Vignesh Real Estate v. The Income Tax Settlement Commission, Additional Bench, 488-489, Anna Salai, Chennai

IN THE HIGH COURT OF JUDICATURE AT MADRAS Vignesh Real Estate, C/o Sri N.Chellakutty C.R.Complex, 27, Avinashi Road, Coimbatore-641 014. ...Petitioner in W.P.No.27563/2007 Vs. 1.The Income Tax Settlement Commission, Additional Bench, 488-489, Anna Salai, Chennai-600035. 2.The Union of India represented by The Chairman, Central Board of Direct Taxes, North Block, New Delhi. 3.The Commissioner of Income Tax, Cochin, Income Tax Office, Race Course, Coimbatore-641 018. 4.Income Tax Officer, Ward III (2), Income Tax Office, Race Course, Coimbatore-641 018. ... Respondents in all WPs Prayers in WP.No.27561/2007: Petition filed under Article 226 ofthe Constitution of India to issue a Writ of Certiorari to callfor the records of the of the 1[st] respondent Income TaxSettlement Commission, Additional Bench, Chennai ApplicationNo.641/CBE/77/2001-IT for assessment years 1990-91 to 2000-01,quash the impugned order u/s 245D(4) dated 13.04.2007 in so far https://hcservices.ecourts.gov.in/hcservices/ as it relates to levy and payment of interest u/s 234A and 234B. Prayer in WP.No.27562/2007: Petition filed under Article 226 ofthe Constitution of India to issue a Writ of Certiorari to callfor the records of the of the 1[st] respondent Income TaxSettlement Commission, Additional Bench, Chennai ApplicationNo.641/CBE/77/2001-IT for assessment years 1990-91 to 2000-01,quash the impugned order u/s 245D(4) dated 13.04.2007 in so faras it relates to levy and payment of interest u/s 234A and 234B. Prayer in WP.No.27563/2007: Petition filed under Article 226 ofthe Constitution of India to issue a Writ of CertiorarifiedMandamus to call for the records of the of the 1[st] respondentIncome Tax Settlement Commission,Additional Bench, ChennaiApplication No.641/CBE/77/2001-IT for assessment years 1990-91to 2000-01, quash the impugned order u/s 245D(4) dated13.04.2007 in so far as it relates to levy and payment ofinterest u/s 234A and 234B. For Petitioners [In all W.Ps] : Mr.R.Kumar For Respondents [In all W.Ps] : Mr.A.P.Srinivas Senior Standing CounselC O M M O N O R D E R Heard Mr.R.Kumar, the learned counsel appearing for thepetitioner and Mr.A.P.Srinivas, learned Senior Standing counselappearing for the respondents in these writ petitions. 2. The petitioner has challenged the common order passed bythe Settlement Commission [IT & WT], Additional Bench, Chennai,in respect of the three applications filed by the petitioners.The Assessment years to which the petitioners filed applicationsfor settlement are 1990-91 to 2000-01, 1994-95, 1996-97 and1992-93 to 1994-95. 3. The Challenge to the impugned proceedings is not on themerits of the findings recorded by the Commissioner, but onlywith regard to the levy of interest under Sections 234 (A) and234 (B) of the Income Tax Act,1961 [hereinafter called as “theAct”]. One other issue is with regard to the interest payableunder Section 220 (2) of the Act. 4. During the course of proceedings before the Commission,the learned counsel appearing for the assessee submitted thatlevy of interest under Sections 234 (A), 234(B) and 234(C) of https://hcservices.ecourts.gov.in/hcservices/ the Act may be kept in abeyance since the legal issue relatingto the chargeability of interest has been referred forconsideration of the Constitution Bench of the HonourableSupreme Court in the case of Brij Lal and Others Vs. CIT[reported in [2010] 328 ITR 477 (SC)]. 5. The Assesse consented before the Commissioner thatsubject to the decision of the Constitution Bench of theHonourable Supreme Court, the assessee would have no objectionfor the order being revised by the Commission. 4. During the course of proceedings before the Commission,the learned counsel appearing for the assessee submitted thatlevy of interest under Sections 234 (A), 234(B) and 234(C) of https://hcservices.ecourts.gov.in/hcservices/ the Act may be kept in abeyance since the legal issue relatingto the chargeability of interest has been referred forconsideration of the Constitution Bench of the HonourableSupreme Court in the case of Brij Lal and Others Vs. CIT[reported in [2010] 328 ITR 477 (SC)]. 5. The Assesse consented before the Commissioner thatsubject to the decision of the Constitution Bench of theHonourable Supreme Court, the assessee would have no objectionfor the order being revised by the Commission. 6. However, the Commission did not accept the saidsubmission on the ground that it would go by law which washolding the field as on the relevant date viz., in the case ofCIT Vs. Anjum M.H. Ghaswala reported in [2001] 252 ITR 1 (SC)and proceeded to levy interest under Sections 234 (A), 234(B)and 234(C). 