2017 (7) TMI 741 - HC - Income Tax

Order passed by the Income Tax Settlement Commission, Additional Bench, Chennai under Section 245F I challenged - held that - The issue involved in these writ petitions are squarely covered by the decision of this Court in the case of R.Vijayalakshmi Vs Income Tax Settlement Commission and Others 2016 (8) TMI 657 - MADRAS HIGH COURT wherein held when the statute does not provide power of review with the authority and if it is done, it has to be termed as wholly without jurisdiction. The phraseology used by the legislation is rectification and such rectification can be done on any mistake apparent from the record. Therefore, such power exercisable under sub Section 6D of Section 245D can be exercised only to rectify a mistake and such mistake should be apparent from the record. Thus, even as per the amendment made by Finance Act, 2011, power of review is not conferred on the Settlement Commission. Rudimentary legal principle is that subsequent development of law cannot be a ground to exercise review jurisdiction and that cannot be taken into consideration as an error apparent on the face of the record. Hence, on that ground also, the Department should be non suited. Hence for all the above, order of the Settlement Commission is held to be unsustainable and it is accordingly quashed. This Court has held that the order passed by the Commission under Section 245D(4) has become final and the Department will be entitled to interest only as ordered by the commission.

Summary

Issues:
Challenge to order of Income Tax Settlement Commission under Section 245F[I] of the Income Tax Act, 1961.

Analysis:
The High Court heard arguments from both sides regarding the challenge to the order passed by the Income Tax Settlement Commission under Section 245F[I] of the Income Tax Act, 1961. The counsel for both parties referred to a previous decision of the Court in the case of R.Vijayalakshmi Vs Income Tax Settlement Commission and Others, where it was clarified that the Commission does not have the power of review unless specifically conferred by the statute. The Court emphasized that the power of review is not inherent and can only be exercised if explicitly provided for. The judgment highlighted that the power of rectification under Section 245D can only be used to rectify a mistake apparent from the record and not for a general review of the order. The Court also referenced a case involving Smt.U.Narayanamma, where the Andhra Pradesh High Court held that the Commission cannot rectify its earlier order if it was not a mistake apparent from the record. Additionally, the Court noted that subsequent legal developments cannot be a basis for review jurisdiction. The judgment concluded that the order of the Settlement Commission was unsustainable and quashed, specifically related to the computation of the terminal date for charging interest under Section 234B.

The Court further addressed the Revenue's concern regarding the setting aside of the interest rate ordered by the Commission. It clarified that the order passed by the Commission under Section 245D(4) had become final, and the Department would only be entitled to interest as per the Commission's order. Based on the above reasoning and the precedent set by previous judgments, the High Court allowed the writ petitions, quashed the impugned orders related to the computation of the terminal date for charging interest under Section 234B, and closed the connected Miscellaneous Petition without imposing any costs.