M/S.vijayan Automobiles v. The Income Tax Settlement Commission, Additional Bench, 488-489, Anna Salai, Chennai-600 035

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HONOURABLE Mr.JUSTICE T.S.SIVAGNANAMW.P.No.21793 of 2004 M/s.Vijayan Automobiles,No.707, Junction Road,Virdhachalam. ... Petitioner Vs 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, Tiruchy Income Tax Office, No.4, Williams Road, Cantonment, Tiruchirapalli – 620 001. 4.Deputy Commissioner of Income Tax, Circle I, Virdhachalam. ... Respondents Prayer: Writ Petition filed under Article 226 of theConstitution of India praying for issuance of Writ ofCertiorari, calling for the records of the first respondentIncome Tax Settlement Commission, Additional Bench, Chennai inits file Settlement Application No.21/V/150/95-IT forassessment years 1991-92 to 1994-95 quash the impugned orderdated 24.02.2004. For Petitioner : Mr.R.Kumar For Respondents : Mr.A.P.Srinivas Senior Panel Counsel Heard Mr.R.Kumar, learned counsel appearing for thepetitioner and Mr.A.P.Srinivas, learned senior panel counselhttps://hcservices.ecourts.gov.in/hcservices/appearing for the respondents. 2. The petitioner has filed the writ petition challengingthe order passed by the Income Tax Settlement Commission,Additional Bench, Chennai under Section 245F[I] of the IncomeTax Act, 1961. 3. The counsel on either side submitted that the issueinvolved in the 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 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 ofthe Commission passed under Section 245 shall beconclusive as to the matters stated therein and nomatter covered by such order shall, save asotherwise provided in that Chapter, be reopened inany proceeding under the Act or under any other lawfor the time being in force. The said provision doesnot confer the power of review on the commission. Itis settled legal position that power of review is tobe specifically conferred on the authority by thestatute and power of review is not inherent with theauthority. However, when the statute does notprovide power of review with the authority and if itis done, it has to be termed as wholly withoutjurisdiction. Sub section (1) of Section 245(F)which states that Settlement Commission shall haveall powers which are vested in Income Tax Authorityunder the Act cannot be read in isolation but itshould be read in tandem with Section 245(I) and ifit is done, then it is to be held that there is nopower of review conferred on the Commission toreopen the proceedings. This position held the fieldtill an amendment was inserted under Section 6(b) ofSection 245D by Finance Act 2011 with effect from1.6.2011. Even the said provision is not a power ofreview. But the phraseology used by the legislationis “rectification” and such rectification can bedone on any mistake apparent from the record.Therefore, such power exercisable under sub Section6D of Section 245D can be exercised only to rectifya mistake and such mistake should be apparent fromthe record. Thus, even as per the amendment made byFinance Act, 2011, power of review is not conferredon the Settlement Commission. 8. In the case of Smt.U.Narayanamma, WritPetitions were filed challenging the orders passedhttps://hcservices.ecourts.gov.in/hcservices/by the Settlement Commission on the ground that the 8. In the case of Smt.U.Narayanamma, WritPetitions were filed challenging the orders passedhttps://hcservices.ecourts.gov.in/hcservices/by the Settlement Commission on the ground that the Commission 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 PradeshHigh Court after taking into consideration thedecision of the Hon'ble Supreme Court in Brij Lal,held that the order passed by the SettlementCommission rectifying its earlier order cannot besustained and must perish. In the said case,rectification was sought for by the commission onthe ground that the order passed by the Commissionwas contrary to the Board's circular. The Court heldthat even otherwise, it is an error within thejurisdiction 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 thesame, it should be by a writ of certiorari. The saiddecision squarely applies to the facts of thepresent case. 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 datefor charging of interest under Section 234B.Admittedly, these decisions were rendered by theHon'ble Supreme Court much after the final order waspassed by the Commission under Section 245D(4). 10. Rudimentary legal principle is thatsubsequent development of law cannot be a ground toexercise review jurisdiction and that cannot betaken into consideration as an error apparent on theface of the record. Hence, on that ground also, theDepartment should be non suited. Hence for all theabove, order of the Settlement Commission is held tobe unsustainable and it is accordingly quashed.Consequently, the orders dated 19.1.2005, 13.12.2004and 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 respondentDepartment submitted that if the order passed by thethird respondent is quashed, then it would amount tosetting aside the rate of interest as ordered by theCommission. The Revenue need not have anyapprehension in this regard and this Court has heldthat the order passed by the Commission datedhttps://hcservices.ecourts.gov.in/hcservices/16.7.1998,15.10.1998 and 16.7.1998 under Section 245D(4) has become final and the Department will beentitled to interest only as ordered by thecommission.” 4. Thus, following the above decision, the writ petitionis allowed and the impugned order is 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 order dated 24.02.2004 passed bythe Settlement Commissioner in No.21/V/150/95-IT is quashed.No costs. Consequently, connected Miscellaneous Petitions arealso closed. Sd/- Assistant Registrar(CS VI) //True Copy// Sub Assistant Registrarkak/sliTo1.The Income Tax Settlement Commission, Additional Bench, 488-489, Anna Salai, Chennai-600 035.2.The Chairman, Union of India Central Board of Direct Taxes, North Block, New Delhi.3.The Commissioner of Income Tax, Tiruchy Income Tax Office, No.4, Williams Road, Cantonment, Tiruchirapalli – 620 001. 4.The Deputy Commissioner of Income Tax, Circle I, Virdhachalam. +1cc to Mr.T.N.Seetharaman, Advocate, S.R.No.53193+1cc to Mr.A.P.Srinivas, Advocate, S.R.No.53432 MG(CO)CA(09/10/2017) W.P.No.21793 of 2004andWMP.Nos.26342 to 26344 of 2004 https://hcservices.ecourts.gov.in/hcservices/