7. At this juncture, the assessee has prayed for waiver ofinterest chargeable under Section 220 (2) of the Act. However,the Commission observed that it is open to the assessee toapproach the Commission after discharging the liabilities. 8. The issue which was referred to the Constitution Bench inthe case of Brij Lal and Others Vs. CIT has been answered inthe decision reported in 2010 [328] ITR 477 (SC). It was held by the Honourable Supreme Court :- “In the case of proceedings before the SettlementCommission, till the Commission decides to admit thecase under Section 245D(1), the proceedings under thenormal provisions remain open. But once the Commissionadmits the case, after being satisfied that thedisclosure is full and true, the proceedings commencewith the Settlement Commission. In the meantime, theapplicant has to pay the additional amount of tax withinterest without which the application for settlementwould not be maintainable. Thus, interest under Section234B would be payable tup to the stage of Section 245D(1). Parliament has not extended the provisions and theliability to pay interest beyond the date of applicationfor settlement. There is no provision either underChapter XIX-A or even under Section 140A (dealing withself-assessment) to charge interest beyond the date ofthe application for settlement after it is admitted bythe Commission under Section 245D(1). There are twodistinct stages under Chapter XIX-A, and the Legislature had not contemplated levy of interest between the orderunder the Seciton 245D(1) stage and the Section 245D(4)stage”. 9. In the light of the above decision of the ConstitutionBench of the Hon'ble Supreme Court, interest under Section 234(B) can be charged only upto to the stage under Section 245 (D)(1) of the Act. However, in the impugned order, the Commissionhas charged interest upto the stage of 245 (D)(4). 10. Therefore, to that extent, the impugned order has to beinterfered with. So far as the interest under Section 234 (A) isconcerned, the learned counsel appearing for the petitionerwould submit that the assessee does not dispute their liabilitybut would contend that there is some computation error committedby the Commission. However, for such a matter, the case cannotbe sent back to the said Commission as the Commission has nopower to review its order. Nevertheless, the assessing officerof the petitioner is well within his jurisdiction to examine thecorrectness of the stand taken by the assessee, as regards theerror in computation. 11. With regard to the interest under Section 220 (2) ofthe Act, the learned counsel appearing for the petitioner wouldsubmit that the petitioner will workout their remedies under theAct. 12. In the light of the above, the writ petitions are partlyallowed with the following directions: 11. With regard to the interest under Section 220 (2) ofthe Act, the learned counsel appearing for the petitioner wouldsubmit that the petitioner will workout their remedies under theAct. 12. In the light of the above, the writ petitions are partlyallowed with the following directions: (i) The interest charged under Section 234(B) of the Actupto the stage of 245 (D)(4) of the Act is setaside and theassessing officer of the petitioner is directed to recompute theinterest upto the stage of 245(D)(1) of the Act and on such re-computation, the assessee / petitioner shall pay interest. (ii) With regard to the alleged contention that there is acomputation error with regard to the interest chargeable underSection 234(A), the petitioners are granted liberty to fileappropriate application before the Assessing Officer who shallconsider the same and examine the correctness of the stand andif there is any computation error, the same may be rectified. (iii) With regard to the interest payable under Section 220(2) of the Act, the petitioners are granted liberty to workouttheir remedies under the provisions of the Act. https://hcservices.ecourts.gov.in/hcservices/ 13. No costs. Consequently, connected miscellaneous petitionis closed. -s/d- Assistant Registrar(CCC) True Copy Sub-Assistant Registrarsk/mayaTo1.The Income Tax Settlement Commission, Additional Bench, 488-489, Anna Salai, Chennai-600035.2. The Chairman, Central Board of Direct Taxes, North Block, New Delhi.3.The Commissioner of Income Tax, Coachin, Income Tax Office, Race Course, Coimbatore-641 018.4.Income Tax Officer, Ward III (2), Income Tax Office, Race Course, Coimbatore-641 018. +2 Ccs to Mr.T.N. Seetharaman, advocate sr 72135 & 72136.+1 Cc to Mr.A.P. Srinivas, Advocate sr 72292. W.P. Nos. 27561 to 27563 of 2007 KGK(CO)SP(16/11/2017) https://hcservices.ecourts.gov.in/hcservices/