M/S. M.a. Jacob's Carpets & Furnishing Company,10 v. Commissioner Of Income Tax – Ivchennai – 600 034

IN THE HIGH COURT OF JUDICATURE AT MADRAS THE HONOURABLE MR. JUSTICE T.S. SIVAGNANAMWP.No.6566 of 2004 1.M/s. M.A. Jacob & Company,No.16, Evening Bazaar,Chennai 600 003. 2.M /s. Flooring & Furnishing Company,No.18, Evening Bazaar,Chennai 600 003. 3.M/s. Jacob's Cleaning Products Company,No.17, Evening Bazaar,Chennai 600 003. 4.M/s. M.A. Jacob's Furnishing Department,No.22, Evening Bazaar,Chennai 600 003. 5.M/s. M.A. Jacob's Carpets & Furnishing Company,10 & 11, Damodharan Street,No.38-A, Cathedral Road,Chennai 600 086. ..Petitioners Vs. 1.Commissioner of Income Tax – IVChennai – 600 034. 2.Income Tax Settlement Commission,640, Anna Salai, Nandanam,Chennai 600 035...Respondents Prayer:Petition under Article 226 of the Constitution of Indiapraying for issue of a Writ of Certiorari to call for therecords relating to the order dated 19.02.2004 passed by the 2[nd]respondent and quash the same. For Petitioners::Mr.Kumarpal R. ChopraFor Respondents::Mr.A.P. Srinivas O R D E R Heard Mr.Kumarpal R.Chopra, learned counsel for thepetitioners and Mr.A.P.Srinivasan, learned Senior Standingcounsel for the respondents. 2.The petitioners have filed this writ petitionchallenging the order passed by the 2[nd] respondent, namely, theIncome Tax Settlement Commission, dated 19.02.2004. 3.In respect of the assessment years 1988-89 to 1992-93,relating to petitioner Nos. 1 to 4 and for the assessment year1995-96, relating to the fifth petitioner, the SettlementCommission passed a consolidated order dated 07.01.2000 underSection 245D(4) of the Income Tax Act, 1961. The effect of thesaid order is granting waiver of interest under Sections 234A &234B. In the said orders, the terminal date for charging ofinterest under Section 234B was fixed as date of completion ofproceedings under Section 143(1)(a) or upto the date ofassessment under Section 143(3) or upto the date of return, asthe case may be, for all the assessment years, referred above.The petitioners are said to have paid a sum of Rs. 12,57,974/-,pursuant to the orders passed by the Settlement Commission.While so, on 30.10.2003, the petitioners received a notice fromthe Departmental representative on behalf of the 1[st] respondentherein requiring the petitioners to file their counter to amiscellaneous petition filed before the Commission for varyingits order dated 07.1.2000. The petitioners were aggrieved asthey cannot be saddled with liability alone and the 1[st]respondent cannot be permitted to withdraw the concessionsunilaterally. Further, the 1[st] respondent had misquoted therecent pronouncement of the Honourable Supreme Court in themiscellaneous petition and the petitioners filed a counter andcontested the matter before the Settlement Commission. Thepetitioners contended before the Settlement Commission that the1[st] respondent wanted to apply the ratio of the judgment of theHonourable Supreme Court in the case of CIT Vs. Hindustan BulkCarriers, [2003] 259 ITR 475 (SC) which was decided on07.01.2000 and the whole matter had concluded by the payment ofmoney within the stipulated time. Thus, it was submitted thatthe very idea of applying the judgment retrospectively in aconcluded matter is unknown to law. Further, it was contendedthat the 1[st] respondent cannot be allowed to go back on asettlement already arrived at before the Settlement Commission,before whom certain voluntary disclosures were made by thepetitioners only on account of the fact that it would beconclusive and there would be an end to all disputes. Inspiteof such contest before the Settlement Commission, the SettlementCommission has passed the impugned order and has re-opened theearlier order passed by it. This has been challenged by thepetitioners before this Court in this writ petition. 4.In an identical circumstance, in the case of R.Vijayalakshmi V. Income Tax Settlement Commission, Addl. Bench488/489, Anna Salai, Chennai- 35 and 2 others, in W.P. Nos. 5553to 5558 of 2008, this Court considered as to whether the actionof the Commission in entertaining the miscellaneous petitionafter the conclusion of the proceedings is valid and whether theterminal date for charging interest could be altered based on asubsequent decision of the Honourable Supreme Court. Both theabove issues were answered in favou rof the assessee and againstthe Revenue. The operative portion of the order dated 26.07.2016reads 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 be conclusiveas to the matters stated therein and no matter coveredby such order shall, save as otherwise provided in thatchapter, be reopened in any proceeding under the Act orunder any other law for the time being in force. Thesaid provision does not confer the power of review onthe commission. It is settled legal position thatpower of review is to be specifically conferred on theauthority by the statute and power of review is notinherent with the authority. However, when the statutedoes not provide power of review with the authority andif it is done, it has to be termed as wholly withoutjurisdiction. Sub-section (1) of Section 245(F) whichstates that Settlement Commission shall have all powerswhich are vested in Income Tax Authority under the Actcannot be read in isolation but it should be red intandem with Section 245(I) and if it is done, then itis to be held that there is no power of reviewconferred on the Commission to reopen the proceedings.This position held the field till an amendment wasinserted under Section 6(b) of Section 245D by FinanceAct 2011 with effect from 01.06.2011. Even the saidprovision is not a power of review. But, thephraseologyusedbythelegislationis'rectification'and such rectification can be done onany mistake apparent from the record. Therefore, suchpower exercisable under sub Section 6D of Section 245Dcan be exercised only to rectify a mistake and suchmistake should be apparent from the record. Thus, evenas per the amendment made by Finance Act, 2011, powerof review is not conferred on the Settlement Commission. 8.In the case of Smt. U. Narayanamma, WritPetitions were filed challenging the orders passed by 8.In the case of Smt. U. Narayanamma, WritPetitions were filed challenging the orders passed by the 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 Brin 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 Bul Carrirs andDamani 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....” 5.The Revenue does not dispute the legal principle laiddown in the above decision, which has been followed by thisCourt in several other cases as well. Thus, by applying theabove decision to the petitioners in the present case, the onlyconclusion that can be arrived at, is to hold that the impugnedorder is not sustainable. Accordingly, the writ petition isallowed and the impugned order is quashed. No costs. ConnectedW.M.P. is closed. To 1.Commissioner of Income Tax – IVChennai – 600 034.Chennai – 600 034. 2.Income Tax Settlement Commission,640, Anna Salai, Nandanam,Chennai 600 035.640, Anna Salai, Nandanam,Chennai 600 035. + 1 cc to M/s.Ramesh Kumar, Advocate,SR.55789 + 1 cc to M/s.Mr.A.P. Srinivas, Advocate,SR.55622 WP.No.6566 of 2004& W.M.P. No. 7781 of 2004 RR(CO)NR 28/08/2017