Sheo Nandan Prasad V. The Union of India and The Vice Chairman, Settlement Commission (IT & WT), Additional Bench, 16B, Rowland Road, 5th Floor, Calcutta

CWJC/666/1995

AI Insights

The case involves Sheo Nandan Prasad, the petitioner, who contested the imposition of interest by the Settlement Commission on his tax assessments for the years 1985-86 to 1989-90. The interest was imposed following the Commission's final order on June 22, 1994, under various sections of the Income-Tax Act, 1961. The petitioner argued that the Commission's decision was mechanical and failed to consider relevant circulars that allowed for non-payment or reduction of interest. The respondents defended the Commission's decision, asserting that it was bound by the law to impose interest. The High Court of Patna, referencing a Supreme Court judgment, upheld the Commission's decision, noting the absence of any circular that could have influenced the Commission's decision at the time of the assessments.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 701163 (HC-PATNA)
• Appeal Type: Others
• Pronouncement Date: 13-09-2010
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income-Tax Vs. Anjum M.H. Ghaswala and others (2001) 252 ITR I, C.W.J.C. No.4152 of 1995 (Janki Sao Vs. Union of India & Ors.)
• Laws Referred To: Income-Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: HARSHWARDHAN PRASAD; RISHI RAJ SINHA; ARCHANA SINHA
• Assessee Lawyers: AJAY KUMAR RASTOGI
• Keywords: Assessment years; Interest Imposition; Mechanical Order; Settlement commission; Circular Oblivion
• Section: 234B; 215; 234A; 234C; 245D(4); 226; 245C; 227; 119(2)(a); 139(8); 217

Judgement Text

" CIVIL WRIT JURISDICTION CASE No.666 OF 1995 ----------- In the matter of an application under Articles 226 and 227 of the Constitution of India. ---------------- Sheo Nandan Prasad, son of late Mohan Lal, resident of Mansurganj, Patna City in the District of Patna ------------- Petitioner. Versus 1. The Union of India. 2. The Vice Chairman, Settlement Commission (IT & WT), Additional Bench, 16B, Rowland Road, 5th Floor, Calcutta --------- Respondents. ----------- For the Petitioner : Mr. Ajay Kumar Rastogi, Advocate. For the Respondents: Mr.Harshwardhan Prasad, Sr. Standing Counsel. Mr. Rishi Raj Sinha, Jr. Standing Counsel. Ms. Archana Sinha. ----------- P R E S E N T THE HON'BLE MR. JUSTICE SUDHIR KUMAR KATRIAR THE HON'BLE MR. JUSTICE BIRENDRA PRASAD VERMA S.K.Katriar,J. This writ petition is directed against the order dated 22.6.1994, passed by the Settlement Commission (IT & WT), Additional Bench, Calcutta, in purported exercise of powers under Section 245 D(4) of the Income-Tax Act, 1961, (hereinafter referred to as „the Act‟), whereby the order of assessment as per the prescribed procedure has been passed and also orders have been passed for payment of interest. The present writ petition is confined to that part of the impugned order whereby interest has been imposed on the petitioner. 2. It relates to assessment years 1985-86, 1986-87, 1987-88, 1988-89 and 1989-90. The petitioner is a dealer in 2 food-grains. He approached the Settlement Commission in terms of Section 245C of the Act for assessment of his returns with respect to the said periods. The Settlement Commission passed the final order on 22.6.1994, and portion of which is impugned herein. As stated, learned counsel for the petitioner does not raise grievance with respect to the order of assessment which indeed is final under the provisions of the Act. The petitioner, however, raises a grievance with respect to the order passed by the Settlement Commission, whereby interest has been imposed. The relevant portion of the impugned order is reproduced hereinbelow: “7. INTEREST CHARGEABLE- Interest under section 139(8) of the Act shall be charged for 12 months in each of the assessment years 1985-86 to 1988-89. Interest chargeable as a result of this settlement under section 215/217 for those years is waived. Interest shall be charged in full as per law under sections 234A, 234B and 234C for assessment year 1989-90.” 3. While assailing the validity of the impugned order, learned counsel for the petitioner submits that the Tribunal has passed order for interest in a mechanical manner. He has not considered the relevant circulars which permit non- payment, or reduction in payment, of interest. Such an order, in his submission, has to be passed in accordance with law, taking into account the facts and circumstances of each case, and by recording reasons in support of the order. He relies 3 on the judgment of the Supreme Court in Commissioner of Income-Tax Vs. Anjum M.H. Ghaswala and others (2001) 252 ITR I. He also relies on the relevant circular dated 2.5.1994, which has been issued in terms of Section 119 (2)(a) of the Act. In other words, in his submission, the impugned order has been passed in complete oblivion of the circular. 4. Learned Junior Standing Counsel has supported the impugned action and submits that the Commission has no option but to impose interest in terms of Section 139(8)(a) of the Act. He next submits that no circular is on record as a result of which it is not possible for the respondents to verify applicability of one or the other circular in the present case. In any case, in his submission, the alleged circular orally relied on by learned counsel for the petitioner is dated 2.5.1994, whereas the present proceedings are with respect to the earlier assessment years. 5. We have perused the materials on record and considered the submissions of learned counsel for the parties. The issues are concluded by the authoritative pronouncement of the Supreme Court in Commissioner of Income Tax vs. Anjum M.H. Ghaswala and others(supra), wherein it has been held that the Settlement Commission is bound to impose tax in terms of Section 139(8)(a) of the Act. It can consider the petitioner‟s plea for waiver or reduction 4 in interest if the Board has issued a circular in terms of Section 119(2)(a) of the Act. The present Bench had the occasion of applying the said judgment of the Supreme Court in C.W.J.C. No.4152 of 1995 (Janki Sao Vs. Union of India & Ors.), and was dismissed by order dated 31.8.2010. It has been held by this Court that no such notice in terms of Section 119(2)(a) of the Act has been issued by the Board of Directors Taxes at the relevant point of time. Just the same situation occurred in the present proceedings where no circular has been placed on record to satisfy us that any such circular in terms of section 119(2)(a) of the Act was in force at the relevant point of time. In that view of the matter, the order passed by the Settlement Commission regarding realization of interest is consistent with the law governing the issue. 6. The writ petition is dismissed. In the facts and circumstances of the case, there shall be no order as to costs. B.P. Verma, J. I agree. High Court Patna, Dated 13th September, 2010 Vinay/N.A.F.R. ( S. K. Katriar,J. ) (Birendra Prasad Verma, J.) "