2013 (6) TMI 134 - HC - Income Tax

Order of settlement commission - power to rectify its own order - Waiver of interest under section 234B - held that - The appropriate course of action for the Revenue ought to have been to challenge the order of the Commission perhaps by way of certiorari. An application for rectification under section 154 of the Act was, however, impermissible and beyond the jurisdiction of the Commission, as held in Brij Lal 2010 (10) TMI 8 - SUPREME COURT . - On the aforesaid analysis, the order of the Settlement Commission dated February 26, 2004, cannot be sustained and is accordingly quashed. - Decided in favor of assessee.

Summary

Issues:
Challenge to the power of the Income-tax Settlement Commission to rectify its earlier order under section 245D of the Income-tax Act, 1961.

Analysis:
The High Court of Andhra Pradesh heard writ petitions challenging orders passed by the Income-tax Settlement Commission. The impugned order pertained to assessment years 1991-92 to 1993-94, where interest waivers were granted. The Revenue filed miscellaneous applications based on a Supreme Court decision clarifying the Commission's powers to reduce or waive interest under certain sections of the Act. The Commission passed a revised order rectifying the earlier order, which was challenged in the writ petitions.

In the case of Brij Lal v. CIT, the Supreme Court ruled that the Commission cannot reopen concluded proceedings to levy interest if not done originally. Citing this precedent, the High Court held that the impugned order could not be sustained. The counsel for the Income-tax argued that the original order was contrary to a Board Circular and the Supreme Court decision, thus challenging the validity of the impugned order. However, the High Court noted that the appropriate course for the Revenue would have been to challenge the original order through certiorari, not rectification under section 154 of the Act.

Considering the arguments presented, the High Court quashed the order of the Settlement Commission dated February 26, 2004, along with similar orders in related writ petitions. The Court allowed the writ petitions without costs, based on the analysis of the legal principles and precedents cited during the proceedings.