Capital Cables ( India) Pvt. Ltd. vs Income-Tax Settlement ...
2004 Latest Caselaw 368 Del

JUDGMENT

B.C. Patel, C.J.

1. All these petitions filed by different petitioners raise common questions and therefore, are decided by a common judgment.

2. The contention raised by the petitioners is that an order made by the Settlement Commission u/s 245D of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') is conclusive under Section 245I of the Act and it cannot be reopened in any proceedings under the Act, or any other law for the time being in force.

3. In all these cases, the applicants in the year 1994( in January or February) moved an application individually under Section 245-C of the Act. In all these cases, the Settlement Commission made an order under Section 245-D(1) on or about 21.4.1995. We are not referring to the assessment years for which the orders were passed by the Settlement Commission, as the same is not relevant for deciding the present controversy. After making an order under Section 245-D(1) of the Act, the Settlement Commission, after examination of all the material placed on record and after giving an opportunity to the applicants as contemplated, in exercise of the power under sub-section (4) of Section 245-D of the Act, made an order on or about 13.5.98. The terms of settlement are placed on record ( in CWP No. 3322/2003 at page 73- It is a part of the order under Section 245-D(4) at page 53). One of the terms of settlement i.e. No. 23, refers to waiver of interest under Section 234A, 234B and 234C. Other terms of settlement being not relevant for deciding this petition, are not referred to.

8. As against that, it was submitted by the learned counsel for the revenue that the powers can be exercised under the Act for rectification by the Settlement Commission and the Settlement Commission was within its power to rectify the order under Section 154 of the Act.

12. Section 245C of the Act specifically mandates the Settlement Commission to have a case settled and dispose it of in the manner provided 'hereinafter' meaning thereby that the case has to be disposed of in the manner prescribed in this chapter only.

19. On behalf of the assessed, it was submitted that the Court has not examined whether power under Section 154 could be exercised or not and without examining the same has proceeded on the assumption that the Settlement Commission had such powers.

20. It is in view of this, in our opinion, this judgment is of no assistance to the revenue as the Court has not come to the conclusion that the Settlement Commission has the power under Section 154(2) of the Act to rectify the mistake.

21. The Supreme Court in the CIT v. Hindustan Bulk Carriers, 259 ITR 449 pointed out that there is no power to waive tax or interest as tax or interest has to be determined under the provisions of the Act.

4. It appears that thereafter the Commissioner of Income-tax moved an application for rectifying a mistake apparent from the record before the Settlement Commission, inter alia, stating that the Commission has the power to grant immunity only from prosecution and penalty and it is not within the ambit of its power to make any order whereby statutory interest, as provided under section 234-A, 234-B and 234-C of the Act is waived or reduced. It was contended before the Commission that on the taxability of the income of the assesee on the basis of the record available before it, the Commission has to levy the mandatory chargeable tax on such income arrived at by it and wherever interest is due and liable under Section 234A 234B and 234C , it has to include the same in the settlement. A request was made to the Settlement Commission to recall sub-para (e) of para 23 of the terms of settlement order dated 13.5.98 and to issue direction to include statutory interest due under mandatory provisions of the Act and to pass further orders. These applications were filed under Section 245-F read with Section 154 of the Act. Show cause notice was issued on 17.3.2003 and the reply was filed on 28.3.2003. According to the counsel appearing for the parties, on the same date, the Settlement Commission made an order. However, from the record it transpires that in the case of Capital Cables ( CWP No.3322/2003), the application was heard on 24.3.2003 and the order was made on 26.3.2003 while in the case of other assesses the matter was heard on 28.3.2003 and the order was also made on the same date. Copies of orders are at Annexure P1 and P2 in CWP 3322/2003.

5. These petitions are filed against the order made by the Settlement Commission rectifying, modify or reviewing its earlier order and directing that interest either under section 234-A, 234-B or 234-C is required to be levied as in view of the Supreme Court judgment in CIT v. Anjum M.H. Ghaswala and ors, , 252 ITR 1, the Settlement Commission has no inherent power of waiver of mandatory interest.

6. It was pointed out to the Settlement Commission that there is specific bar under Section 245-I of the Act that the order made under sub-section (4) of Section 245D of the Act shall be conclusive as to matters stated therein and no matter covered by such order shall be re-opened in any proceedings under the Act or any other law for the time being in force. It was also pointed out that the Supreme Court in the case of Anjum MH Ghaswala (supra) has specifically pointed out that the Settlement Commission has no power to reopen any proceedings under the Act, as its orders in view of Section 245-I are conclusive. However, the Settlement Commission in view of the decision directed the Assessing Officer to charge interest.

7. Being aggrieved by the aforesaid decision of the Settlement Commission, the petitioners have contended before us that after the orders made on 13.5.1998, the Settlement Commission has no power to recall the earlier order made by it. It was further submitted that the said order was passed after considering the provisions of law and various decisions of the Supreme Court. It was further contended that if in some subsequent decision the Court has held that the Settlement Commission has no power to waive or reduce the interest, the finality of the order made by it in 1998 cannot be disturbed after a period of about four years.

9. Chapter XIX-A refers to settlement of cases. Section 245A provides the definitions. Section 245B makes a provision for constitution of a Settlement Commission. Section 245BA indicates jurisdiction and power of the Settlement Commission. Section 245BB indicates the entitlement of the Vice-Chairman to act as a Chairman under certain circumstances. Section 245BC provides power to transfer cases. Section 245BD provides for a decision by a majority.

10. Section 245C indicates the manner in which an application has to be made for settlement. Section 245D refers to proceedings after receipt of the application. Section 245DD provides for power of Settlement Commission for provisional attachment to protect the revenue. Section 245E provides for power of the Settlement Commission to reopen completed proceedings. Section 245-G provides for inspection. Section 245H provides for power of the Settlement Commission to grant immunity from prosecution and penalty. Section 245-I mandates that the order of the Settlement Commission shall be conclusive. Recovery of sum due is provided under Section 245-J of the Act. Subsequent application for settlement in cases are barred as per Section 245-K and Section 245-L indicates that proceedings before the Settlement Commission are judicial proceedings.

11. Thus, reading all these Sections, it is very clear that a separate chapter is provided for the Settlement Commission and keeping these aspects in mind, we are required to examine the matter. The Chapter itself is a complete code for settlement. Sub-clause(d) of Section 245-A refers to Income-tax Authority, i.e. an Income-tax Authority specified in Section 116 of the Act. The Settlement Commission is defined in sub-clause (f) of Section 245-A of the Act. Section 116 of Chapter XIII refers to Income-tax Authority. It refers to all authorities right from Income-tax inspector to Central Board of Direct Taxes . However, the Settlement Commission is not included in Section 116 of the Act. Section 117 refers to appointment of Income-tax authorities. Section 118 indicates the control of Income-tax authorities with the Board. Section 245B empowers the Central Government to constitute a commission.

13. Under sub-section (6) of Section 245D of the Act, terms of settlement include any demand by way of tax, penalty or interest, the manner in which any sum due under settlement shall be paid and also provides all other matters to make settlement effective. Sub-section (6) also states that the settlement shall be void if it is obtained by fraud or misrepresentation of facts. On failure to pay tax payable in pursuance of an order under sub-section (4) within 45 days of receipt of copy of order or where the Commission has extended the time limit for payment of such tax or has allowed Installments for payment thereof, the assessed shall be liable to pay simple interest @ 15% p.a. on the amount remaining unpaid from the date of expiry of the period.