Kakadia Builders Pvt. Ltd. & Anr. v. Income-tax Officer Ward 1(3) & Anr
[Citation -2019-LL-0305-16]

Citation 2019-LL-0305-16
Appellant Name Kakadia Builders Pvt. Ltd. & Anr.
Respondent Name Income-tax Officer Ward 1(3) & Anr.
Court SUPREME COURT
Relevant Act Income-tax
Date of Order 05/03/2019
Judgment View Judgment
Keyword Tags search and seizure operation • rectification application • settlement commission • waiver of interest • interest payable
Bot Summary: The High Court, by order dated 03.03.2014 allowed the petitions(SCAs) and set aside the order dated 11.10.2002 passed by the Settlement Commission and granted liberty to the Revenue to follow the remedies as may be available to them against the order passed by the Settlement Commission dated 11.08.2000. The High Court though in 4 concluding paragraph observed that the petitions are disposed of yet in substance allowed the petitions(SCAs) and modified the order dated 11.08.2000 of the Settlement Commission by passing the following directions in paragraph 13 which reads as under: Under the circumstances, we direct modification of the order of Settlement Commission dated 11.08.2000 by reversing the waiver of interest in terms of Settlement Commission s directions contained in its order dated 11.10.2002. So far as the decision rendered in Ghaswala is concerned, the question involved therein was whether the Settlement Commission constituted under Section 245B of the Act has the jurisdiction to reduce or waive the interest chargeable under Sections 234A, 234B and 234C of the Act while passing the order of settlement under Section 245D of the Act. So far as the decision rendered in Brijlal is concerned, this Court examined the following three questions: Whether Section 234 B applies to proceedings of the Settlement Commission under Chapter XIX A of the said Act If answer to the above question is in the affirmative, what is the terminal point for levy of such interest whether such interest should be computed up to the date of the order under Section 245 D(1) or up to the date of the order of the Commission under Section 245 D(4) Whether the Settlement Commission could reopen its concluded proceedings by invoking Section 154 of the said Act so as to levy interest under Section 234 B, though it was not so done in the original proceedings 19. Consequent upon Conclusion, the terminal point for the levy of interest under Section 234 B would be up to the date of the 8 order under Section 245 D(1) and not up to the date of the order of settlement under Section 245 D(4). The Settlement Commission cannot reopen its concluded proceedings by invoking Section 154 of the Act so as to levy interest under Section 234 B, particularly, in view of Section 245 I. 20. In a situation like the one arising in the case, the High Court instead of going into the merits of the issue, should have set aside the order dated 11.08.2000 passed by the Settlement Commission and remanded the case to the Settlement Commission for deciding the issue relating to waiver of interest payable under Sections 234A , 234B, and 234C of the Act afresh keeping in view the scope and the extent of powers of the Settlement Commissioner in relation to waiver of interest as laid down in the said two decisions. The impugned order passed by the High Court and the order dated 11.08.2000 passed by the Settlement Commission in Settlement Application Nos.10/S/095/95 96/IT 10/S/029/95 96/IT are set aside.


