2016 (9) TMI 701 - HC - Income Tax

Reopning of assessment - where the Commission shifted the terminal date for calculation of interest under Section 234B - Held that - Commission had no jurisdiction to reopen the matter for the purpose of shifting the terminal date. The observation of the Settlement Commission by extending terminal date upto 25.02.2000, calls for interference. Accordingly, the Writ Petitions are allowed to that extent and the terminal date as fixed by the Commission in its original order dated 25.02.2000, is confirmed

Summary

Issues:
1. Interpretation of the Settlement Commission's authority to waive or reduce statutory interest.
2. Application of circulars issued by the Central Board under the Income Tax Act, 1961.
3. Jurisdiction of the Settlement Commission to reopen proceedings for shifting terminal date for interest calculation under Section 234B.

Issue 1:
The petitioners argued that the Settlement Commission's decision should be set aside based on a previous court ruling. The Supreme Court allowed appeals challenging the Commission's authority to waive statutory interest. The court clarified that the Commission cannot reduce or waive interest beyond relief granted by CBDT circulars. The Commission was directed to examine the applicability of specific circulars to determine relief entitlement.

Issue 2:
The Commission, following the Supreme Court's direction, withdrew waivers of interest not covered by the circulars. The petitioners did not contest these decisions. However, they challenged the Commission's alteration of the terminal date for interest calculation under Section 234B. The court held that the Commission lacked jurisdiction to reopen proceedings for shifting the terminal date, citing statutory limitations on the Commission's review powers.

Issue 3:
The court referenced a case where the High Court held that the Commission cannot rectify its order under Section 245D. The court emphasized that subsequent legal developments cannot justify a review. Consequently, the court quashed the Commission's order related to the terminal date for interest calculation under Section 234B. The court confirmed the original terminal date determined by the Commission. The judgment favored the petitioners on this specific issue, and the writ petitions were allowed without costs.