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TMI Blog2020 (9) TMI 734X X X X Extracts X X X X X X X X Extracts X X X X ..... by invoking Section 154 of the Act so as to levy interest under Section 234B in view of Section 245I. The terminal point for the levy of interest under Section 234B would be up to the date of the order under section 245 D (1) and not up to the date of the Order of Settlement under Section 245D(4). Sections 234A, 234B and 234C are applicable to the proceedings of the Settlement Commission under Chapter XIX-A of the Act to a certain extent. Even after the above said decision of the Constitution Bench of the Honourable Supreme Court in the case of Brij Lal Other [2010 (10) TMI 8 - SUPREME COURT] in the case of Kakadia Builders (P.) Ltd. [ 2019 (3) TMI 402 - SUPREME COURT] by decision had an occasion to deal with the issue which is similar to the case on hand, wherein, the Supreme Court held that the Settlement Commission's order 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 nor it could be relied upon by the High Court much less for making it a part of their order for issuing a writ. In such circumstances, following the said decision, the subsequent order passed by the Settl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchases, etc., (b) The Settlement Commission, instead of following the method adopted by the Assessing Officer of estimating the turnover by multiplying the incentives paid to the employees at a particular multiplying factor, they found the investment method preferable as a better index for computation of income. Accordingly, the investment in unrecorded stock, cost of air-conditioners, were taken into consideration and the income so determined was apportioned among the five different firms. In the application for 1993-94, the applicant was M/s.Carpet Centre. In the other application confined to the assessment year 1995-96, the applicant was M/s.M.A.Jacob's Crapets Furnishing Co. In the case of other firms, the application covers the assessment years 1988-89 to 1992-93. However, in the case of M/s.M.A.Jacob Company, there were no proceedings pending at the time of filing of the application for the assessment years 1988-89 and 1989-90. In the case of M.A.Jacob's furnishing Department, M/s.Flooring Furnishing Co., and M/s.M.A.Jacob's Cleaning Products Co., there were no proceedings pending for the assessment year 1988-89. These applicants have pleaded that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke as the waiver granted by the Settlement Commission appears to have been granted without taking into consideration the Circulars issued by the CBDT on the subject and therefore, sought for rectification of the said order of ITSC. The second Miscellaneous Petition was filed on 24.07.2003 requesting for rectification on the basis of the decision of the Hon'ble Supreme Court in the case of CIT Vs. Hindustan Bulk Carriers (2003) 259 ITR 449 (SC) and CIT Vs. Demani Brothers (2003) 259 ITR 475 (SC) . It is stated that interest under Section 234B is to be charged for the period beginning from the 1st day of April next following the relevant financial year up to the date of order of ITSC u/s.245D(4). 7. The 6th respondent/Income Tax Settlement Commission, considered all the submissions made by both parties and followed the decisions rendered by the Honourable Apex Court and various High Courts, and passed the order dated 19.02.2004 and held that at the point of time when the order u/s.245D(4) was passed by the ITSC, the judgments of Hon'ble Supreme Court in the case of CIT vs. Anjum M.H.Ghaswala and Others (2001) 119 taxman 352/252 ITR 1 (SC) and CIT Vs. Hindustan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urable Supreme Court in the decisions CIT Vs. Hindustan Bulk Carriers (2003) 259 ITR 449 (SC) and CIT Vs. Demani Brothers (2003) 259 ITR 475(SC) . In such circumstances, the Commissioner of Income Tax-IV, filed two Miscellaneous Petitions before the 6th respondent/ITSC, seeking rectification. While considering the subsequent development of law as held by the Honourable Supreme Court in the above referred to decisions, the Authority has changed the view that there is no case for waiver of interest leviable u/s.234B of the Act and that interest u/s.234B shall be charged up to the date of order u/s.245D(4) of the Act. 10. The learned counsel for the appellant/revenue has also placed reliance on the decision reported in CDJ 2010 SC 968 [Brij Lal others Vs. Commissioner of Income Tax, Jalandhar] . She would further submit that the learned Single Judge failed to consider the subsequent development of law on the issue in question in the case of Brij Lal others Vs. Commissioner of Income Tax, Jalandhar [CDJ 2010 SC 968], but followed the earlier order passed by this court reported in [2016] 73 taxmann.com 367(Madras) [R.Vijayalakshmi Vs. Income Tax Settlement Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Others Vs. Commissioner of Income Tax, Jalandhar [CDJ 2010 SC 968] , for the referred questions viz., (i) Whether Sections 234A, 234B and 234C of the Income Tax Act, 1961 are all applicable to proceedings of the Settlement Commissioner under Chapter XIX-A of the Act, (ii) Whether in the absence of period of limitation prescribed for making the order of the Settlement, the relevant date for determining the quantum of interest could be the date of the said order? and (iii) Whether in the absence of period of limitation prescribed for making the order of the Settlement, the relevant date for determining the quantum