Adv. Sri.sajith Kumar v. For R2

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.BALAKRISHNAN NAIR FRIDAY, THE 19TH SEPTEMBER 2008 / 28TH BHADRA 1930 WP(C).No. 36138 of 2004(B) --------------------------------------- PETITIONER: ------------------- THE COMMISSIONER OF INCOME TAX, COCHIN. BY ADV. SRI.P.K. RAVEENDRANATHA MENON, SR.COUNSEL,GOI (TAXES), ADV. SRI.GEORGE K. GEORGE, SC FOR IT. RESPONDENTS: ----------------------- 1. SETTLEMENT COMMISSION (IT & WT), ADDITIONAL BENCH, 488-489, ANNASALAI, CHENNAI-600 035. 2. SHRI.K.A.DAVIS, VANITHA JEWELLERY, BROADWAY, ERNAKULAM. ADV. SRI.K.R.SUDHAKARAN PILLAI FOR R2, ADV. SRI.SAJITH KUMAR V. FOR R2. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 19/09/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C). NO.36138/2004-B: APPENDIX PETITIONERS' EXHIBITS: EXT.P.1: COPY OF THE ORDER DTD. 21/07/1995 OF THE SETTLEMENT COMMISSION FORTHE ASST. YEAR 1992-93. EXT.P.1.A: COPY OF THE ORDER OF THE SETTLEMENT COMMISSION DTD. 08/05/1997. EXT.P.1.B: COPY OF THE ORDER OF THE SETTLEMENT COMMISSION DTD. 29/08/2000. EXT.P.2: COPY OF THE MISC. PETITION FILED ON 12/03/2002. EXT.P.2.A: COPY OF THE MISC. PETITION FILED ON 02/07/2002. EXT.P.3: COPY OF THE ORDER DTD. 26/03/2004 OF THE SETTLEMENT COMMISSION. RESPONDENTS' EXHIBITS: NIL. //TRUE COPY// P.S. TO JUDGE. prv. K. BALAKRISHNAN NAIR, J. ---------------------------------------- W.P.(C) No.36138 OF 2004 ---------------------------------------- Dated this the 19[th ]day of September, 2008 J U D G M E N T ~~~~~~~~~~~ The Commissioner of Income Tax challenges Ext.P3 orderof the 1[st] respondent, Settlement Commission(IT & WT), in thiswrit petition. It is an order rejecting Exts.P2 and P2(A)applications filed by the petitioner for rectification of certainmistakes in Ext.P1(A) order. 2.The petitioner is aggrieved by paragraphs 7.1 and 7.2of Ext.P1(A). The said portions of Ext.P1(A) are quoted belowfor convenient reference. “7.1Regarding Section 234A Interest: Sincethere was no delay in the filing of the IT return for theassessment years 1991-92, 1994-95 and 1995-96, nointerest u/s 234A would be chargeable for theseassessment years. For the assessment year 1992-93,we hold that no interest u/s 234A is chargeable inrespect of the period of delay of 4 months in the filingof the Income Tax return, since there was areasonable cause for this delay as the applicant hadto face the action u/s 132 on 5.2.1992. However, forthe assessment year 1993-94, the interest would becharged for the period of delay of 3 months in thefiling of the IT return on 21.7.1994, as against the duedate of 31.10.1993. 7.2The interest u/s 234B shall be charged upto thedate of the Section 143(3) order for the assessmentyear 1991-92 and upto the date of the order u/s 143(1)(a) for the assessment years 1992-93 to 1995-96 in thelight of the Special Bench decision of the SettlementCommission, Bombay in the case ofGuljajEngineering Construction Co. & Others[215/ITR 1(AT)].” 3.Aggrieved by the waiver of interest allowed bySettlement Commission under Sections 234A and 234B of theIncome Tax Act, The petitioner preferred Ext.P2 petition. It waspointed out that the waiver granted was in violation of the lawlaid down by the Constitution Bench of the Apex Court inCommissioner of Income Tax v. Anjum M.H.Ghaswala andothers[252 ITR(1)] dated 18.10.2001. The said application wasconsidered and rejected by Ext.P3 by the 1[st] respondent in thefollowing manner. 3.Aggrieved by the waiver of interest allowed bySettlement Commission under Sections 234A and 234B of theIncome Tax Act, The petitioner preferred Ext.P2 petition. It waspointed out that the waiver granted was in violation of the lawlaid down by the Constitution Bench of the Apex Court inCommissioner of Income Tax v. Anjum M.H.Ghaswala andothers[252 ITR(1)] dated 18.10.2001. The said application wasconsidered and rejected by Ext.P3 by the 1[st] respondent in thefollowing manner. “10.2. As regards the first Miscellaneous Petitionfiled by the Department on 18.3.2002 relying on thedecision of Hon'ble Supreme Court CIT v. AnjumM.H.Ghaswala and Others [2001] 252 ITR 1 (SC) itis found that the matter is squarely covered by thedecision of Hon'ble Calcutta High Court in the caseof Netai Chandra Rarhi & Co.v. ITSC [2003] 263ITR 186 (Cal). The relevant extracts have alreadybeen quoted above in para 7.1. Respectfully followingthe decision of the Hon'ble Calcutta High Court it isheld that as on the date of application the matterregarding the ratio of decision in the case of CIT v. Anjum M.H.Ghaswala and Others was debatable andtherefore, rectification was not possible as on thedate of filing of Miscellaneous Petition by theDepartment.” 