2018 (8) TMI 865 - HC - Income Tax

Settlement of case - power of commission u/s 254F to rectify an order - levy of interest liability u/s 234B which was not levied in the original order - Section 245F(1) of the 1961 Act confers on the Settlement Commission all powers which are vested in an Income Tax Authority under the 1961 Act. The Settlement Commission, therefore, has power to rectify an order. The powers under Section 154 of the 1961 Act can be exercised by the Settlement Commissioner in addition to those specifically provided under Chapter IXA. There is a difference between rectification of an order and review of an order. Such power has to be conferred by statute either expressly or by necessary implication. In this case, there is no power of review. However, the power of rectifying an apparent mistake under Section 154 of the 1961 Act includes wide power to amend the order, which has the effect of enhancing an assessment or increasing the liability of the assessee. Interest under Section 234B of the 1961 Act is to be charged up to the date of order under Section 245D(4) of the 1961 Act. The order of the Settlement Commission that the respondent assessee would be entitled to waiver of interest leviable under Section 234A of the 1961 Act; that there is no case for waiver of interest leviable under Section 234B of the 1961 Act; and that interest under Section 234B shall be charged up to the date of the order under Section 245D(4) of the 1961 Act, does not warrant interference - Decided against the assessee.

Summary

Issues:
1. Interpretation of Section 154 of the Income Tax Act, 1961 regarding rectification of mistakes in orders.
2. Review of Settlement Commission's order on interest leviable under Section 234B of the Income Tax Act.
3. Applicability of Supreme Court judgments on Settlement Commission's decisions.
4. Power of Settlement Commission to rectify orders under Section 154 of the Income Tax Act.

Analysis:
1. The judgment dealt with the interpretation of Section 154 of the Income Tax Act, 1961, which allows for the rectification of mistakes apparent from the record by an income-tax authority. The Settlement Commission, under Section 245F(1) of the Act, possesses the authority to rectify orders, including those related to the assessment of interest charges.

2. The case involved a review of the Settlement Commission's order on interest charges under Section 234B of the Income Tax Act. The Settlement Commission had initially levied interest up to the date of the assessment order, which was challenged by the Revenue. The Supreme Court's decision in a related matter clarified that interest under Section 234B should be charged until the date of the Settlement Commission's final order under Section 245D(4).

3. The judgment discussed the applicability of Supreme Court judgments on the decisions of the Settlement Commission. It highlighted that subsequent Supreme Court decisions declaring the correct legal position would render earlier orders erroneous. The Settlement Commission's decision was upheld based on the Supreme Court's remand in Civil Appeal Nos. 8705-8706 of 1996.

4. The judgment emphasized the power of the Settlement Commission to rectify orders under Section 154 of the Income Tax Act. It differentiated between the concepts of review and rectification, stating that rectification aims to correct mistakes apparent from the record without altering the decision's basis. The Settlement Commission's order regarding interest charges was deemed appropriate and not subject to interference under Article 226 of the Constitution of India.

Overall, the judgment underscored the Settlement Commission's authority to rectify orders, the significance of adhering to Supreme Court decisions, and the specific application of statutory provisions in determining interest charges under the Income Tax Act.