of interest could be the date of the said order?, has held as follows:- 16. (1) Sections 234A, 234B and 234C are applicable to the proceedings of the Settlement Commission under Chapter XIX-A of the Act to the extent indicated hereinabove. (2) Consequent upon conclusion (1), the terminal point for the levy of interest under section 234B would be up to the date of the order under section 245D(1) and not up to the date of the Order of Settlement under section 245D(4). (3) The Settlement Commission cannot re-open its concluded proceedings by invoking section 154 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re to the order for the assessment years under consideration. It is given that the total additional income of all the applicants would work out to ₹ 39,45,943/- and ₹ 9,30,000/- additional income offered in the case of M/s.M.A.Jacob's Carpet Furnishing Co., is accepted and therefore, the same is not added. The order reads that in the case of all the old firms, interest u/s.139(8) is waived for the assessment year 1988-89 since the assessment was reopened u/s.245E; in the case of all the old firms, the interest is waived since the assessments were reopened u/s.245E, and for that reason, interest u/s.234B in the case of M.A.Jacob Co., is waived. The Settlement Commission further stated that in the case of M.A.Jacob Furnishing Co. the only assessment year involved is 1995-96 and the return has been filed within the due date. 15. In this case, it is not as if, the respondents 1 to 5/assessee have filed the returns showing their income voluntarily in the first instance itself. There was a search under Section 132 of the IT Act on 18.03.1993 on the business premises of the firms and at the instance of the partners, Shri.M.A.Jacob made a declaration u/s.132(4) offer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) . 18. Subsequent to the order passed by the Settlement Commission on 07.01.2000, considering the Miscellaneous Petitions filed by the Department, the ITSC/Settlement Commission (IT WT) Additional Bench, reversed the order of waiver of interest and held that the interest u/s.234B shall be charged up to the date of order u/s.245D(4) of the Act. Further, directed the Assessing Officer to re-compute the interest u/s.234B of the IT Act in view of the directions stated in the order and amend the order giving effect to the order of the Settlement Commission u/s.245D(4) of the Income Tax Act. 19. Challenging the said order of Settlement Commission dated 19.02.2004, the assessee filed W.P.No.6566 of 2004 before this court. The learned Single Judge, following the decision reported in [2016] 73 taxmann.com 367 (Madras) [R.Vijayalakshmi Vs. Income Tax Settlement Commission] wherein, the decision of the Constitution Bench of the Honourable Supreme Court reported in CDJ 2010 SC 968 [Brij Lal Others Vs. Commissioner of Income Tax, Jalandhar] , was followed, allowed the writ petition and set aside the impugned order dated 19.02.2004 passed by the 6th respondent/ITSC. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.2000, was based on the unsettled legal position. Since subsequently, legal proposition on the issue has been settled in the above said decisions, they filed the Miscellaneous Petitions before the 6th respondent, who after considering all the relevant factual matrix of the case and the legal proposition, rectified the order passed on 07.01.2000, by its subsequent order dated 19.02.2004. 22. It has to be noted that the learned Single Judge has followed the decisions of the Honourable Supreme Court reported in CDJ 2010 SC 968 [Brij Lal others Vs. CIT, Jalandhar] and also earlier decisions of this court viz., [2016] 73 taxmann.com 367 (Madras) [R.Vijayalakshmi Vs. Income Tax Settlement Commission], and set aside the order passed by the 6th respondent/ITSC by his order dated 02.08.2017. But Subsequently, the First Division Bench of this Court had an occasion to deal with the same issue in question in the case of Union of India and others Vs. Dr.L.Subramanian [W.A.No.496 of 2018] dated 06.08.2018, and held at paragraph 19 as under:- 19. Interest under Section 234B of the 1961 Act is to be charged up to the date of order under Section 245D(4) of the 1961 Act. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nn.com 53(SC) [(Kakadia Builders (P.) Ltd., Vs Income Tax Officer Ward 1(3)] . Since on the date of the order passed by the Settlement Commission i.e., on 07.01.2000, law was not settled regarding the power of the Settlement Commission in relation to waiver of interest and the interest up to what date, and therefore, it cannot be said that there are divergent views of the courts on the issue. We consider that the decision reported in [2019] 102 taxmann.com 53 (SC) is squarely applicable to the facts of this case. 25. The order passed on the Settlement Applications filed by the assessee is dated 07.01.2000. The second order of ITSC was passed on 19.02.2004. After those orders passed by ITSC on the issue in question, concerning the assessee, in the year 2010, the Honourable Supreme Court had an occasion to deal with the said issue in the case of Brij Lal Others Vs. CIT, Jalandhar [CDJ 2010 SC 968] . Another Constitution Bench also dealt with the issue and rendered its decision on 18.10.2011 in the case of CIT Vs. Anjum M.H.Ghaswala [2001] 119 Taxmann 352/252 ITR 1 . In the said decisions, the Honourable Supreme Court held that the Settlement Commission cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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