and secondary sources which is by obtaining copies of original ground level drawings, surface contour maps present in the archives of the Indian Bureau of Mines, IBM, Nagpur, lease Khasra and other details from the Government of Madhya Pradesh and the data available on the internet. (i) The methodology and instruments used by Shri Pilliwar i.e. total station and 3-D terrestrial scanner when used for volumetric measurements are so used only for large size stacks/excavations of regular geometry / shape. They are not used for volumetric measurement involving small stacks or small dumps of highly irregular shapes and haphazardly placed. For such situation, physical tape measurements are preferred. (ii) The secondary sources as indicated do not give correct (the desired level of accuracy) reliance and sufficiently detailed information about the surface profile at different points in time to be usable for this purpose.

Conclusion The volume of the pit is as follows:- 3-D terrestrial laser scanner and photogrammetry - 1996656.822 cubic meter

Total Station (after deduction of initial volume) 1916770.550

Both 3-D terrestrial laser scanner and total station are modern and sophisticated instruments used in surveying practice. It is however misleading to call it volume of the Pit. It is, in fact, volume of the void enclosed between the ground profile at the time of the survey and an assumed ground profile at some higher level. The secondary sources material such as old maps etc. lack the desired accuracy, reliability and detail to be usable as a bench mark for the purpose.

Conclusion It is seen from the onsite measurements that the foot wall pond has an average depth of 12ft (3.65 m) for about 50% of area and average depth of 6ft (1.83 m) for about 45% area (0.60 m) for about 5% area. This more of guess-work. The same applies for the middle pond also.

Final Results 1) Total excavated volume - 2011466 m3 2) Total over burden volume - 324057 cumt.

3) Difference between total excavated volume and total over burden volume - 1087409 cumt.

4) Total manganese ore lumps quantity at mining lease area and Dinu''s Land 23302.74 cumt.

(i) 2011466 m3 cannot be taken as total excavated volume. It is the volume enclosed between the ground profile at the time of measurements and an assumed profile based on old maps of suspect reliability, accuracy and detail. (ii) 324057 cumt as total overburden volume lying in the area seems to be an underestimation. Use of total station is not the right methodology for volumetric measurements of small, irregularly shaped, and haphazardly spread dumps.

(iii) 1687409 cumt which is calculated difference between total excavation volume and total overburden volume cannot be taken as the volume of material removed from the area as it does not take into account the loss of overburden material during the period due to natural flow, transportation outside the area, other uses including road making and compaction.

(iv) 1687409 cumt which is calculated difference between total excavation volume and total overburden volume, claimed as the volume of material removed from the site cannot therefore, be taken as the quantum of ore taken out from the area, for the above reasons as well as for the following:-

a) It it is taken as ore removed from the area, assuming a bank cubic metre, its tonnage works out as 5062227 tonnes. The total updated are reserve as on 1st April 2008 as per the Mining Scheme prepared during that year is 1622404, which means that the mined tonnage during the period was 3.12 times more than the estimated reserves. This is not in line with accepting mining practice.

b) If this is taken as the ore removed from the area, as against 324059 cumt of overburden volume, the stripping ratio works out as 0.064 cumt per tonne of ore. This is an absurd figure. This ration varies from 3 cumt to 10 cumt per tonne of manganese ore (expressed as 1:3 or 1:10), in the manganese ore mine of MOIL Ltd. located in central India.

(v) 23302.74 cannot be taken as the volume of ore lying at the site as this includes 2 nos stacks with 22.5% manganese and 1 stack with 15% manganese ore i.e. ore is still to be recovered from these stacks.

Not only this, the Settlement Commission was so much influenced by the volumetric analysis report that it has not considered the other issue raised by the petitioner. However, the important aspect of the case is that issue regarding inadmissibility of the survey report dated 24/07/2012 for assessment of undisclosed income of the period from 2006 to 2012 since the same is not an incriminating material obtained as a result of search and assessment of undisclosed income under Section 133A can be done only with reference to incriminating material recovered from such and not post search material.

Identical issue come up before the Delhi High Court in the case of CIT Vs. Kabul Chawla reported in 380 ITR 573 (Delhi) wherein all the earlier decisions delivered by the High Courts have been considered and legal position decided by the Delhi High Court is summarized as under:- "On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under:

i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place.

ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise.

iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the "total income'' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax".

iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material."

v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word ''assess'' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word ''reassess'' to completed assessment proceedings.

vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO.

Vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment."

In CIT Vs. Khushal Chand Nirmal Kumar reported in 183 CTR 503 (MP) this Court while considering the erstwhile section 158BC also held that no addition can be made of unaccounted expenditure in construction on account of DVO''s report obtained subsequent to search proceedings which was not available at the time of search.

