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TMI Blog2004 (7) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, it is a case covered under the provisions of section 154. Elaborate submission was made by Mr. Shome with regard to the applicability of the various decisions cited by Mr. R.N. Bajoria, learned senior counsel for the respondents, and also to the validity of the submission advanced by him. Respondent's points: At the same time Mr. Bajoria had also made elaborate submissions and had met all the submissions advanced by Mr. Shome and had pointed out that the rectification that was sought for was not free from doubt. At the point of time when the rectification was sought for the decision in Anjum Ghaswala [1998] 230 ITR (AT) 1 [SB] had not come and was pending reference to a larger Bench of five judges and was decided subsequent to the stage when the rectification was asked for. Similarly, the other decision in CIT v. Damani Brothers [2002] 254 ITR 91 (SC) on which Mr. Shome had anchored his submission was also pending decision before the three-judge Bench, which decided the same later on. Therefore, it does not come within the purview of the scope where section 154 can be applied. Facts: We would refer to the detailed submission made by the respective counsel at appropria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Brothers [2002] 254 ITR 91 (SC) was still awaiting decision. However, the decision proceeded on the basis of the decision in Anjum M.H. Ghaswala [1998] 230 ITR (AT) 1 by a seven-member Special Bench of the Settlement Commission rendered on December 12, 1997, which, however, was operating in the field, which was not the basis on which this notice was issued. The Supreme Court (three-judges Bench) in Anjum Ghaswala [2001] 252 ITR 1 (SC) had settled the issue on October 18, 2001. In that decision all the three judges had pointed out that the Settlement Commission had no power to waive interest chargeable under sections 234A, 234B and 234C while passing the order under section 245(4). Reliance was placed by Mr. Shome on Anjum M.H. Ghaswala [1998] 230 ITR (AT) 1, a decision of a seven member Special Bench of the Settlement Commission on December 12, 1997. Whereas the Settlement Commission has passed the final order on November 27,1997, namely, before Ghaswala [1998] 230 ITR (AT) 1 decision by the Settlement Commission overruling Ashwani Kumar Aggarwal, In re [1992] 195 ITR 861 (ITSC) [SB]. In Ashwani Kumar Aggarwal [1992] 195 ITR 861 (ITSC) [SB] the jurisdiction of the Settlement Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Assessing Officer, Asst. CIT [2004] 267 ITR 129 (Guj). To support his contention that the Settlement Commission has no power to waive or reduce interest, he relied on the decision in CIT v. Anjum M.H. Ghaswala [2001] 252 ITR 1 (SC), of a five-judge Bench. This decision, according to him, cannot be doubted neither was it doubted by the two-judge Bench in Damani Brothers [2002] 254 ITR 91 (SC) nor in the three-judge Bench decision in Damani Brothers [2003] 259 ITR 475 (SC). On the other hand, the two-judge Bench in Damani Brothers [2002] 254 ITR 91 (SC) followed the ratio of the five-judge Bench and referred only one question to the three-judge Bench, whether the Settlement Commissioner gets a complete role in substitution of the other authorities under the Act. The three-judge Bench in Damani Brothers [2003] 259 ITR 475 (SC) followed Ghaswala [2001] 252 ITR 1 (SC). The three-judge Bench clearly held that interest under sections 234A, 234B and 234C becomes payable on the income already disclosed in the return as well as those disclosed before the Settlement Commission. Another three-judge Bench in Hindustan Bulk Carriers [2003] 259 ITR 449 (SC) following Ghaswala [2001] 252 ITR 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2001] 252 ITR 1, the Supreme Court had held that the Commission had power to waive interest only to the extent and in accordance with the circular issued by the Board under section 119 of the Act and no further. In Ashwani Kumar's case [1992] 195 ITR 861 (ITSC) [SB] the five-Member Bench had also held so since approved by the Supreme Court in Ghaswala [2001] 252 ITR 1. According to Mr. Bajoria, the rectification proceeding is wholly without jurisdiction and illegal for the following reasons, namely, (1) the order sought to be rectified was passed under section 254D(4) on November 27, 1997, whereas the decision in the seven-Member Bench of the Commission in Ghaswala [1998] 230 ITR (AT) 1 [SB] was rendered on thereafter on December 12, 1997. Thus Ghaswala's case [1998] 230 ITR (AT) 1 [SB] was not the basis of waiver of interest; (2) the application for rectification proceeds on surmises, assumption and presumption as to what the Commission might have taken into consideration while waiving interest; (3) how far the Commission had taken into consideration Ashwani Kumar's case [1992] 195 ITR 861 (ITSC) [SB] and the circular while granting waiver needs an investigation into facts and al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT [2003] 263 ITR 41 (Cal) and Kesoram Industries Ltd. v. CIT [2004] 271 ITR 501 (Cal) (I.T.A. No. 359 of 2000) disposed of by us on July 13, 2004. The learned single judge has also proceeded on the said principle and rightly allowed the writ petition. On which the scope of section 154 is hinged can be found in the decision in T.S. Balaram, ITO v. Vokart Brothers [1971] 82 ITR 50 (SC). The proposition of law is well settled. The Income-tax Act has not conferred any jurisdiction to review any or either of the authorities under the provisions. The Code of Civil Procedure is not applicable in a proceeding under the Act; neither section 151, Code of Civil Procedure, can be conceived of to enable the authorities under the Act to exercise inherent power. The power that has been specifically conferred upon the authorities is that under section 154 or under section 254 or section 263, as the case may be. We are now concerned with section 154. Section 154 only confers power of rectification if there is a mistake apparent on the face of the record. The settled proposition as has been laid down by different decisions including Volkart Brothers [1971] 82 ITR 50 (SC) and all subsequent decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either to waive or to reduce the statutory interest payable under the Act. The waiver/reduction of interest chargeable under these sections, is not permissible and the Commission is bound to follow the Special Bench decision in Ashwani Kumar's case [1992] 195 ITR 861 (ITSC) which was decided by a larger Bench and this additional Bench was legally bound to follow the decision of the larger Bench. Ignoring the decision of the Special Bench in Ashwani Kumar's case [1992] 195 ITR 861 (ITSC) is an error of law apparent from the record. The erroneous view of the Additional Bench, Kolkata, found a g temporary support from the Special Bench decision in Anjum M.H. Ghaswala [1998] 230 ITR (AT) 1 (ITSC). However, the hon'ble Supreme Court vide its judgment in the case of CIT v. Anjum M.H. Ghaswala [2001] 252 ITR 1 has reversed the said decision of the Special Bench of the Settlement Commission and upheld the decision of the Commission in Ashwani Kumar's case [1992] 195 ITR 861 [SB]. It has been held by the Supreme Court in Ghaswala's case [2001] 252 ITR 1 that the Commission does not have power to reduce/waive statutory interest chargeable under sections 234A, 234B and 234C, except to the ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h. Despite the decision in the five-judge Constitution Bench in Ghaswala [2001] 252 ITR 1 (SC) and the decision on Damani Brothers [2003] 259 ITR 475 (SC) by a three-judge Bench upon such reference was rendered after the final order of rectification was passed, namely, expiry of limitation. Thus by reason of Ghaswala's decision [2001] 252 ITR 1 (SC), it cannot be conclusively concluded that the mistake was rectifiable under section 154, though a subsequent contrary decision in law is a ground for rectification. In the present case, what the Department had asked for on the strength of the application at page 91 is virtually a review, a power which is absent in the authorities. As discussed above, this is not a case, as rightly pointed out by the learned single judge, coming within the narrow scope and ambit of rectification under section 154. On the other hand, it stretches to the field of review, a power not available with the income-tax authorities. An analysis of the appellant's submission: In view of our above decision, we may now answer Mr. Shome's contention on point No. 1 that a mistake of law on the basis of the subsequent Supreme Court decision is rectifiable under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under any other circumstances. This is apparent from section 245HA where the application of section 154 is confined only in respect of cases coming under section 245C since remanded to the Assessing Officer on account of non-co-operation of the assessee. When the statute specifically provides that section 154 is applicable only in a limited sphere, then on the face of the provisions contained in section 245-1 such power cannot be exercised by the Settlement Commission unless it is necessary in extreme cases. In our view the present case does not fall within such an extreme case where the power of rectification that inheres in the Tribunal can be exercised. The Settlement Commission has no inherent power to exercise the jurisdiction under section 154 after a final order is passed and becomes conclusive by reason of section 245-1. We are unable to agree with the reasoning given by the Gujarat Division Bench in AOP of Sanjaybhai R. Patel v. Assessing Officer/Asst. CIT [2004] 267 ITR 129. On the other hand, we are in full agreement with the reasoning given by the Delhi High Court Division Bench in Capital Cables (India) Pvt. Ltd. v. Income-tax Settlement Commission [2004] 267 ITR 528. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be seen that in Ghaswah's case [2001] 252 ITR 1 all the aspects relating to waiver of interest had not been dealt with by the Supreme Court. The distinction sought to be made by the appellants that the case of Damani Brothers [2002] 254 ITR 91 (SC) was dealing with section 220(2) of the Act and not sections 234A, 234B and 234C of the Act dealt with in Ghaswala's c case [2001] 252 ITR 1 (SC) is not correct. It would appear from page 94 of the reports, where the facts of S.L.P. (C) Nos. 18012-18015 of 2000 have been noted, that section 234B was also involved. Even otherwise, under section 220 also circumstances are specified under which interest can be waived as in the case of interest under sections 234A, 234B and 234C by the circular. Merely because such circumstances are specified in one case in the statute itself and in the other by the circular issued under the statutory provisions would make no difference. The matter was reconsidered by the Supreme Court in the case of CIT v. Hindustan Bulk Carriers [2003] 259 ITR 449 and in the case of CIT v. Damani Bros. [2003] 259 ITR 475 (SC), both decided on December 17, 2002. In the said decision in Hindustan Bulk Carriers [2003] 259 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant and in any event is erroneous for the reasons following: (a) in the said case the order of settlement was passed after Ghaswala's case [1998] 230 ITR (AT) 1 [SB] was decided by the Settlement Commission unlike the respondents' case herein; (b) the rectification order was passed by the Settlement Commission after the reference to a larger Bench in the case of Datnani Bros. [2002] 254 ITR 91 (SC), but before it was decided by the Supreme Court; (c) it does not deal with and decide the issue that in rectification proceedings investigation into facts relating to circumstances in which order of waiver was passed; applicability of circular, etc., cannot be considered. It has rather proceeded on the basis as if interest had to be charged in all circumstances ignoring the fact that the Supreme Court had not so held; (d) the decision, as the Delhi High Court points out, proceeded after recording that it need not go into the issue whether section 154 of the Act applied or not; (e) the finding that the subsequent decision of the Supreme Court can be a ground for rectification is contrary to the Division Bench decision of this hon'ble court in the case of Jiyajeerao Cotton Mills Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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