REPORTABLE IN SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL Nos.2491 2492 OF 2019 (Arising out of S.L.P.(C) Nos.21139 21140 of 2017) Kakadia Builders Pvt. Ltd. & Anr. .Appellant(s) VERSUS Income Tax Officer Ward 1(3) & Anr. .Respondent(s) J U D G M E N T Abhay Manohar Sapre, J. 1. Leave granted. 2. These appeals are directed against final judgment and order dated 28.07.2016 passed by High Court of Gujarat at Ahmedabad in SCA Nos.7814 & 7820 of 2014 whereby High Court Signature Not Verified Digitally signed by disposed of petitions(SCAs) filed by ASHOK RAJ SINGH Date: 2019.03.05 16:47:32 IST Reason: respondents. 1 3. In order to appreciate issue involved in these appeals, it is necessary to set out few relevant facts infra. 4. appellants herein are respondents (assessee) and respondents (Revenue) herein are petitioners in petitions(SCAs) before High Court out of which these appeals arise. 5. appellant in S.L.P. No.21139/2017 is Private Limited Company and appellant in SLP No.21140/2017 is promoter Director of said Company. On 19.01.1994, search and seizure operation was carried out in premises of appellants (assessee) under Income Tax Act, 1961 (hereinafter referred to as Act ). 6. During pendency of assessment proceedings, which were initiated for determination of tax liability as result of search and seizure operation, appellants on 12.03.1996 and 03.09.1996 filed settlement applications before 2 Settlement Commission and offered to settle their tax matter in accordance with procedure provided under Chapter XIXA of Act. 7. On 11.08.2000, Settlement Commission passed order under Section 245D(4) of Act. By said order, Settlement Commission made certain additions and waived interest chargeable under Sections 234A, 234 B and 234C of Act. 8. appellants (assessee) felt aggrieved and filed rectification applications before Settlement Commission on 29.12.2000 for amending its order dated 11.08.2000. Revenue (Commissioner of Income Tax) also felt aggrieved by order dated 11.08.2000 and filed rectification application under Section 154 of Act before Settlement Commission on 26.07.2002. 9. By order dated 11.10.2002, Settlement Commission dismissed applications filed by appellants(assessee) and partly allowed 3 application filed by respondents(Revenue) rectifying its order dated 11.08.2000 insofar as it pertained to waiver of interest, which was granted to appellants (assessee). appellants(assessee) felt aggrieved by order dated 11.10.2002 passed by Settlement Commission and filed two separate petitions (SCA Nos.15097 and 15101 of 2004) in High Court of Gujarat. 10. High Court, by order dated 03.03.2014 allowed petitions(SCAs) and set aside order dated 11.10.2002 passed by Settlement Commission and granted liberty to Revenue to follow remedies as may be available to them against order passed by Settlement Commission dated 11.08.2000. 11. Revenue, therefore, felt aggrieved and filed two petitions (SCA Nos.7814 of 2014 and 7820 of 2014) against order dated 11.08.2000 questioning its legality. High Court though in 4 concluding paragraph observed that petitions are disposed of yet in substance allowed petitions(SCAs) and modified order dated 11.08.2000 of Settlement Commission by passing following directions in paragraph 13 which reads as under: Under circumstances, we direct modification of order of Settlement Commission dated 11.08.2000 by reversing waiver of interest in terms of Settlement Commission s directions contained in its order dated 11.10.2002. In other words, we adopt same directions for modification of Settlement Commissioner s original order dated 11.08.2000. 12. It is against this order, appellants(assessee) felt aggrieved and have filed present appeals by way of special leave in this Court. 13. So, short question which arises for consideration in these appeals, is whether High Court was justified in allowing petitions(SCAs) and thereby was justified in modifying order 5 dated 11.08.2000 passed by Settlement Commission. 14. Heard Mr. R.P. Bhatt, learned senior counsel for appellants and Mr. K. Radhakrishnan, learned senior counsel for respondents. 15. Having heard learned counsel for parties and on perusal of record of case including written submissions filed by parties, we are inclined to allow appeals and remand case to Settlement Commission for deciding matter in question afresh on merits keeping in view observations made infra. 16. At outset, we consider it apposite to mention that issue involved in these appeals is governed by law laid down by decision of two Constitution Benches of this Court. One was rendered on 18.10.2001 in Commissioner of Income Tax, Mumbai vs. Anjum M.H. Ghaswala & Ors., (2002) 1 SCC 633 and other was rendered 6 on 21.10.2010 in Brij Lal & Ors. vs. Commissioner of Income Tax, Jalandhar, (2011) 1 SCC 1. 