Vijayan Automobiles v. The Income-tax Settlement Commission, Additional Bench, Chennai / The Union of India / The Commissioner of Income-tax, Tiruchy / Deputy Commissioner of Income-tax, Circle I, Virdhachalam
[Citation -2017-LL-0726-29]

Citation 2017-LL-0726-29
Appellant Name Vijayan Automobiles
Respondent Name The Income-tax Settlement Commission, Additional Bench, Chennai / The Union of India / The Commissioner of Income-tax, Tiruchy / Deputy Commissioner of Income-tax, Circle I, Virdhachalam
Court HIGH COURT OF MADRAS
Relevant Act Income-tax
Date of Order 26/07/2017
Judgment View Judgment
Keyword Tags settlement application • settlement commission • mistake apparent • legal principle • rectification of error • levy of interest • terminal date • right of review
Bot Summary: Section 245-I of the Act states that any order of the Commission passed under Section 245 shall be conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwise provided in that Chapter, be reopened in any proceeding under the Act or under any other law for the time being in force. Sub section of Section 245(F) which states that Settlement Commission shall have all powers which are vested in Income Tax Authority under the Act cannot be read in isolation but it should be read in tandem with Section 245(I) and if it is done, then it is to be held that there is no power of review conferred on the Commission to reopen the proceedings. The Hon'ble Division Bench of the Andhra Pradesh High Court after taking into consideration the decision of the Hon'ble Supreme Court in Brij Lal, held that the order passed by the Settlement Commission rectifying its earlier order cannot be sustained and must perish. In the said case, rectification was sought for by the commission on the ground that the order passed by the Commission was contrary to the Board's circular. One more observation that is required to be made in the instant case is that the Revenue while rectification/recalling of the order passed by the Commission, referred to a decision of the Hon'ble Supreme Court in the case of Hindustan Bulk Carriers and Damani Bros, with respect to the terminal date for charging of interest under Section 234B. Admittedly, these decisions were rendered by the Hon'ble Supreme Court much after the final order was passed by the Commission under Section 245D(4). The orders dated 19.1.2005, 13.12.2004 and 19.1.2005 and order dated 14.7.2005, 4.2.2005, insofar as it relates to the computation of terminal date for charging the interest under Section 234B alone and the order passed by the Settlement Commission dated 8.8.2007 are quashed. After the above order was dictated, the 5 learned Standing Counsel for the respondent Department submitted that if the order passed by the third respondent is quashed, then it would amount to setting aside the rate of interest as ordered by the Commission.


IN HIGH COURT OF JUDICATURE AT MADRAS DATED : 26.07.2017 CORAM HONOURABLE Mr.JUSTICE T.S.SIVAGNANAM WP.No.21793 of 2004 and WMP.Nos.26342 to 26344 of 2004 M/s.Vijayan Automobiles, No.707, Junction Road, Virdhachalam. .. Petitioner Vs 1.The Income Tax Settlement Commission, Additional Bench, 488-489, Anna Salai, Chennai-600 035. 2.The Union of India rep. by Chairman, Central Board of Direct Taxes, North Block, New Delhi. 3.The Commissioner of Income Tax, Tiruchy Income Tax Office, No.4, Williams Road, Cantonment, Tiruchirapalli 620 001. 4.Deputy Commissioner of Income Tax, Circle I, Virdhachalam. .. Respondents http://www.judis.nic.in 2 Prayer: Writ Petition filed under Article 226 of Constitution of India praying for issuance of Writ of Certiorari, calling for records of first respondent Income Tax Settlement Commission, Additional Bench, Chennai in its file Settlement Application No.21/V/150/95-IT for assessment years 1991-92 to 1994-95 quash impugned order dated 24.02.2004. For Petitioner : Mr.R.Kumar For Respondents : Mr.A.P.Srinivas Senior Panel Counsel ORDER Heard Mr.R.Kumar, learned counsel appearing for petitioner and Mr.A.P.Srinivas, learned senior panel counsel appearing for respondents. 2. petitioner has filed writ petition challenging order passed by Income Tax Settlement Commission, Additional Bench, Chennai under Section 245F[I] of Income Tax Act, 1961. 3. counsel on either side submitted that issue involved in writ petition is squarely covered by decision of this Court in case of R.Vijayalakshmi Vs Income Tax Settlement Commission and http://www.judis.nic.in Others reported in [2016]73 taxmann.com 367 [Madras], wherein it has 3 been held as follows : 7. After hearing learned counsel for parties and perusing materials placed on record, first issue to be answered is with regard to power of Commission to reopen its proceedings. Section 245-I of Act states that any order of Commission passed under Section 245 shall be conclusive as to matters stated therein and no matter covered by such order shall, save as otherwise provided in that Chapter, be reopened in any proceeding under Act or under any other law for time being in