K.r.balasubramanian v. The Income Tax Settlement Commission,Additional Bench,488-489, Anna Salai, Chennai-35

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED 12.07.2017 CORAM THE HONOURABLE Mr.JUSTICE T.S.SIVAGNANAM WP.Nos.31324 and 31325 of 2003and WMP.No.38112 of 2003 in WP.No.31325 of 2003 K.R.Balasubramanian .. Petitioner in WP.31324/2003Malathy Prabhakaran .. Petitioner in WP.31325/2003 Vs 1.The Income Tax Settlement Commission,Additional Bench,488-489, Anna Salai, Chennai-35. 2.The Union of India rep. byThe Chairman,Central Board of Direct Taxes,North Block, New Delhi. 3.The Commissioner of Income Tax, Chennai IV, 121, Nungambakkam High Road,Chennai-34. 4.The Deputy Commissioner of Income Tax, Circle I,121, Nungambakkam High Road,Chennai-34. .. Respondents in both WPs Prayer in W.P.No.31324 of 2003 : Writ Petition filed underArticle 226 of the Constitution of India praying for issuance ofWrit of Certiorari to call for the records of the 1[st] respondentIncome Tax Settlement Commission, Additional Bench, Chennai inits file settlement application No.21/111/37/93-IT and quash theimpugned order dated 21.03.2003. Prayer in W.P.No.31325 of 2003 : Writ Petition filed underArticle 226 of the Constitution of India praying for issuance ofWrit of Certiorari to call for the records of the 1[st] respondentIncome Tax Settlement Commission, Additional Bench, Chennai inits file settlement application No.21/111/48/93-IT and quash theimpugned order dated 21.03.2003. https://hcservices.ecourts.gov.in/hcservices/ For Respondents : Ms.Hema Muralikrishnan Senior Panel Counsel C O M M O N O R D E R Heard Mr.R.Kumar for Mr.T.N.Seetharaman, learned counselappearing for the petitioner and Ms.Hema Muralikrishnan,learned Senior Panel Counsel appearing for the respondents. 2. The petitioners have filed these writ petitionschallenging the order passed by the Income Tax SettlementCommission, Additional Bench, Chennai under Section 245F[I] ofthe Income Tax Act, 1961. 3. The counsel on either side submitted that the issueinvolved in these writ petitions are squarely covered by thedecision of this Court in the case of R.Vijayalakshmi Vs IncomeTax Settlement Commission and Others reported in [2016]73taxmann.com 367 [Madras], wherein it has been held as follows :“7. After hearing the learned counsel for theparties and perusing the materials placed on record,the first issue to be answered is with regard to thepower of the Commission to reopen its proceedings.Section 245-I of the Act states that any order of theCommission passed under Section 245 shall beconclusive as to the matters stated therein and nomatter covered by such order shall, save as otherwiseprovided in that Chapter, be reopened in anyproceeding under the Act or under any other law forthe time being in force. The said provision does notconfer the power of review on the commission. It issettled legal position that power of review is to bespecifically conferred on the authority by the statuteand power of review is not inherent with theauthority. However, when the statute does not providepower of review with the authority and if it is done,it has to be termed as wholly without jurisdiction.Sub section (1) of Section 245(F) which states thatSettlement Commission shall have all powers which arevested in Income Tax Authority under the Act cannot beread in isolation but it should be read in tandem withSection 245(I) and if it is done, then it is to beheld that there is no power of review conferred on theCommission to reopen the proceedings. This positionheld the field till an amendment was inserted underSection 6(b) of Section 245D by Finance Act 2011 witheffect from 1.6.2011. Even the said provision is not a power of review. But the phraseology used by thelegislation is “rectification” and such rectificationcan be done on any mistake apparent from the record.Therefore, such power exercisable under sub Section 6Dof Section 245D can be exercised only to rectify amistake and such mistake should be apparent from therecord. Thus, even as per the amendment made byFinance Act, 2011, power of review is not conferred onthe Settlement Commission. 