2020 (2) TMI 655 - HC - Income Tax

Settlement of cases - Period of limitation for rectification of mistake apparent from the record in the order passed by the Settlement Commission - Application u/s 245D(6B) - Procedure on receipt of an application under section 245C - HELD THAT - A perusal of sub-section (6B) of Section 245D of the Act makes it amply clear that any mistake apparent from the record in the order passed by the Settlement Commission under sub-section (4) of Section 245D of the Act may be rectified at any time within a period of six months from the end of the month in which the order was passed or at any time within a period of six months from the end of the month in which an application for rectification has been made by the Principal Commissioner or the Commissioner or the applicant, as the case may be. Six months from the end of the month in which the order was passed, expired on 31st May, 2017. Admittedly, the application under Section 245D(6B) of the Act was filed by the petitioner on 30.06.2017 which was barred by limitation as provided under sub-section (6B) thereof. Still further, even if the argument advanced by the petitioner that the limitation of six months for entertaining application under Section 245D(6B) of the Act would start running from the date the order was served on the petitioner, is considered, there is nothing to show as to on which date in the month of December, 2016 the order was served upon the petitioner. The petitioner has only stated that the order dated 28.11.2016 was served upon him in the month of December, 2016 and has not demonstrated that the order dated 28.11.2016 was served upon him on or after 30th December, 2016 so as to claim that the application filed by the petitioner on 30th June, 2017 was within limitation. Thus, considering the controversy from this angle also, no case is made out in favour of the petitioner. We do not find any error in the findings recorded by the learned Settlement Commission warranting interference in exercise of power of judicial review. That apart, if any right has been conferred by the Legislature, it equally has the right to take it away or prescribe reasonable conditions for the exercise of the right. The Legislature would be perfectly within its right to regulate any right conferred by it while imposing conditions or restrictions on its exercise.

Summary

Issues:
Challenge to order of Settlement Commission dismissing rectification application under Section 245D(6B) of Income Tax Act, 1961 as barred by limitation.

Analysis:
The petitioner, an individual assessee, filed an application under Section 245D(4) of the Act before the Settlement Commission for settlement, disclosing additional income for the period 2007-08 to 2013-14. The application was decided on 28.11.2016. Subsequently, the petitioner filed an application under Section 245D(6B) for rectification of errors on 30.06.2017, which was dismissed by the Settlement Commission as barred by limitation. The main contention was regarding the computation of the limitation period under Section 245D(6B) from the date of order or its service. The petitioner argued for counting the limitation from the date of service, relying on various judgments, while the Revenue contended that the limitation starts from the date of the order.

The key provision under scrutiny was Section 245D(6B) of the Act, allowing rectification of mistakes in the Settlement Commission's order within six months from the end of the month in which the order was passed. The first proviso to sub-section (6B) clearly states that no rectification application shall be entertained after six months from the end of the month in which the order was passed. In this case, the order was passed on 28.11.2016, making the rectification application filed on 30.06.2017 time-barred. Even if the petitioner's argument of counting the limitation from the date of service was considered, there was no evidence presented regarding the specific date of service in December 2016, further weakening the petitioner's case.

The judgments cited by the petitioner, including Raja Harish Chandra Raj Singh and D. Saibaba, were found inapplicable as they dealt with different enactments and did not align with the provisions of Section 245D(6B). The Settlement Commission also clarified that the proviso to Section 245D(6B) clearly indicates the limitation period starts from the date of passing the order, not its receipt. The Commission's decision to reject the rectification application was upheld, emphasizing the legislative intent behind setting a specific limitation period for rectification applications.

In conclusion, the High Court found no error in the Settlement Commission's decision and dismissed the writ petition, emphasizing the legislative authority to regulate rights and impose conditions for their exercise. The judgment reaffirmed the importance of adhering to statutory provisions, including limitation periods, in seeking rectification of orders under the Income Tax Act, 1961.