4.The petitioner attacks the above decision contendingthat when there is a direct decision of the Constitution Bench ofthe Apex Court, the same can never be treated as a debatablepoint by Inferior courts and Tribunals, even assuming a Bench oftwo Judges of the Hon'ble Supreme Court have raised doubtsregarding the correctness of that decision. 5.Ext.P2(A) application was filed to correct the error inExt.P1(A) regarding the terminal date for charging interestunder Section 234B of the Income Tax Act. The SettlementCommission ordered to charge interest for the respectiveassessment years upto the date of order of assessment or thedate of intimation of that order, as the case may be. But, in viewof the decision of the Apex Court, the terminal date should bethe date of the decision of the Settlement Commission. The saidapplication was considered and rejected by the SettlementCommission as per Ext.P3 order in the following manner. “11.1 As regards the second Miscellaneous Petitionfiled by the Department on 3.7.2003 relying on thedecision of the Hon'ble Supreme Court in the case ofCIT v. Hindustan Bulk Carriers [2003] 259 ITR 449(SC) it is held that the decision of the Hon'bleSupreme Court was pronounced much after theexpiry of limitation period and therefore, the samecannot be pressed into service for rectifying amistake which already got time barred on an earlierdate. 11.2The second Miscellaneous Petition filed by theDepartment on 3.7.2003 is also dismissed.” 6.The petitioner would submit that the SettlementCommission has got inherent power to correct any mistake byvirtue of Section 245F of the Act and therefore, the Commissionshould have allowed Ext.P2(A) application. 7.The 2[nd] respondent has filed a counter affidavitsupporting the impugned order and the petitioner has filed areply affidavit. 8.I heard Mr.P.K.R.Menon, learned Senior Counsel forthe Government of India (Taxes), and Mr.K.R.Sudhakaran Pillai,learned Counsel who appeared for the 2[nd] respondent. W.P.(C) No.36138/2004 11.2The second Miscellaneous Petition filed by theDepartment on 3.7.2003 is also dismissed.” 6.The petitioner would submit that the SettlementCommission has got inherent power to correct any mistake byvirtue of Section 245F of the Act and therefore, the Commissionshould have allowed Ext.P2(A) application. 7.The 2[nd] respondent has filed a counter affidavitsupporting the impugned order and the petitioner has filed areply affidavit. 8.I heard Mr.P.K.R.Menon, learned Senior Counsel forthe Government of India (Taxes), and Mr.K.R.Sudhakaran Pillai,learned Counsel who appeared for the 2[nd] respondent. W.P.(C) No.36138/2004 9.It is not seriously disputed that when an applicationfor rectification is filed, within the permitted time limit, based ona subsequent decision of the Apex Court, directly on the point ,normally, it has to be entertained. But, in this case, theSettlement Commission has rejected Ext.P2 on the ground thatthe issue raised is a debatable issue. But, I feel that when thereis a decision of the Apex Court, no inferior court or Tribunal cansay that the issue is a debatable issue for the reason that aBench of two judges of the Apex Court has doubted thecorrectness of the decision of the Constitution Bench. Evenassuming there is a final judgment of a two Judge Bench of theApex Court, the same has to be ignored and inferior courts andTribunals are bound to follow the decision of the ConstitutionBench in view of the law relating to precedents and also article141 of the Constitution of India. So, the rejection of Ext.P2application is unjustified. Accordingly, Ext.P3 order to theextent it rejects Ext.P2 is set aside and the said application isremitted to the 1[st] respondent for disposal, in accordance withlaw, as expeditiously as possible. W.P.(C) No.36138/2004 10.Ext.P2(A) application has been rejected on the groundof limitation. Though the learned senior counsel appearing forthe writ petitioner raised several points to review that decision, Ifeel that the view taken by the Settlement Commission is aplausible view and this Court, while exercising its jurisdictionunder Article 226 of the Constitution of India, is not justified ininterfering with it. Normally, power to review or recall an ordercan be exercised, if only, it is expressively conferred by thestatute. In limited circumstances, to correct patent mistakesinherent jurisdiction is also conceded to Courts and Tribunals.But, I think on the facts of the case, the point involved is not one,where this Court should compel the Settlement Commission toentertain a time barred petition. Normally, a petition barred bytime limit has to be rejected. Such an order cannot be describedas an order which is ultravires or one passed withoutjurisdiction. In the result, the challenge against the rejection ofExt.P2(A) is repelled. The writ petition is disposed of as above. (K.BALAKRISHNAN NAIR, JUDGE)