M/S.sri Sastha Oil Stores v. The Income Tax Settlement Commission, Additional Bench, 488-489, Anna Salai, Chennai 600 035

IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 18.07.2017Coram The Hon'ble Mr.Justice T.S.Sivagnanam Writ Petition No. 20191 of 2003 andW.P.M.P.No.s.25216 & 25217 of 2003 M/s.Sri Sastha Oil Stores,130, Main Road,Dindigul. ...PetitionerVs. 1.The Income Tax Settlement Commission,Additional Bench,488-489, Anna Salai, Chennai 600 035. 2.The Union of India,Rep. by The Chairman,Central Board of Direct Taxes,North Block, New Delhi. 3.The Commissioner of Income Tax,Central Revenue Buildings,Bibikulam, Madurai 625 002. 4.The Income Tax Officer,Ward I(2),Palani Road, Kottapatti,Dindigul – 624 002. ...Respondents Writ Petition, filed under Article 226 of the Constitutionof India, for issuance of Writ of Certiorari to call forrecords of the first respondent Income Tax SettlementCommission, Additional Bench, Chennai in its File SettlementApplication No.21/IV/74/95-IT dated 21.03.2003 and quash thesame. For Petitioner : Mr.R.Kumar for Mr. C.V. Rajan For Respondents : Mr.A.P.Srinivas Senior Standing Counsel O R D E R Heard Mr.R.Kumar, the learned counsel for M/s.C.V.Rajan, the learned appearing for the petitioner andMr.A.P.Srinivas, the learned Senior Standing Counsel for therespondents. 2.The petitioner has filed this Writ Petition,challenging 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 this Writ Petition is squarely covered by thedecision of this Court, in the case of (R.Vijayalakshmi VsIncome Tax Settlement Commission and Others) reported in [2016]73 Taxmann.com 367 [Madras], wherein, it has been held asfollows :- “7. After hearing the learned counselfor the parties and perusing the materialsplaced on record, the first issue to beanswered is with regard to the power of theCommission to reopen its proceedings. Section245-I of the Act states that any order of theCommission passed under Section 245 shall beconclusive as to the matters stated thereinand no matter covered by such order shall,save as otherwise provided in that Chapter,be reopened in any proceeding under the Actor under any other law for the time being inforce. The said provision does not confer thepower of review on the commission. It issettled legal position that power of reviewis to be specifically conferred on theauthority by the statute and power of reviewis not inherent with the authority. However,when the statute does not provide power ofreview with the authority and if it is done,it has to be termed as wholly withoutjurisdiction. Sub section (1) of Section 245(F) which states that Settlement Commissionshall have all powers which are vested inIncome Tax Authority under the Act cannot beread in isolation but it should be read intandem with Section 245(I) and if it is done,then it is to be held that there is no powerof review conferred on the Commission to reopen the proceedings. This position heldthe field till an amendment was insertedunder Section 6(b) of Section 245D by FinanceAct 2011 with effect from 1.6.2011. Even thesaid provision is not a power of review. Butthe phraseology used by the legislation is“rectification” and such rectification can bedone on any mistake apparent from the record.Therefore, such power exercisable under subSection 6D of Section 245D can be exercisedonly to rectify a mistake and such mistakeshould be apparent from the record. Thus,even as per the amendment made by FinanceAct, 2011, power of review is not conferredon the Settlement Commission. reopen the proceedings. This position heldthe field till an amendment was insertedunder Section 6(b) of Section 245D by FinanceAct 2011 with effect from 1.6.2011. Even thesaid provision is not a power of review. Butthe phraseology used by the legislation is“rectification” and such rectification can bedone on any mistake apparent from the record.Therefore, such power exercisable under subSection 6D of Section 245D can be exercisedonly to rectify a mistake and such mistakeshould be apparent from the record. Thus,even as per the amendment made by FinanceAct, 2011, power of review is not conferredon the Settlement Commission. 8. In the case of Smt.U.Narayanamma,Writ Petitions were filed challenging theorders passed by the Settlement Commission onthe ground that the Commission has no powerto rectify its earlier order even underSection 245D of the Income Tax Act, 1961. TheHon'ble Division Bench of the Andhra PradeshHigh Court after taking into considerationthe decision of the Hon'ble Supreme Court inBrij Lal, held that the order passed by theSettlement Commission rectifying its earlierorder cannot be sustained and must perish. Inthe said case, rectification was sought forby the commission on the ground that theorder passed by the Commission was contraryto the Board's circular. The Court held thateven otherwise, it is an error within thejurisdiction of the Commission and it was notan error which went to the root of itsjurisdiction and held that if at all revenuehad to question the same, it should be by awrit of certiorari. The said decisionsquarely applies to the facts of the presentcase.9. One more observation that is requiredto be made in the instant case is that theRevenue while rectification/recalling of theorder passed by the Commission, referred to adecision of the Hon'ble Supreme Court in thecase of Hindustan Bulk Carriers and DamaniBros, with respect to the terminal date forcharging of interest under Section 234B.Admittedly, these decisions were rendered by the Hon'ble Supreme Court much after thefinal order was passed by the Commissionunder Section 245D(4). 10. Rudimentary legal principle is thatsubsequent development of law cannot be aground to exercise review jurisdiction andthat cannot be taken into consideration as anerror apparent on the face of the record.Hence, on that ground also, the Departmentshould be non suited. Hence for all theabove, order of the Settlement Commission isheld to be unsustainable and it isaccordingly quashed. Consequently, the ordersdated 19.1.2005, 13.12.2004 and 19.1.2005 andorder dated 14.7.2005, 4.2.2005, insofar asit relates to the computation of terminaldate for charging the interest under Section234B alone and the order passed by theSettlement Commission dated 8.8.2007 arequashed. 11. After the above order was dictated,the learned Standing Counsel for therespondent Department submitted that if theorder passed by the third respondent isquashed, then it would amount to settingaside the rate of interest as ordered by theCommission. The Revenue need not have anyapprehension in this regard and this Courthas held that the order passed by theCommission dated 16.7.1998,15.10.1998 and16.7.1998 under Section 245D(4) has becomefinal and the Department will be entitled tointerest only as ordered by the commission.” 4. Thus, following the above decision, this WritPetition is allowed and the impugned order passed by the firstrespondent/Settlement Commission, dated 21.03.2003, insofar asit relates to computation of terminal date for charging theinterest under Section 234B of the Income Tax Act, 1961 isquashed. No costs. Consequently, connected MiscellaneousPetitions are closed. Assistant Registrar(CS II) Sub Assistant Registrar To 4. Thus, following the above decision, this WritPetition is allowed and the impugned order passed by the firstrespondent/Settlement Commission, dated 21.03.2003, insofar asit relates to computation of terminal date for charging theinterest under Section 234B of the Income Tax Act, 1961 isquashed. No costs. Consequently, connected MiscellaneousPetitions are closed. Assistant Registrar(CS II) Sub Assistant Registrar To 1.The Income Tax Settlement Commission,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,Central Revenue Buildings,Bibikulam, Madurai 625 002.4.The Income Tax Officer,Ward I(2),Palani Road, Kottapatti,Dindigul – 624 002. +1cc to Mr.A.P.Srinivas, Advocate sr.50347+1cc to Mr.T.N.Seetharaman, Advocate sr.50854Writ Petition No. 20191 of 2003pvs(co)ss(6/10/2017)