2004 (1) TMI 47 - HC - Income Tax

Petitioners have filed these petitions under article 226 of the Constitution of India challenging the orders passed by the Settlement Commission u/s 154 withdrawing the reduction or waiver of interest granted by the Settlement Commission under sections 234A, 234B and 234C, while passing the orders under section 245D(4) Held that Settlement Commission has no power to reduce or waive the interest chargeable under sections 234A, 234B and 234C - since it was a mistake apparent from the record, the said mistake was rightly rectified by the Settlement Commission while resorting to the provisions contained in section 154 Petition dismssed

Issues Involved:
1. Jurisdiction and power of the Settlement Commission under Section 154 of the Income-tax Act, 1961.
2. Whether the Settlement Commission is an "income-tax authority" under Section 116 of the Act.
3. The finality and conclusiveness of orders passed by the Settlement Commission under Section 245D(4).
4. Applicability of the Supreme Court's decision in CIT v. Anjum M.H. Ghaswala [2001] 252 ITR 1.
5. Rectification of mistakes apparent from the record.

Detailed Analysis:

Jurisdiction and Power of the Settlement Commission under Section 154 of the Act:
The petitioners challenged the Settlement Commission's orders passed under Section 154 of the Income-tax Act, 1961, which withdrew the reduction or waiver of interest granted earlier under Sections 234A, 234B, and 234C. The petitioners argued that the Settlement Commission lacked the power to rectify its orders under Section 154 as it is not an "income-tax authority" within the meaning of Section 116 of the Act. The court examined Section 245F(1), which confers all powers of an income-tax authority on the Settlement Commission, and concluded that this includes the power to rectify mistakes under Section 154.

Whether the Settlement Commission is an "income-tax authority" under Section 116:
The petitioners contended that the Settlement Commission is not listed as an income-tax authority under Section 116. The court acknowledged that while the Settlement Commission is not explicitly mentioned in Section 116, Section 245F(1) vests it with all the powers of an income-tax authority. Therefore, the Settlement Commission can exercise powers under Section 154 for rectification of mistakes.

Finality and Conclusiveness of Orders under Section 245D(4):
The petitioners argued that orders passed under Section 245D(4) are final and conclusive as per Section 245-I and cannot be reopened except in cases of fraud or misrepresentation. The court, however, highlighted that Section 245F(1) allows the Settlement Commission to exercise powers of an income-tax authority, which includes rectifying mistakes under Section 154. Thus, the finality of orders under Section 245D(4) does not preclude rectification of apparent mistakes.

Applicability of the Supreme Court's Decision in CIT v. Anjum M.H. Ghaswala:
The court referred to the Supreme Court's decision in CIT v. Anjum M.H. Ghaswala, which held that the Settlement Commission does not have the power to waive or reduce interest under Sections 234A, 234B, and 234C, except as provided under circulars issued by the Central Board of Direct Taxes (CBDT). The court found that the Settlement Commission's earlier orders reducing or waiving interest were contrary to this decision and thus constituted mistakes apparent from the record.

Rectification of Mistakes Apparent from the Record:
The court examined the nature of mistakes that can be rectified under Section 154, emphasizing that such mistakes must be obvious and self-evident. The court concluded that the Settlement Commission's reduction or waiver of interest, contrary to the Supreme Court's ruling in Ghaswala, was a clear mistake apparent from the record. Therefore, the rectification under Section 154 was justified.

Conclusion:
The court dismissed the petitions, holding that the Settlement Commission has the power to rectify mistakes under Section 154 of the Act, despite not being listed as an income-tax authority under Section 116. The court affirmed that the Settlement Commission's orders reducing or waiving interest were mistakes apparent from the record, as they were contrary to the Supreme Court's decision in Ghaswala. The rectification of these mistakes was within the Settlement Commission's jurisdiction and power.

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