M.r.engineering v. The Income Tax Settlement Commission, Additional Bench, 488-489, Anna Salai, Chennai – 600 035

M.R.Engineering ... Petitioner Vs. 1.The Income Tax Settlement Commission, Additional Bench, 488-489, Anna Salai, Chennai – 600 035. 2.The Union of India, Represented by the Chairman, Central Board of Direct Taxes, North Block, New Delhi.3.The Commissioner of Income Tax VII, Chennai – 600 034.4.The Assistant Commissioner Income Tax, Business Range VI, Chennai – 600 034. ... Respondents Prayer: Writ Petition is filed under Article 226 of theConstitution of India praying for the issuance of Writ ofCertiorari, to call for the records of the first respondentIncome Tax Settlement Commission Additional Bench, Chennai inits File Settlement Application No.21/V/182/93-IT dated05.02.2004 quash the same. For Petitioner : Mr.J.Balachander, Mr.A.Gnana Esther Dorothy and M/s.S.IndumathiFor Respondents: Mr.Prabhu Mukunth Arunkumar for Mrs.Hema Murali Krishnan Senior Standing Counsel O R D E R In this Writ Petition, the petitioner has challenged theimpugned order dated 05.02.2004 passed by the firstrespondent/Settlement Commission under Section 245F(1) read withsection 154 of the Income Tax Act, 1961. https://hcservices.ecourts.gov.in/hcservices/ 2.The petitioner had approached the first respondentsettlement commission on 24.03.1994 for settlement of its casefor the Assessment Years 1984-1985 to 1991-1992(except 1988-1989). Earlier, the first respondent/ Settlement Commission byan order dated 27.02.1998 ordered as follows:7.Consideringtheco-operationextended by the applicant in the completionof the present proceeding, immunity isgranted from prosecution under the I.T.Actand under the relevant provisions of theI.P.C and also from the imposition of anypenalty under the I.T.Act, with referenceto the matters covered by the presentsettlement. However, the immunity sogranted shall be withdrawn, if it issubsequently found that the conditionsmentioned in Sub-section (1A) and/ or Sub-section (2) of Section 245H are satisfied. 3.The said order of the first respondent/SettlementCommission was sought to be rectified at the instance of therespondent and therefore an application was filed under Section154 of the Income Tax Act. The said application forrectification was considered by the first respondent/SettlementCommission and disposed by the impugned order dated 05.02.2014.The operative portion of the impugned order of the firstrespondent/Settlement Commission reads as under:In view of the above, it is herebyordered.(i)thatwaiveru/s234Aispermissible only with reference toA.Y.1989-90. Waiver granted u/s 234A forother assessment years is to bewithdrawn.(ii)that there is no case forwaiver of interest leviable u/s.234B ofthe Act.(iii)that the interest u/s.234Bshall be charged up to the date of orderu/s.245D(4) of the Act.The miscellaneous petitions filedby the Department are allowed. 4.Challenging the impugned order, the learned counsel forthe petitioner submits that the issue is no longer res integraand is squarely covered by the decision of the Hon'ble SupremeCourt in the case of CIT Vs Brijilal [2010] 320 ITR 477 (SCC).Earlier, the Hon'ble Supreme Court in its decision in CIT Vs.Anjum Ghaswala [2001] 252 ITR 1 (SC) held as follows:- https://hcservices.ecourts.gov.in/hcservices/ we hold that the Commission in exerciseof its power under Section 245D(4) and (6)does not have the power to reduce or waiveinterest statutorily payable under Sections234A, 234B and 234C except to the extent ofgranting relief under the circulars issuedby the Board under Section 119 of the Act. 5.He submits that an identical issues came up forconsideration before the Hon'ble Supreme Court in CIT VsHindustan Bulk Carriers [2003] (259) ITR 449 (SC) and in CIT VsDamani Brothers [2003] (259) ITR 475 (SC). Both were renderedon 17.12.2002. In CIT Vs Hindustan Bulk Carriers [2003] (259)ITR 449 (SC) ITR 475 (SC) it was held that https://hcservices.ecourts.gov.in/hcservices/ we hold that the Commission in exerciseof its power under Section 245D(4) and (6)does not have the power to reduce or waiveinterest statutorily payable under Sections234A, 234B and 234C except to the extent ofgranting relief under the circulars issuedby the Board under Section 119 of the Act. 5.He submits that an identical issues came up forconsideration before the Hon'ble Supreme Court in CIT VsHindustan Bulk Carriers [2003] (259) ITR 449 (SC) and in CIT VsDamani Brothers [2003] (259) ITR 475 (SC). Both were renderedon 17.12.2002. In CIT Vs Hindustan Bulk Carriers [2003] (259)ITR 449 (SC) ITR 475 (SC) it was held that The starting point of charginginterest would be the due date of paymentof advance tax or tax assessed anddemanded as applicable to regularassessment proceedings and the end pointthe date of the order of the SettlementCommission. However, in CIT Vs Damani Brothers [2003] (259) ITR 475 (SC) itwas held as follows: ''To put it differently, the interests charged in terms of Sections234A, 234B and 234C become payable on theincome already disclosed in the returnsfiled, together with the income disclosedbefore the Commission. The concernedinterest as aforesaid shall be on theconsolidated amount of income, i.e., bothdisclosed and undisclosed. As indicated above, such interests shall be chargedtill the commission acts in terms ofSection245D.Thereafter,theprescription relating to charging ofinterests etc. becomes operative, afterthe Commission allows the application forsettlement to be proceeded with. One of the issue which is relevant for the present case and wasconsidered by the Hon'ble Supreme Court in CIT Vs Brijilal[2010] 320 ITR 477 (SCC) and was answered as follows:III.Whether the Settlement Commission can reopen its concluded proceedings byhaving recourse to Section 154 of the Actso as to levy interest under Section 234B,it it was not done in the originalproceedings? The Settlement Commission cannotreopen its concluded proceedings byinvoking section 154 of the Act so as tolevey interest under Section 234B,particularly, in view of Section 245-I. 6.The learend counsel for the petitioner further submitsthat to get over the above decision of the Hon'ble SupremeCourt, the parliament also amended section 245D of the IncomeTax Act by inserting sub-clause (6B) vide Finance Act, 2011 witheffect from 01.06.2011 to clothe the Settlement Commission withperverse of rectification within a period of six months fromthe date of its order. 