2011 (11) TMI 374 - HC - Income Tax

Settlement Commission - miscellaneous application filed for re-consideration of the additional income arrived at by the Settlement Commission - Held That - Settlement Commission cannot review its own order.

Summary

Issues:
1. Quashing of the order of the Income Tax Settlement Commission and seeking a fresh order.
2. Rejection of rectification application by the Settlement Commission.
3. Consideration of depreciation and admissible reductions in estimating business income.
4. Jurisdiction of the Settlement Commission to touch on its passed order.
5. Legal justification for accepting the rectification petition.
6. Jurisdiction of the High Court under Article 226 of the Constitution of India.

Issue 1: Quashing of Settlement Commission's Order and Seeking a Fresh Order
The petitioner sought a Writ of Certiorarified Mandamus to quash the Income Tax Settlement Commission's order dated 16.7.2002 and requested a fresh order on the Settlement Application. The Settlement Commission estimated the assessable income for certain assessment years despite the petitioner maintaining regular books of accounts. The Commission arrived at an assessable income of Rs. 56.59 lakhs or Rs. 57.00 lakhs for the years in question, considering project-wise turnover. Immunity from penalty and prosecution was granted for the lorry business income.

Issue 2: Rejection of Rectification Application
The petitioner filed a rectification application seeking reconsideration of the additional income estimation by the Settlement Commission. The application was rejected twice, with the petitioner arguing that depreciation should have been considered based on a Circular of Central Board of Direct Taxes. The Settlement Commission rejected the rectification, stating that the income was fixed after considering all materials, and no separate addition was warranted for cash credits.

Issue 3: Consideration of Depreciation and Admissible Reductions
The petitioner contended that the Settlement Commission should have considered the Board's Circular on depreciation while estimating additional income. However, the Commission rejected the argument, stating that the income was already determined after considerable discussion and no further deductions were allowed. The petitioner relied on legal precedents to support the claim for considering depreciation in income estimation.

Issue 4: Jurisdiction of the Settlement Commission
The Settlement Commission's jurisdiction was questioned regarding the rectification of its own order. The High Court emphasized that the Settlement Commission's role is to settle liabilities, not determine them. The Commission's decision-making process was upheld, and the High Court clarified that it does not have the authority to direct the Commission to act as though bound by circulars or review its order without specific provisions.

Issue 5: Legal Justification for Accepting Rectification Petition
The High Court found no legal justification to accept the rectification petition, as the petitioner had already moved the Commission for rectification, which was rejected and not challenged earlier. The Court reiterated that it does not act as an appellate forum and cannot interfere unless the reasoning is prejudicial to the assessee's interest or contrary to the law.

Issue 6: Jurisdiction of High Court under Article 226
The High Court clarified that its jurisdiction under Article 226 of the Constitution of India is not that of an appellate forum. It dismissed the Writ Petition, emphasizing that unless the reasoning is abusive or against the law, the Court does not interfere with the Settlement Commission's orders. The Court highlighted the lack of legal grounds for granting the relief sought by the petitioner.

In conclusion, the High Court dismissed the Writ Petition, emphasizing the Settlement Commission's authority in settling liabilities, the limitations of the Court's jurisdiction, and the lack of legal justification for challenging the Commission's decisions. The Court upheld the Settlement Commission's order and rejected the petitioner's plea for quashing the order and seeking a fresh decision.