2013 (2) TMI 400 - HC - Income Tax

Whether the Settlement Commission could reopen its concluded proceedings by invoking Section 154 so as to levy interest u/s 234B Held that - Following the decision in case of Brij Lal (2010 (10) TMI 8 - SUPREME COURT) that as per Sec. 245-I the order of the Settlement Commission is made final and conclusive on matters mentioned in the application for settlement except in the two cases of fraud and misrepresentation in which case the matter could be reopened by way of review or recall. Thus, Settlement Commission cannot reopen its concluded proceedings by invoking Section 154. One must keep in mind the difference between review/recall of the order and rectification under section 154. The schedule of Chapter XIX-A does not contemplate invocation of section 154 otherwise there would be no finality to the assessment by settlement which is different from assessment under Chapter XIV where there is an appeal, revision, etc. Settlement of liability and not determination of liability is the object of Chapter XIX-A. In favour of assessee

Summary

Issues:
1. Jurisdiction of Settlement Commission to reopen concluded proceedings under Section 154 of the Income Tax Act, 1961 for levying interest under section 234B if not done in original proceedings.

Analysis:

Issue 1:
The primary issue in this case was whether the Settlement Commission had the authority to reopen its concluded proceedings by invoking Section 154 of the Income Tax Act, 1961 to levy interest under section 234B if it was not done in the original proceedings. The petitioner, an individual and proprietor of a business, had a case before the Settlement Commission where interest under sections 234A and 234B of the Act was levied after a rectification petition was filed by the Income Tax Department. The petitioner challenged this action, arguing that the Settlement Commission had no jurisdiction to rectify its earlier order and levy interest under the mentioned sections. The Supreme Court's judgment in Brij Lal's case was cited, emphasizing that the Settlement Commission's proceedings are akin to arbitration proceedings and have their own distinct procedure separate from regular assessments under different sections of the Act. It was highlighted that the Settlement Commission's order is final and conclusive, except in cases of fraud or misrepresentation. The Court concluded that the Settlement Commission cannot reopen concluded proceedings by invoking Section 154, and the order in question was set aside based on the legal principles outlined in the judgment.

This case delved into the intricate procedural aspects of settlement proceedings before the Settlement Commission under the Income Tax Act. The judgment clarified the distinct nature of settlement proceedings compared to regular assessments, emphasizing the finality of orders issued by the Settlement Commission and the limitations on rectification powers. The analysis provided a detailed examination of relevant legal provisions and judicial precedents to establish the Settlement Commission's jurisdiction and limitations in rectifying its concluded proceedings.