7.The learned counsel for the petitioner further submitsthat when the first order dated 27.02.1998 was passed by theclarification that has governed the field was in terms of thedecision of the larger Bench of the Settlement Commission in thecase of IN Re: Gulraj Engineering case [1995] 215 ITR AT (1)wherein the larger Bench of Settlement Commission also concludedthat it had powers to grant waiver of interest of under sections234A, 234B and 234C. 8.The learend counsel for the petitioner also relied uponthe decision of this Court rendered in the case ofR.Vijayalakshmi Vs Income Tax Settlement Commission in its orderdated 26.07.2016 in W.P.Nos.5553 to 5558 of 2008 [2016] 73taxmann.com 367 (Mad) wherein the decision of the Supreme Courtin Brijlal case was referred and the 2011 amendment. 9.Defending the impugned order passed by the firstrespondent/ Settlement Commission, the learned counsel for theIncome Tax department Mr.Prabhu Muknth Arunkumar submits thatthe writ petition was without any merits and therefore the writpetiton was liable to be dismissed. He said that the firstrespondent/Settlement Commission had correctly exercised thejurisdiction under Section 154 of the Income Tax Act and therebyrectified certain errors on the face of the record by the orderdated 27.02.1998. 9.Defending the impugned order passed by the firstrespondent/ Settlement Commission, the learned counsel for theIncome Tax department Mr.Prabhu Muknth Arunkumar submits thatthe writ petition was without any merits and therefore the writpetiton was liable to be dismissed. He said that the firstrespondent/Settlement Commission had correctly exercised thejurisdiction under Section 154 of the Income Tax Act and therebyrectified certain errors on the face of the record by the orderdated 27.02.1998. 10.The learned counsel for the respondent relied on thedecision of the Divison Bench of this Court in the case ofCommissioner of Income Tax Vs. M.A.Jacob & Company reported in(2020) 119 taxmann.com 232 vide in its order dated 15.09.2020 inW.A.No.456 of 2018. 11.The learned Cousnel for the respondent submits that thedecision of the Hon'ble Division Bench of this court consideredthe decision of the Hon'ble Supreme Court in the case of KakadiaBuilders (P) Ltd Vs. Income Tax Officer Ward 1(3) [2019] 103taxmann.com 53 (SC). https://hcservices.ecourts.gov.in/hcservices/ 12.He further noticed in either the petitioner nor therespondent in the present case have challenged the OriginalOrder passed on 27.02.1998 by the first respondent/SettlementCommission and therefore the impugned order passed by the firstrespondent/Settlement Commission on 05.02.2004 under section254f(1) of the Income Tax Act read with section 154 of the Act,cannot be challenged. 13.I have considered the arguments advanced by the learnedcounsel for the petitioner and the learned counsel for therespondents. 14.The impugned order passed by the first respondentSettlement Commission on 05.02.2004 under Section 245F(1) readwith Section 154 of the Income Tax Act, 1961 seeking to correctthe alleged error apparently on the fact of record in theexercise of power conferred under Section 154 of the Income TaxAct, 1961 is clearly barred in terms of the decision renderredby the Hon'ble Supreme Court in Commissioner of Income TaxVs.Anjum M.H.Ghaswala and Others, (2001) 252 ITR 1 (SC) and CITVs Brijilal [2010] 320 ITR 477 (SCC).15.Asperthefirstdecision,thefirstrespondent/Settlement Commission had no power to reduce or waivethe interest statutorily payable under Sections 234A, 234B and234C of the Income Tax Act, 1961 except to the extent ofgranting relief under the circulars issued by the Board underSection 119 of the Income Tax Act, 1961. 16.The Hon'ble Supreme Court in its Full Bench in Brij Laland Others Vs. Commissioner of Income Tax, (2010) 328 ITR 477(SC) has however answered the issued by holding that theSettlement Commission cannot reopen its concluded proceedings byinvoking Section 154 of the Act so as to levy interest underSection 234B, particularly, in view of the Section 245-I of theIncome Tax Act, 1961. 17.In view of the above, the present writ petition has to beallowed and is hereby allowed. No costs. Consequently,connected Miscellaneous Petitions are closed. //True Copy// jas Sub Assistant Registrar https://hcservices.ecourts.gov.in/hcservices/ To 1.The Income Tax Settlement Commission, Additional Bench, 488-489, Anna Salai, Chennai – 600 035. Additional Bench, 488-489, Anna Salai, Chennai – 600 035. 2. The Chairman, The Union of India, Central Board of Direct Taxes, North Block, New Delhi. 3.The Commissioner of Income Tax VII, Chennai – 600 034. Chennai – 600 034. 4.The Assistant Commissioner Income Tax, Business Range VI,Chennai – 600 034. +1 CC to Mrs.Hema Murali Krishnan,Advocate Senior Standing Counsel SR No.7236 W.P.No.16829 of 2004and W.M.P.Nos.19919 to 19921 of 2004PMK(CO)RG.20.04.2021