force. said provision does not confer power of review on commission. It is settled legal position that power of review is to be specifically conferred on authority by statute and power of review is not inherent with authority. However, when statute does not provide power of review with authority and if it is done, it has to be termed as wholly without jurisdiction. Sub section (1) of Section 245(F) which states that Settlement Commission shall have all powers which are vested in Income Tax Authority under Act cannot be read in isolation but it should be read in tandem with Section 245(I) and if it is done, then it is to be held that there is no power of review conferred on Commission to reopen proceedings. This position held field till amendment was inserted under Section 6(b) of Section 245D by Finance Act 2011 with effect from 1.6.2011. Even said provision is not power of review. But phraseology used by legislation is rectification and such rectification can be done on any mistake apparent from record. Therefore, such power exercisable under sub Section 6D of Section 245D can be exercised only to rectify mistake and such mistake should be apparent from record. Thus, even as per amendment made by Finance Act, 2011, power of review is not conferred on Settlement Commission. 8. In case of Smt.U.Narayanamma, Writ Petitions were filed challenging orders passed by Settlement Commission on ground that Commission http://www.judis.nic.in has no power to rectify its earlier order even under Section 4 245D of Income Tax Act, 1961. Hon'ble Division Bench of Andhra Pradesh High Court after taking into consideration decision of Hon'ble Supreme Court in Brij Lal, held that order passed by Settlement Commission rectifying its earlier order cannot be sustained and must perish. In said case, rectification was sought for by commission on ground that order passed by Commission was contrary to Board's circular. Court held that even otherwise, it is error within jurisdiction of Commission and it was not error which went to root of its jurisdiction and held that if at all revenue had to question same, it should be by writ of certiorari. said decision squarely applies to facts of present case. 9. One more observation that is required to be made in instant case is that Revenue while rectification/recalling of order passed by Commission, referred to decision of Hon'ble Supreme Court in case of Hindustan Bulk Carriers and Damani Bros, with respect to terminal date for charging of interest under Section 234B. Admittedly, these decisions were rendered by Hon'ble Supreme Court much after final order was passed by Commission under Section 245D(4). 10. Rudimentary legal principle is that subsequent development of law cannot be ground to exercise review jurisdiction and that cannot be taken into consideration as error apparent on face of record. Hence, on that ground also, Department should be non suited. Hence for all above, order of Settlement Commission is held to be unsustainable and it is accordingly quashed. Consequently, orders dated 19.1.2005, 13.12.2004 and 19.1.2005 and order dated 14.7.2005, 4.2.2005, insofar as it relates to computation of terminal date for charging interest under Section 234B alone and order passed by Settlement Commission dated 8.8.2007 are quashed. http://www.judis.nic.in 11. After above order was dictated, 5 learned Standing Counsel for respondent Department submitted that if order passed by third respondent is quashed, then it would amount to setting aside rate of interest as ordered by Commission. Revenue need not have any apprehension in this regard and this Court has held that order passed by Commission dated 16.7.1998,15.10.1998 and 16.7.1998 under Section 245D(4) has become final and Department will be entitled to interest only as ordered by commission. 4. Thus, following above decision, writ petition is allowed and impugned order is quashed, insofar as it relates to computation of terminal date for charging interest under Section 234B of Income Tax Act, 1961 alone and accordingly, impugned order dated 24.02.2004 passed by Settlement Commissioner in No.21/V/150/95-IT is quashed. No costs. Consequently, connected Miscellaneous Petitions are also closed. 26.07.2017 kak/sli Index : Yes/No Internet : Yes/No http://www.judis.nic.in T.S.SIVAGNANAM, J. 6 kak/sli To 1.The Income Tax Settlement Commission, Additional Bench, 488-489, Anna Salai, Chennai-600 035. 2.The Union of India rep. by Chairman, Central Board of Direct Taxes, North Block, New Delhi. 3.The Commissioner of Income Tax, Tiruchy Income Tax Office, No.4, Williams Road, Cantonment, Tiruchirapalli 620 001. 4.Deputy Commissioner of Income Tax, Circle I, Virdhachalam. WP.No.21793 of 2004 and WMP.Nos.26342 to 26344 of 2004 26.07.2017 http://www.judis.nic.in Vijayan Automobiles v. Income-tax Settlement Commission, Additional Bench, Chennai / Union of India / Commissioner of Income-tax, Tiruchy / Deputy Commissioner of Income-tax, Circle I, Virdhachalam
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