17. So far as decision rendered in Ghaswala (supra) is concerned, question involved therein was whether Settlement Commission constituted under Section 245B of Act has jurisdiction to reduce or waive interest chargeable under Sections 234A, 234B and 234C of Act while passing order of settlement under Section 245D of Act. After examining scheme of Act in context of powers of Settlement Commission, Justice Santosh Hegde speaking for Bench held as under: 35. For reasons stated above, we hold that Commission in exercise of its power under Sections 245 D(4) and (6) does not have power to reduce or waive interest statutorily payable under Sections 234 A, 234 B and 234 C except to extent of granting relief under circulars issued by Board under Section 119 of Act. 7 18. So far as decision rendered in Brijlal (supra) is concerned, this Court examined following three questions: (I) Whether Section 234 B applies to proceedings of Settlement Commission under Chapter XIX of said Act? (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 245 D(1) or up to date of order of Commission under Section 245 D(4)? (III) Whether Settlement Commission could reopen its concluded proceedings by invoking Section 154 of said Act so as to levy interest under Section 234 B, though it was not so done in original proceedings? 19. After examining these questions, this Court speaking through Justice S.H. Kapadia, then learned CJI, answered questions as under : (1) Sections 234 A, 234 B and 234 C are applicable to proceedings of Settlement Commission under Chapter XIX of Act to extent indicated hereinabove. (2) Consequent upon Conclusion (1), terminal point for levy of interest under Section 234 B would be up to date of 8 order under Section 245 D(1) and not up to date of order of settlement under Section 245 D(4). (3) Settlement Commission cannot reopen its concluded proceedings by invoking Section 154 of Act so as to levy interest under Section 234 B, particularly, in view of Section 245 I. 20. Keeping in view law laid down by this Court in aforementioned two decisions, question arises for consideration in these appeals is whether High Court was justified in allowing petitions(SCAs) filed by Revenue. 21. It is not in dispute that when Settlement Commission passed first order on 11.08.2000 disposing of application of appellants(aseesee), issue with regard to powers of Settlement Commission was not settled by any decision of this Court. These two decisions were rendered after Settlement Commission passed order in this case. Therefore, Settlement Commission had no 9 occasion to examine issue in question in context of law laid down by this Court in these two decisions. However, issue in question was, at that time, pending before High Court in petitions(SCAs). 22. In situation like one arising in case, High Court instead of going into merits of issue, should have set aside order dated 11.08.2000 passed by Settlement Commission and remanded case to Settlement Commission for deciding issue relating to waiver of interest payable under Sections 234A , 234B, and 234C of Act afresh keeping in view scope and extent of powers of Settlement Commissioner in relation to waiver of interest as laid down in said two decisions. 23. High Court, however, committed jurisdictional error when it observed in Para 13 (quoted above) that they (High Court) adopt 10 directions contained in order of Settlement Commission dated 11.10.2002 and then went on to make said directions as part of impugned order in relation to waiver of interest. This approach of High Court is wholly without jurisdiction. 24. High Court failed to see that order dated 11.10.2002 of Settlement Commission was already set aside by High Court itself in first round vide order dated 03.03.2014 passed in S.C.A. Nos. 15097 & 15101 of 2004 in light of law laid down by this Court in Brijlal (supra) wherein it is laid down that Settlement Commission has no power to pass orders under Section 154 (see conclusion III). 25. Since order dated 11.10.2002 of Settlement Commission was already held bad in law on ground that it was passed under Section 154 of Act, same was neither in existence for any purpose and nor it could be relied upon by High 11 Court much less for making it part of their order for issuing writ. 26. In light of what we have held above, we consider it apposite to set aside impugned order and order dated 11.08.2000 passed by Settlement Commission to extent it decided issue in relation to waiver of interest and remand case to Settlement Commission to decide issue relating to waiver of interest payable by assessee (appellants herein) afresh keeping in view law laid down by this Court in Ghaswala (supra) and Brijlal (supra) after affording opportunity to parties concerned. 27. appeals are accordingly allowed. impugned order passed by High Court and order dated 11.08.2000 passed by Settlement Commission in Settlement Application Nos.10/S/095/95 96/IT & 10/S/029/95 96/IT are set aside. 12 28. We, however, make it clear that we have not expressed any opinion on merits of issue while having formed opinion to remand case to Settlement Commission. Settlement Commission will accordingly decide matter uninfluenced by any observations made by this Court. Let matter be decided by Settlement Commission within six months from date of this order. ...................................J. [ABHAY MANOHAR SAPRE] .... ..................................J. [DINESH MAHESHWARI] New Delhi; March 05, 2019. 13 Kakadia Builders Pvt. Ltd. & Anr. v. Income-tax Officer Ward 1(3) & Anr
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