Smt. Brij Nayyar V. Income Tax Settlement Commission, Delhi

CWP/11693/2003

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The case revolves around the Income Tax Settlement Commission's authority to reopen its concluded proceedings to levy interest under sections 234A and 234B of the Income Tax Act, 1961. The petitioner, Smt. Brij Nayyar, challenged the Commission's decision to rectify its earlier order, which had waived interest charges, based on a miscellaneous petition filed by the Income Tax Department. The court examined whether the Commission could invoke Section 154 for rectification and found that it could not, referencing the Supreme Court's decision in Brij Lal and others v. Commissioner of Income Tax, which clarified the Commission's limited powers in this context.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 796274 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 20-07-2012
• Assessment Year: misc
• Other Referred Cases: CIT v. Arjum M.H.Ghaswala and others, Brid Lal and others v. Commissioner of Income Tax, M/s Bansal Engineering Works v. Union of India and others
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: RAJESH KATOCH
• Assessee Lawyers: D K GOYAL
• Keywords: Advance tax; Interest Levy; Rectification; Settlement commission; Waiver
• Section: 154; 234B; 234A; 245D(4); 226; 227; 245D(6)

Judgement Text

"CWP no.11693 of 2003 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP No.11693 of 2003(O&M) Date of decision: 20.07.2012 Smt.Brij Nayyar -----Petitioner Vs. Income Tax Settlement Commission, Delhi and others ----Respondents CORAM:- HON’BLE MR. JUSTICE AJAY KUMAR MITTAL HON'BLE MR. JUSTICE GURMEET SINGH SANDHAWALIA Present:- Mr. D.K.Goyal, Advocate for Mr. Pankaj Jain, Advocate for the petitioner. Mr. Rajesh Katoch, Advocate for the respondent. Ajay Kumar Mittal,J. 1. The short question that arises for consideration in this petition filed under Articles 226/227 of the Constitution of India is whether the Settlement Commission could reopen its concluded proceedings by invoking Section 154 of the Income Tax Act, 1961 (in short, “the Act”) so as to levy interest under section 234B of the Act if it was not done in the original proceedings. 2. A few facts relevant for the decision of this case, as narrated in the petition may be noticed. The petitioner is an individual and proprietor of M/s Fashion Boom, Ludhiana. She derives income from the business of purchase and sale of woollen/semi woollen shawls. The CWP no.11693 of 2003 2 Settlement Commission vide order dated 21.3.2003, Annexure P.1 rectified its earlier order dated 21.6.1999, Annexure P.2 passed under section 245D(4) of the Act. The Settlement Commission vide its order dated 21.6.1999 had waived interest under section 234A of the Act for late filing of return as it was late for less than one year in view of decision of the Special Bench of the Tribunal in the case of M/s Gulraj Engineering Construction Company, and for non-payment/less payment of tax, interest under section 234B of the Act was to be paid on income so settled upto the date of filing of return and balance was waived as per powers under section 245D(6) of the Act. On 18.3.2003, a miscellaneous petition was filed by the Income Tax Department, Annexure P.7 seeking rectification of the said order on the ground that there was mistake apparent from the record in giving direction for not charging interest under section 234A of the Act and for charging interest under section 234B of the Act upto the date of filing of return for non payment of advance tax in view of judgment of the Hon'ble Supreme Court in the case of CIT v. Arjum M.H.Ghaswala and others, (2001) 252 ITR 1. The Settlement Commission considered the matter and allowed the necessary rectification to be carried out in the order dated 21.6.1999 and accordingly interest under sections 234A and 234B of the Act was levied. Consequently demand was raised vide Annexure P.4. Hence this petition. 3. Learned counsel for the petitioner relying upon judgment of the Apex Court in Brij Lal and others v. Commissioner of Income Tax, (2010) 328 ITR 477 and this Court in M/s Bansal Engineering CWP no.11693 of 2003 3 Works v. Union of India and others, CWP No.17402 of 2004, decided on 12.3.2012, submitted that the Settlement Commission had no jurisdiction to rectify its earlier order by invoking Section 154 of the Act and levying interest under Section 234A and Section 234B of the Act. 4. Learned counsel for the respondents, however, could not dispute the aforesaid proposition. 5. After hearing learned counsel for the parties, we find that the matter stands concluded by the judgment of the Hon'ble Supreme Court in Brij Lal's case (supra), wherein it was held as under:- “Proceedings before Settlement Commission are similar to arbitration proceedings. It contemplates assessment by settlement and not by way of regular assessment or assessment under section 143(1) or under section 143(3) or under section 144. In that sense,it is a Code by itself. It does not begin with the filing of the return but by filling the application for settlement. Under the Act, procedure for assessment falls in Chapter XIV (in which section 154 falls) which is different from procedure for settlement in Chapter XIX-A in which sections 245C and 245D fall. Provision for levy of interest for default in payment of advance tax under section 234B falls in Chapter XVII (Section F) which deals with collection and recovery of tax which is incidental to the liability to pay advance tax under section 207(which is also in Chapter XVII) and to the computation of total income in the manner indicated under Chapter XIX-A vide sections 245C(1B) and 245C(1C) read with the proviso to section 245C (1) on the additional income tax payable on the undisclosed income. Further,if one examines the provisions of sections 245C (1B) and 245(1C), one finds that various CWP no.11693 of 2003 4 situations are taken into account while computing the additional amount of tax payable viz., if the applicant has not filed his returns, if he has filed but orders of assessment are not passed or if the proceedings are pending for reassessment under section 147 (again in Chapter XIV) or by way of appeal or revision in connection with such reassessment and the applicant has not furnished his return of total income in which case tax has to be calculated on the aggregate of total income as assessed in the earlier proceedings for assessment under section 143 or under section 144 or under section 147 [see section 245C(1B)]. The point to be noted is that in computation of additional income tax payable by the assessee, there is no mention of section 154. On the contrary, under section 245-I the order of the Settlement Commission is made final and conclusive on matters mentioned in the application for settlement except in the two cases of fraud and misrepresentation in which case the matter could be reopened by way of review or recall. Like Tribunal, the Settlement Commission is a quasi judicial body. Under section 254(2), the Tribunal is given the power to rectify but no such power is given to the Settlement Commission. Thus, Settlement Commission cannot reopen its concluded proceedings by invoking Section 154. Lastly, one must keep in mind the difference between review/recall of the order and rectification under section 154. The schedule of Chapter XIX-A does not contemplate invocation of section 154 otherwise there would be no finality to the assessment by settlement which is different from assessment under Chapter XIV where there is an appeal, revision, etc. Settlement of liability and not determination of liability is the object of Chapter XIX-A. Even otherwise, invocation of section 154 on facts of its batch of cases is not justified. In this batch of cases, the situation which prevailed when the Settlement Commission CWP no.11693 of 2003 5 waived or reduced interest chargeable under sections 234A and 234B was that a debate was on as to whether the Settlement Commission has the power to reduce or waive interest. It is only after CIT v. Anjum M.H.Ghaswala and others, (2001) 171 CTR (SC) 1: (2001) 252 ITR 1 (SC) that the law got settled that the nature and the character of the interest was compensatory and mandatory and that the Commission had no such power.” 6. In view of the above, the writ petition is allowed and the impugned order dated 21.3.2003, Annexure P.1 is, hereby, set aside. (Ajay Kumar Mittal) Judge July 20, 2012 (Gurmeet Singh Sandhawalia) 'gs' Judge "