ORDER SHEET WP NO.44 OF 2015 IN HIGH COURT AT CALCUTTA Constitutional Writ Jurisdiction ORIGINAL SIDE G. M. FOODS & ANOTHER Versus INCOME TAX & WEALTH TAX SETTLEMENT COMMISSIONER BEFORE: Hon'ble JUSTICE I. P. MUKERJI Date : 2nd February, 2015. Mr. S.Pal, senior advocate, Ms. M. Agarwal, Mr. B. Manot appear. Ms. S. Das De appears. Court : order of Income Tax Settlement Commission Principal Bench dated 12th November, 2014 has to be set aside. consequential order passed by Settlement Commission [Income Tax & Wealth Tax] Additional Bench, 10C, Middleton Row, 2nd Floor, Kolkata-700 071 on 30th December, 2014 following said order is also set aside. proceeding before Principal Bench of Settlement Commission was under section 245 [6B] of Income Tax Act, 1961. Commission has committed very serious error. It is also in gross breach of judicial discipline. I will now recount reasons. Before Commission, judgment of Brij Lal & Ors. vs. Commissioner of Income Tax; reported in [2010] 328 ITR 477 [SC] was cited. It was judgment pronounced by no less than five Judges of Hon ble Supreme Court, through Hon ble Mr. S.H. Kapadia, Chief Justice of India. One of points that was considered in that case is set out in that judgment in following manner : [II] If answer to above question is in affirmative, what is terminal point for levy of such interest- whether such interest should be computed up to date of order under section 245D[1] or up to date of order of Commission under section 245D[4] ? 2 This point is directly and substantially in issue in this case too. judgment pronounced by Hon ble Supreme Court held, inter alia, following : [2] Consequent upon conclusion [1], terminal point for levy of interest under section 234B would be up to date of order under section 245D[1] and not up to date of order of settlement under section 245D[4]. Now, while dealing with present case Commission referred to judgment of Hon ble Supreme Court in Brij Lal at internal page 29 of its judgment. tribunal went to extent of saying that judgment in Brij Lal was obiter dicta. That was reason for tribunal not following it. relevant passage from judgment of tribunal is quoted below : question raised in Brij Lal s case related only to terminal point for levy of interest u/s 234B. observations of Apex Court have to be read in context of question being decided. Where obiter dicta is in conflict with another decision of Supreme Court, ratio should be followed in preference to obiter dicta. If interest was not to computed on basis of income determined by Commission u/s 245D[4], it would place applicant to Commission in privileged position qua assessee, who files his returns of income truly and regularly before department. For this reason too, we are not in agreement with learned A.R. and interveners. Thus, we are of view that decision of Brij Lal is incorrectly being relied upon as authority to contend that interest u/s 234B is leviable on income as per order u/s 245D[1], as ratio of case was on terminal point of charging of interest under section 234B. First of all issue decided by Hon ble Supreme Court in Brij Lal regarding levy of interest under section 234B and section 245D[1] and terminal point for levy of such interest were substantially in issue before it, as stated by me before. It was decided by highest Court with abundant reasons. So, observations of Hon ble Supreme Court were not obiter dicta. 3 In my opinion to term decision of Supreme Court as obiter dicta and deciding not to follow it was gross misdemeanor on part of Commission. Secondly, it tried to rely on case of Commissioner of Income Tax vs. Anjum M. H. Ghaswala & Ors. reported in (2001) 171 CTR 1 (SC). In page 505 of Judgment in Brij Lal, Supreme Court held that only question decided by Court in Ghaswala was whether Section 234B was mandatory in nature and whether Settlement Commission had any authority to waive it. Referring to this decision of Ghaswala five Judges Bench of Supreme Court pronounced its decision in Brij Lal. This was rubbished by Commission by saying that law was to be found in Ghaswala and that principles for charging interest under Section 234B and section 245D[1] were other than that decided in Brij Lal. This is not appreciated at all, by this court. Moreover, Supreme Court in case of Municipal Committee, Amritsar vs. Hazara Singh reported in AIR 1975 SC 1087 has expressly approved passage that even dictum of Supreme Court rendered obiter was binding on Courts below. I will quote this passage from Judgment of Justice Krishna Iyer. Judicial property, dignity and decorum demand that being highest judicial tribunal in country even obiter dictum of Supreme Court should be accepted as binding. Declaration of law by that Court even if it be only by way has to be respected. But all that does not mean that every statement contained in judgment of that Court would be attracted by Art. 141. Statements on matters other than law have no binding force. Several decisions of Supreme Court are on facts and that Court itself has pointed out in Gurcharan Singh v. State of Punjab (1972 FAC 549) and Prakash Chandra Pathak v. State of Uttar Pradesh, (AIR 1960 SC 195) that as on facts no two cases could be similar, its own decisions which were essentially on questions of fact could not be relied upon as precedents for decision of other cases standard fixed under Act is one that is certain. If it is varied to any extent, certainty of general standard would be replaced by vagaries of fluctuating standard. disadvantages of resulting unpredictability, uncertainty and impossibility of arriving at fair and consistent decisions are great. 4 Settlement Commission (Income Tax & Wealth Tax), Additional Bench, Kolkata made very extraordinary order on 30th December, 2014 to following effect: We accordingly reiterate that interest under Section 234B is to be charged upto date of order under section 245D(1) as held in case of Brij Lal. Interest is also to be charged on income determined by Commission it its order under Section 245D(4) of Income Tax Act, 1961 in confirmity with Special Bench s order dated 12.11.2014 Therefore, order of Special Bench of Commission dated 12th November, 2014 and that of additional Bench, Kolkata dated 30th December, 2014 are quashed and set aside. Settlement Commission (Income Tax & Wealth Tax), Additional Bench, Kolkata is directed to pass appropriate order on basis of this order following Brij Lal reported in (2010) 328 ITR 477 (SC) within six weeks of communication of this order. No affidavits were invited as all records of case were before me. allegations contained in petition are deemed to be admitted. This writ application is allowed to above extent by above order. Certified photocopy of this order, if applied for, be supplied to parties subject to compliance with all requisite formalities. (I. P. MUKERJI, J.) Pkd./Ag A.R.[C.R.] G. M. Foods & Another v. Income-tax & Wealth-tax Settlement Commissioner