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2019 (3) TMI 402 - SC - Income TaxWaiver of interest chargeable u/s. 234A, 234B and 234C granted by the Settlement Commission in original order - Rectification filed - Rectification of above order was allowed by commission - Assessee challenged before High Court - High Court held that no rectification is permissible in view of decision of Supreme Court in case of Brij Lal and ors 2010 (10) TMI 8 - SUPREME COURT - department, thereupon, challenging original order - High Court inter-alia hold that 13. Under the circumstances, we direct modification of the order of Settlement Commission dated 11.08.2000 by reversing the waiver of interest in terms of Settlement Commission s directions contained in its order dated 11.10.2002. In other words, we adopt the same directions for modification of the Settlement Commission s original order dated 11.08.2000. - can Quashed order could be relied upon by the High Court much less for making it a part of their order for issuing a writ - Appeal against above observation in High Court order - HELD THAT - It is not in dispute that when the Settlement Commission passed the first order on 11.08.2000 disposing of the application of the appellants(asseesee), the issue with regard to the powers of the Settlement Commission was not settled by any decision of this Court. These two decisions of BRIJ LAL & ORS. 2010 (10) TMI 8 - SUPREME COURT and GHASWALA AND OTHERS 2001 (10) TMI 4 - SUPREME COURT were rendered after the Settlement Commission passed the order in this case. Therefore, the Settlement Commission had no occasion to examine the issue in question in the context of law laid down by this Court in these two decisions. However, the issue in question was, at that time, pending before the High Court in the petitions(SCAs). In a situation like the one arising in the case, the High Court instead of going into the merits of the issue, should have set aside the order dated 11.08.2000 passed by the Settlement Commission and remanded the case to the Settlement Commission for deciding the issue relating to waiver of interest payable under Sections 234A , 234B, and 234C of the Act afresh keeping in view the scope and the extent of powers of the Settlement Commissioner in relation to waiver of interest as laid down in the said two decisions. The High Court, however, committed a jurisdictional error when it observed that they (High Court) adopt the directions contained in the order of the Settlement Commission dated 11.10.2002 and then went on to make the said directions as a part of the impugned order in relation to waiver of interest. This approach of the High Court is wholly without jurisdiction. Since the order dated 11.10.2002 of the Settlement Commission was already held bad in law on the ground that it was passed under Section 154 of the Act, the same was neither in existence for any purpose and nor it could be relied upon by the High Court much less for making it a part of their order for issuing a writ. We consider it apposite to set aside the impugned order and the order dated 11.08.2000 passed by Settlement Commission to the extent it decided the issue in relation to waiver of interest and remand the case to the Settlement Commission to decide the issue relating to waiver of interest payable by the assessee (appellants herein) afresh keeping in view the law laid down by this Court in Ghaswala (supra) and Brijlal (supra) after affording an opportunity to the parties concerned.
Issues:
Appeal against High Court judgment modifying Settlement Commission's order on waiver of interest under Income Tax Act. Analysis: The case involves appeals against a High Court judgment modifying the Settlement Commission's order regarding the waiver of interest under the Income Tax Act. The appellants, a Private Limited Company, and its promoter Director had filed settlement applications before the Settlement Commission during assessment proceedings initiated post a search and seizure operation in 1994. The Settlement Commission passed an order in 2000 making additions and waiving interest under certain sections of the Act. Subsequently, rectification applications were filed by both the appellants and the Revenue. The Settlement Commission partially allowed the Revenue's application, leading to appeals by the appellants in the High Court. The High Court set aside the Settlement Commission's order and directed the waiver of interest to be reversed. The appellants appealed to the Supreme Court, questioning the High Court's decision. The Supreme Court considered the issue in light of two previous decisions by Constitution Benches. The first decision clarified that the Settlement Commission does not have the power to waive interest under specific sections of the Act, except to the extent provided in circulars issued by the Board. The second decision addressed questions related to the applicability of interest, the terminal point for levy of interest, and the Settlement Commission's power to reopen proceedings for levying interest. The Court emphasized that the Settlement Commission cannot reopen concluded proceedings to levy interest under certain sections. The Supreme Court found that the High Court erred in adopting directions from a previously set-aside order of the Settlement Commission and including them in its judgment. The Court held that the High Court should have remanded the case to the Settlement Commission for a fresh decision on the waiver of interest, considering the scope of the Commission's powers as per the two previous decisions. Therefore, the Supreme Court set aside the High Court's judgment and the Settlement Commission's order related to the waiver of interest. The case was remanded to the Settlement Commission for a fresh decision within six months, emphasizing that the Commission should decide the matter independently, uninfluenced by any observations made by the Court.
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