Pr. Commissioner Of Income Tax ... vs M/S Frontline Business Solutions ...

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*       IN THE HIGH COURT OF DELHI AT NEW DELHI

+                        WRIT PETITION (CIVIL) No. 3030/2017

%                                      Date of decision: 26th October, 2017

        PR. COMMISSIONER OF INCOME TAX (CENTRAL)-2

                                                              ..... Petitioner

                              Through Mr. Asheesh Jain, Sr. Standing
                              Counsel.

                              versus

        M/S FRONTLINE BUSINESS SOLUTIONS PVT. LTD. &
        ORS.                             ..... Respondents

                              Through Mr. Saurabh Prakash & Mr. Kunal
                              Gosain, Advocates for respondent Nos. 1
                              and 3 to 6.

        CORAM:
        HON'BLE MR. JUSTICE SANJIV KHANNA
        HON'BLE MS. JUSTICE PRATHIBA M. SINGH


SANJIV KHANNA, J. (ORAL):

        This writ petition impugns the order dated 17 th March, 2016
passed by the Income Tax Settlement Commission (ITSC, for short)
on the miscellaneous application filed by the Principal CIT (Central -
2), New Delhi, seeking rectification of the rectification order dated
31st December 2015.




W.P. (C) No. 3030/2017                                     Page 1 of 4
 2.      The impugned order dismisses the said miscellaneous
application recording that the Principal Bench, ITSC had taken a
conscious decision while passing the rectification order under Section
245D(6B) of the Income Tax Act, 1961 (Act, for short) in view of the
amended provisions of Section 234B(2A) introduced with effect from
1st June, 2015.

3.      The aforesaid observation and finding of the ITSC cannot be
faulted for the reason that there cannot be rectification of the
rectification order.

4.      The respondent-assessee had approached the ITSC for
settlement of its disputes by moving an application under Section
245C of the Act.

5.      ITSC disposed of the settlement application vide order dated
29th June, 2015 under Section 245D(4) enhancing the undisclosed
income as declared. It was also directed that the assessee would be
liable to pay interest under Section 234B of the Act upto the date of
passing of the order under Section 245D(4) of the Act.

6.      The assessee had thereafter filed an application for rectification
of the order dated 29th June, 2015 on account of correction of
typographical errors and also direction to charge interest under Section
234B upto the date of order under Section 245D(4) as being against
law as the same was chargeable only upto the date of order under
Section 245D(1) of the Act.




W.P. (C) No. 3030/2017                                   Page 2 of 4
 7.      For detailed reasons, the Principal Bench of the ITSC by
majority of 2:1 allowed the rectification application holding that
interest would be chargeable under Section 234B upto the date of
order under Section 245D(1) only and not thereafter even on the
enhanced undisclosed income as decided vide order under Section
245D(4) of the Act dated 29th June, 2015. This order examines the
effect of insertion of sub-section 2A (b) of Section 234B of the Act
introduced with effect from 1st June, 2015 and the majority opinion
holds that the amended provision would be applicable to settlement
applications filed under Section 245C on or after 1st June, 2015 only
and not to orders of the ITSC passed on or after 1st June, 2015.

8.      Revenue, in the present writ petition, has only challenged the
order dated 17th March, 2016 and there is no challenge to the order of
the ITSC dated 31st December, 2015 by which the rectification
application of the assessee was allowed, accepting the contention of
the assessee that interest under Section 234B should be charged only
upto the date of order under Section 245D(1) and not upto the order
under Section 245D(4) of the Act, as amendment made by enacting
sub-section 2A(b) to Section 234B with effect from 1 st June, 2015 was
not retrospective and would not apply to pending applications.

9.      The Revenue would have to challenge this order dated 31 st
December, 2015 passed by the Principal Bench of the ITSC by filing
an appropriate writ petition. In the said petition, reference can be
made to the subsequent order dated 17th March, 2016 passed by the
ITSC, but as noticed above, this order dated 17th March, 2016 per se




W.P. (C) No. 3030/2017                                 Page 3 of 4
 cannot be held to be bad in law for the ITSC does not have power to
rectify, review or re-examine the order passed in the rectification
application.

10.     With the aforesaid observations, the present writ petition is
disposed of, clarifying that if and when Revenue prefers a fresh writ
petition, we would examine the issue on merits.        We have not
expressed any opinion on merits.



                                      SANJIV KHANNA, J.

PRATHIBA M. SINGH, J.

OCTOBER 26, 2017 VKR W.P. (C) No. 3030/2017 Page 4 of 4