This Court is of the considered opinion that the order dated 17/02/2017 passed under Section 245D(4) by the Settlement Commission is perverse and devoid of merits, both in law and on facts and hence deserves to be set aside and is accordingly set aside. The Settlement Commission has erred in upholding the survey report dated 24/07/2012 merely because Total Station Method and 3D scanning technique was used without considering the fact that the person preparing the said report was incompetent and did not possess the necessary qualification to prepare the said report and gross inaccuracies were writ large on the face of the report, like Manganese Ore being 83% and waste being 27% which is impossible. Moreover, the gross production for six years determined at 16 lac MT was more than the estimated reserve determined as epr the mining plan which again is impossible.

The Settlement Commission has also erred in rejecting the report dated 17/06/2012 prepared by the State Government at the directions of this Court. The said report was prepared by competent revenue and mining officers and that too at the direction of this Court and the report of the State Government highlighted the fact of inaccuracies in using 3D technique.

The Settlement Commission has also arrived at a perverse finding in respect of signature of IBM officials and partners of the petitioner on the survey report. This finding falls flat for the simple reason that survey was done on 12/07/2012 while the ex-parte report was prepared on 24/07/2012. How can the later report dated 24/07/2012 be signed on 12/07/2012.

The Settlement Commission has erred in upholding the survey report merely on the basis of withdrawal of writ petition filed before this Court. The Settlement Commission has erred in construing the withdrawal as admission of the petitioner without appreciating the fact that the withdrawal application was with specific liberty to raise all objections to the survey report before the Settlement Commission and the withdrawal order was passed considering the grounds raised in the said application. There was no presumption of estoppel against the petitioner by withdrawal of the writ petition which was done for specific reasons and with a liberty. This observation of the Settlement Commission shows the perversity in its order.

The Settlement Commission has simply brushed aside the mining plan which was approved by IBM in 1998 and also in 2008. The mining plan is a statutory document prepared under The Mines and Minerals (Development and Regulation) Act, 1957 and has a statutory force and could not have been simply brushed aside.

The specific request made before the Settlement Commission to consider the stripping ratio has been completely ignored by the Settlement Commission. In this case there was a clear discrepancy in calculation of overburden by the private Architect who arrived at the overburden (waste) figure of 3.24 lac MT while the State Government''s report arrived at the overburden figure of 17.90 lac MT of overburden. This gross miscalculation of overburden in the report of the private Architect gave the astronomical figure of production of Manganese of 83% while that of waste was determined at 27% which can never be the case in Manganese mine where the waste is more and the Ore is less. The best mines of MOIL (Manganese Ore India Ltd.) gives waste of 90% and Ore of 10%. This report of MOIL was also placed before the Settlement Commission which has been conveniently ignored.

The Settlement Commission has erred in terming the private Architect as an expert. A person who does not even posses the necessary qualification to work as a Geologist cannot be termed as an expert. Even the basic findings of this private Architect''s report are flawed and demonstrate that he is no expert.

The petitioner''s application has been wrongly treated as not being full and true by the Settlement Commission merely on the basis of the report dated 24/07/2012. All the facts were fully disclosed before the Settlement Commission including the factum of wrong allegation of excess mining being levied by the Income Tax Department on incorrect facts and the Settlement Commission has not even discussed how the contentions of the petitioner are wrong in so far as secondary evidences were concerned. It has simply reproduced in a columnar form the submissions of the Income Tax Department and the averment of the petitioner without pointing out how the petitioner is at fault. The Settlement Commission thereafter, proceed to determine that the private Architect is an expert, his report is based on latest technology and the fact of withdrawal of petition by the petitioner and thereafter the application was treated as not being full and fair disclosure of facts. The Settlement Commission has even dismissed the report dated 17/06/2013 prepared by the State Government at the direction of this Court. The Settlement Commission has also dismissed the statutory mining plan prepared under The Mines and Minerals (Development and Regulation) Act, 1957 and approved by IBM. The entire order does not discuss the petitioner''s submission or why the submissions were not true and full and this approach shows that the Settlement Commission was predetermined not to pass the final order but proceeded with singe minded determination to send the petitioner back to the Assessing Officer.

In light of the aforesaid, this Court is of the considered opinion that the order passed by the Settlement Commission dated 17/02/2017 passed under Section 245D(4) deserves to be quashed and is accordingly quashed. The volumetric report dated 24/07/2012 prepared by the Income Tax Department through a private architect is also quashed and the matter is remanded back to the Settlement Commission to process the petitioner''s application and to pass a final order afresh ignoring the volumetric report dated 24/07/2012. The Settlement Commission shall consider all the documents recovered during the search and seizure and other material produce by the department and shall be free to pass appropriate order in accordance with law. With the aforesaid, writ petition stands allowed.

Certified Copy as per rules.