W.P No. 432 of 2012
IN HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
Peerless General Finance &
Investment Company Limited
Income Tax Settlement Commission,
Additional Bench, Kolkata and Others
For Petitioner : Mr. S. Bagchi, Sr. Advocate
Mr. Gopal Ram Sharma, Advocate
For Respondents : Mr. R.N. Bandyopadhyay, Advocate
Ms. S. Chatterjee, Advocate
Hearing concluded on : September 9, 2015
Judgment on : September 23, 2015
DEBANGSU BASAK, J.:-
writ petitioners have challenged Order dated March 25,
2010 passed by Settlement Commission under Section 245F(1)
read with Section 154 of Income Tax Act, 1961.
By impugned order Settlement Commission has refused
to rectify computation of interest under Sections 234B and 234C
pursuant to its order of settlement of income under Section 245D(4)
of Income Tax Act, 1961 dated February 13, 2009. By the
impugned order Settlement Commission had also refused to waive
interest under Section 220(2) of Income Tax Act, 1961.
It is contended on behalf of writ petitioners that, Chapter
XIXA of Income Tax Act, 1961 is self-contained code. Once an
assessee invokes provisions of settlement under Income Tax
Act, 1961 and pays enhanced income tax consequent upon the
revised income tax return, date when Settlement Commission
admits such request of assessee, such date should be considered
as terminus for calculation of interest. Sections 234B and
234C would not apply for period subsequent to order under
Section 245D(1) of Act of 1961. It is contended that, law on
this subject is settled by Supreme Court in (2010) 328 ITR 477
(Brij Lal v. Commissioner of Income-tax). This Court has also
followed Brij Lal (supra) in judgment and order dated February
2, 2015 delivered in W.P. No. 44 of 2015 (G.M. Foods & Another v.
Income Tax & Wealth Tax Settlement Commissioner).
So far as Section 220 (2) of Income Tax Act, 1961 is
concerned it is submitted that, for such provision to apply there has
to be notice of demand under Section 156 and assessee not
paying within time specified in such notice of demand for the
income tax authorities to charge interest under Section 220(2) of the
Act of 1961. In facts scenario according to writ petitioners, the
provisions of Section 220(2) of Income Tax Act, 1961 is not
respondent authorities are represented.
first writ petitioner had filed settlement application under
Section 245C(1) on March 20, 2008 in respect of four assessment
years from 2004 till 2008.
By Order dated April 2, 2008 passed under Section 245D(1)
the settlement case was admitted by Settlement Commission. By
an Order dated February 13, 2009 Settlement Commission had
settled total income of first writ petitioner for four
assessment years concerned. This order was forwarded to Assessing
Officer with direction to compute tax/interest/penalty and
communicate same to assessee. Assessing Officer by an
Order dated April 29, 2009 had passed four separate orders. By such
orders Assessing Officer had imposed interests under Sections
234B and 234C as well as under Section 220(2) apart from interest
under Section 244A.
first writ petitioner had filed miscellaneous application on
July 15, 2009 claiming that mistakes in computation of interest
under Section 234B and 234C as well as under Section 220(2) had
crept in Order dated April 29, 2009.
By Order dated March 25, 2010 Settlement Commission
had disposed of miscellaneous application of first writ
petitioner by holding that terminus for interest was date of the
final order of settlement under Section 245D(4). Settlement
Commission thereby had declined to interfere with order of the
Assessing Officer. Assessing Officer thereafter had recomputed
interest by Order dated June 30, 2010.
first writ petitioner had filed appeal against order of
recomputation which had since been withdrawn.
Three issues arise for consideration in present petition. They
(1) What is terminus for calculating interest when settlement
proposal is admitted?
(2) Does Sections 234B and 234C apply for period subsequent
to Order under Section 245D(1) of Act of 1961?
(3) Is Section 220(2) attracted in facts of case?
second issue is corollary to first issue. Both are taken
up together for sake of convenience.
two issues have received consideration by Supreme
Court in Brij Lal (supra). date of judgment of Brij Lal
(supra) is October 21, 2010 while date of last order of the
Settlement Commission is March 25, 2010. Consequently, Settlement
Commission did not have occasion to consider Brij Lal (supra).
In Brij Lal (supra) it has been held that, proceeding before the
Settlement Commission is similar to arbitration proceedings. It
begins with filing of application of settlement. When the
Settlement Commission accepts voluntary disclosure made by the
application for settlement, Section 234B(2) steps in. As assessee is
liable to pay advance tax, he commits default in payment to extent
of undisclosed income. When he offers to pay additional income
tax then interest has to be calculated in accordance with Sections
207, 208 and 234B(2) up to date on which such tax is paid. The
legislature has not contemplated levy of interest for period
between order under Section 245D(1) and Section 245D(4). The
terminal point of interest would be date of order under Section
245D(1) admitting case and not date of settlement order under
In G.M. Foods & Another (supra) it has been held that, the
decision in Brij Lal (supra) regarding levy of interest under Sections
234B and 245D(1) as well as terminal point for levy of such
interest were substantially in issue before it and, therefore, such
decision of Supreme Court is not obiter dicta. order passed by
the Settlement Commission charging interest under Section 234B up
to date of order under Section 245D(4) was set aside.
In view of Brij Lal (supra) first issue is answered by holding
that date of terminus for calculating interest is date of order of
admission under Section 245D(1) and not Section 245D(4). No
interest is payable for period between date of order under
Section 245D(1) and order under Section 245D(4).
second issue, again in view of Brij Lal (supra), has to be
answered in negative.
In present case, Settlement Commission has refused to
rectify mistake of charging interest under Sections 234A and
234B up to date of order under Section 245D(4). order
impugned to such extent therefore is required to be set aside and is
hereby set aside.
Section 220(2) of Act of 1961 is not attracted in facts
scenario of instant case as notice of demand under Section
156 of Act of 1961 has not been served upon assessee. The
third issue is answered in negative and in favour of writ
petitioners. That portion of order impugned is also required to be
set aside on such ground and is hereby set aside.
Consequently, entirety of order impugned is set aside.
The Settlement Commission is directed to hear and decide the
application for rectification of mistakes afresh and to dispose of
the same in accordance with observations made herein and in
terms of Brij Lal (supra).
W.P. No. 432 of 2012 is allowed. No order as to costs.
[DEBANGSU BASAK, J.]
Peerless General Finance & Investment Company Limited v. Income Tax Settlement Commission, Additional Bench, Kolkata and Other