2014 (3) TMI 581 - HC - Income Tax

Validity of order of settlement commission Power of the settlement commission for rectification - Held that - The Commission Settlement modified its direction with respect to charging of interest exercising powers of rectification The decision in Brij Lal and others v. Commissioner of Income tax 2010 (10) TMI 8 - SUPREME COURT followed - the Settlement Commission had no power of rectification the order is required to be set aside - In any case, application for rectification was not maintainable as the statute stood at the relevant time - Decided in favour of Assessee.

Summary

Issues:
Challenge to Settlement Commission's order on interest liability waiver and rectification powers.

Analysis:
The petitioner challenged an order passed by the Settlement Commission regarding the waiver of interest under the Income Tax Act. The Commission had initially waived or reduced the interest liability under sections 234A, 234B, and 234C for certain assessment years. However, the Revenue contended that the Commission could not have waived any portion of the interest liability based on a Supreme Court decision. The Settlement Commission then passed an order stating that the interest charged under sections 234A and 234B was not chargeable due to certain legal amendments with retrospective effect. The Commission also allowed the applicants to pay the resultant liability in installments. The Commission modified its direction on charging interest, citing the power of rectification. However, the Supreme Court had previously held that the Settlement Commission did not have the power of rectification, as seen in the case of Brij Lal v. Commissioner of Income Tax. Therefore, the High Court set aside the impugned order on the grounds that the Settlement Commission exceeded its powers by modifying the interest liability. The Court clarified that it did not express an opinion on whether the interest liability could be waived or reduced, as that was a matter for the Revenue to challenge through proper legal channels. The Court quashed the order and allowed the Revenue to pursue remedies against the original order of the Settlement Commission.

This judgment highlights the importance of adhering to legal procedures and the limitations of the Settlement Commission's powers. It underscores the need for parties to follow appropriate legal avenues to challenge decisions and rectifications made by the Commission. The case serves as a reminder of the significance of legal interpretations and the necessity for parties to address disputes within the framework of the law.