2016 (9) TMI 1006 - HC - Income Tax

Terminal date for the purpose of charging interest under Section 234-B - Settlement Commission - Held that - Identical issue was raised before this court in R.Vijayalakshmi vs. Income Tax Settlement Commission Additional Bench and others 2016 (8) TMI 657 - MADRAS HIGH COURT and ultimately it was held that the Department will be entitled for interest only as ordered by the Commission while passing the order under section 245D (4) of the Income Tax Act.

Summary

Issues involved:
Challenge to the order of the Income Tax Settlement Commission regarding the terminal date for charging interest under Section 234-B of the Income Tax Act, 1961.

Analysis:

1. Power of Review by Settlement Commission:
The primary issue in this case revolved around the power of the Settlement Commission to reopen its proceedings. The court highlighted that Section 245-I of the Income Tax Act, 1961, specifies that orders of the Commission shall be conclusive, with no provision for review. The court emphasized that the power of review must be explicitly granted by statute and cannot be assumed. The judgment referred to an amendment under Section 6(b) of Section 245D by the Finance Act 2011, which introduced the concept of rectification for mistakes apparent from the record. It was clarified that even with this amendment, the power of review was not conferred upon the Settlement Commission.

2. Precedent and Legal Position:
Reference was made to a case where the Andhra Pradesh High Court held that the Settlement Commission cannot rectify its earlier order unless it was a mistake apparent from the record. The court stressed that errors within the Commission's jurisdiction do not warrant rectification and must be challenged through a writ of certiorari. This precedent was deemed applicable to the present case, emphasizing the limited scope for rectification by the Commission.

3. Subsequent Development of Law:
The judgment addressed the contention raised by the Revenue regarding decisions by the Supreme Court on the terminal date for charging interest under Section 234B, which were issued after the Commission's final order. The court reiterated that subsequent legal developments cannot justify a review and cannot be considered as an error apparent on the face of the record. Consequently, the court held that the Department's reliance on post-order legal developments was not a valid ground for challenging the Commission's decision.

4. Decision and Outcome:
Based on the above analysis, the court concluded that the order passed by the Settlement Commission in 1999 should be upheld. The court set aside the order of the Additional Bench of the Commission in 2003, restoring the original order from 1999. The writ petition was allowed, with no costs imposed, and the connected miscellaneous petition was closed, thereby resolving the dispute regarding the terminal date for charging interest under Section 234-B of the Income Tax Act, 1961.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues, precedents, and conclusions drawn by the Madras High Court in this case.