8. In the case of Smt.U.Narayanamma, WritPetitions were filed challenging the orders passed bythe Settlement Commission on the ground that theCommission has no power to rectify its earlier ordereven under Section 245D of the Income Tax Act, 1961.The Hon'ble Division Bench of the Andhra Pradesh HighCourt after taking into consideration the decision ofthe Hon'ble Supreme Court in Brij Lal, held that theorder passed by the Settlement Commission rectifyingits earlier order cannot be sustained and must perish.In the said case, rectification was sought for by thecommission on the ground that the order passed by theCommission was contrary to the Board's circular. TheCourt held that even otherwise, it is an error withinthe jurisdiction of the Commission and it was not anerror which went to the root of its jurisdiction andheld that if at all revenue had to question the same,it should be by a writ of certiorari. The saiddecision squarely applies to the facts of the presentcase. 9. One more observation that is required to bemade in the instant case is that the Revenue whilerectification/recalling of the order passed by theCommission, referred to a decision of the Hon'bleSupreme Court in the case of Hindustan Bulk Carriersand Damani Bros, with respect to the terminal date forcharging of interest under Section 234B. Admittedly,these decisions were rendered by the Hon'ble SupremeCourt much after the final order was passed by theCommission under Section 245D(4). 10. Rudimentary legal principle is that subsequentdevelopment of law cannot be a ground to exercisereview jurisdiction and that cannot be taken intoconsideration as an error apparent on the face of therecord. Hence, on that ground also, the Departmentshould be non suited. Hence for all the above, orderof the Settlement Commission is held to beunsustainable and it is accordingly quashed.Consequently, 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 terminaldate for charging the interest under Section 234Balone and the order passed by the SettlementCommission dated 8.8.2007 are quashed. 11. After the above order was dictated, thelearned Standing Counsel for the respondent Departmentsubmitted that if the order passed by the thirdrespondent is quashed, then it would amount to settingaside the rate of interest as ordered by theCommission. The Revenue need not have any apprehensionin this regard and this Court has held that the orderpassed by the Commission dated 16.7.1998,15.10.1998and 16.7.1998 under Section 245D(4) has become finaland the Department will be entitled to interest onlyas ordered by the commission.” 4. Thus, following the above decision, these writ petitionsare allowed and the impugned orders are quashed, insofar as itrelates to computation of terminal date for charging theinterest under Section 234B of the Income Tax Act, 1961 aloneand accordingly, the impugned orders dated 21.03.2003 passed bythe Settlement Commissioner in No.21/111/37/93-IT andNo.21/111/48/93-IT are quashed. No costs. Consequently,connected Miscellaneous Petition is closed. Sd/- Asst.Registrar (CS VIII) /true copy/Sub Asst. Registrar To 1.The Income Tax Settlement Commission, Additional Bench, 488-489, Anna Salai, Chennai-35. Additional Bench, 488-489, Anna Salai, Chennai-35. 4. Thus, following the above decision, these writ petitionsare allowed and the impugned orders are quashed, insofar as itrelates to computation of terminal date for charging theinterest under Section 234B of the Income Tax Act, 1961 aloneand accordingly, the impugned orders dated 21.03.2003 passed bythe Settlement Commissioner in No.21/111/37/93-IT andNo.21/111/48/93-IT are quashed. No costs. Consequently,connected Miscellaneous Petition is closed. Sd/- Asst.Registrar (CS VIII) /true copy/Sub Asst. Registrar To 1.The Income Tax Settlement Commission, Additional Bench, 488-489, Anna Salai, Chennai-35. Additional Bench, 488-489, Anna Salai, Chennai-35. 2.The Union of India rep. by The Chairman, Central Board of Direct Taxes, North Block, New Delhi. The Chairman, Central Board of Direct Taxes, North Block, New Delhi. 3.The Commissioner of Income Tax, Chennai IV, 121, Nungambakkam High Road, Chennai-34. 121, Nungambakkam High Road, Chennai-34. 4.The Deputy Commissioner of Income Tax, Circle I, 121, Nungambakkam High Road, Chennai-34. +2cc to MR.T.N.Seetharaman, Advocate in sr.no.49146,49145 +1cc to M/s.Hemamuralikrishnan,Advocate in sr.no.49154 WP.Nos.31324 and 31325 of 2003and WMP.No.38112 of 2003in WP.No.31325 of 2003 SS(CO)NR 27/07/2017