Income Tax Act, 1961 – ss. 154, 234A, 234B and 234C, Chapter XIXA – The appellants-assessee filed settlement applications before the Settlement Commission during the pendency of the assessment proceedings for determination of the tax liability – On 11.08.2000, the Settlement Commission passed an order and made certain additions and waived interest chargeable u/ss. 234A, 234B and 234C of the Act – Aggrieved, both appellant and Revenue filed rectification applications – Consequent to which, Settlement Commission by order dated 11.10.2002 rectified its order dated 11.08.2000 u/s.154 of the Act insofar as it pertained to waiver of interest, which was granted to the appellant-assessee – However, High Court set aside the Settlement Commission’s order dated 11.10.2002 – Thereafter, Revenue filed petitions against order dated 11.08.2000 in the High Court – High Court modified order of the Settlement Commission dated 11.08.2000 by reversing the waiver of interest in terms of Settlement Commission’s directions contained in its order dated 11.10.2002 – On appeal, held: The approach of the High Court was without jurisdiction – The High Court failed to see that the order dated 11.10.2002 of the Settlement Commission was already set aside by the High Court itself in the first round passed in the light of the law laid down by the Supreme Court in Brijlal case wherein it held that the Settlement Commission had no power to pass orders u/s. 154 of the Act – Therefore, keeping in view the law laid down in Ghaswala case and Brijlal case, the impugned order of the High Court and order dated 11.08.2000 passed by the Settlement Commission to the extent it decided the issue in relation to waiver of interest set aside – Case remanded to the Settlement Commission to decide the issue relating to waiver of interest payable by the assessee afresh.
Allowing the appeals, the Court
HELD: 1. In a situation like the one arising in the case, the High Court instead of going into the merits of the issue, should have set aside the order dated 11.08.2000 passed by the Settlement Commission and remanded the case to the Settlement Commission for deciding the issue relating to waiver of interest payable under Sections 234A , 234B, and 234C of the Act afresh keeping in view the scope and the extent of powers of the Settlement Commissioner in relation to waiver of interest as laid down in the Commissioner of Income Tax, Mumbai vs. Anjum M.H. Ghaswala & Ors., (2002) 1 SCC 633 and the other was rendered on 21.10.2010 in Brij Lal & Ors. vs. Commissioner of Income Tax, Jalandhar, (2011) 1 SCC 1. [Para 22] [285-E]
2. The High Court, however, committed a jurisdictional error when it observed that they (High Court) adopt the directions contained in the order of the Settlement Commission dated 11.10.2002 and then went on to make the said directions as a part of the impugned order in relation to waiver of interest. This approach of the High Court is wholly without jurisdiction. [Para 23] [285-F-G]
3. The High Court failed to see that the order dated 11.10.2002 of the Settlement Commission was already set aside by the High Court itself in the first round vide order dated 03.03.2014 passed in S.C.A. Nos. 15097 & 15101 of 2004 in the light of law laid down by this Court in Brijlal wherein it is laid down that the Settlement Commission has no power to pass orders under Section 154 of the Act. [Para 24] [285-G-H]
4. Since the order dated 11.10.2002 of the Settlement Commission 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 and nor it could be relied upon by the High Court much less for making it a part of their order for issuing a writ. [Para 25] [286-A-B]
5. Therefore, the impugned order and the order dated 11.08.2000 passed by Settlement Commission are set aside to the extent it decided the issue in relation to waiver of interest and remand the case to the Settlement Commission to decide the issue relating to waiver of interest payable by the assessee (appellants herein) afresh keeping in view the law laid down by this Court in Ghaswala and Brijlal after affording an opportunity to the parties concerned. [Para 26] [286-B-C]
Commissioner of Income Tax, Mumbai v. Anjum M.H. Ghaswala & Ors. (2002) 1 SCC 633 : [2001] 4 Suppl. SCR 303 ; Brij Lal & Ors. v. Commissioner of Income Tax, Jalandhar (2011) 1 SCC 1 : [2010] 11 SCR 1167 – relied on.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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