IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 36138 of 2004(B)
1. THE COMMISSIONER OF INCOME TAX,
... Petitioner
Vs
1. SETTLEMENT COMMISSION (IT & WT),
... Respondent
2. SHRI.K.A.DAVIS,
For Petitioner :SRI.P.K.R.MENON,SR.COUNSEL,GOI(TAXES)
For Respondent :SRI.K.R.SUDHAKARAN PILLAI
The Hon'ble MR. Justice K.BALAKRISHNAN NAIR
Dated :19/09/2008
O R D E R
K. BALAKRISHNAN NAIR, J.
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W.P.(C) No.36138 OF 2004
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Dated this the 19th day of September, 2008
J U D G M E N T
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The Commissioner of Income Tax challenges Ext.P3 order
of the 1st respondent, Settlement Commission(IT & WT), in this
writ petition. It is an order rejecting Exts.P2 and P2(A)
applications filed by the petitioner for rectification of certain
mistakes in Ext.P1(A) order.
2. The petitioner is aggrieved by paragraphs 7.1 and 7.2
of Ext.P1(A). The said portions of Ext.P1(A) are quoted below
for convenient reference.
“7.1 Regarding Section 234A Interest: Since
there was no delay in the filing of the IT return for the
assessment years 1991-92, 1994-95 and 1995-96, no
interest u/s 234A would be chargeable for these
assessment years. For the assessment year 1992-93,
we hold that no interest u/s 234A is chargeable in
respect of the period of delay of 4 months in the filing
of the Income Tax return, since there was a
reasonable cause for this delay as the applicant had
to face the action u/s 132 on 5.2.1992. However, for
the assessment year 1993-94, the interest would be
charged for the period of delay of 3 months in the
filing of the IT return on 21.7.1994, as against the due
date of 31.10.1993.
W.P.(C) No.36138/2004 2
7.2 The interest u/s 234B shall be charged upto the
date of the Section 143(3) order for the assessment
year 1991-92 and upto the date of the order u/s 143(1)
(a) for the assessment years 1992-93 to 1995-96 in the
light of the Special Bench decision of the Settlement
Commission, Bombay in the case of Guljaj
Engineering Construction Co. & Others
[215/ITR 1(AT)].”
3. Aggrieved by the waiver of interest allowed by
Settlement Commission under Sections 234A and 234B of the
Income Tax Act, The petitioner preferred Ext.P2 petition. It was
pointed out that the waiver granted was in violation of the law
laid down by the Constitution Bench of the Apex Court in
Commissioner of Income Tax v. Anjum M.H.Ghaswala and
others [252 ITR(1)] dated 18.10.2001. The said application was
considered and rejected by Ext.P3 by the 1st respondent in the
following manner.
“10.2. As regards the first Miscellaneous Petition
filed by the Department on 18.3.2002 relying on the
decision of Hon’ble Supreme Court CIT v. Anjum
M.H.Ghaswala and Others [2001] 252 ITR 1 (SC) it
is found that the matter is squarely covered by the
decision of Hon’ble Calcutta High Court in the case
of Netai Chandra Rarhi & Co.v. ITSC [2003] 263
ITR 186 (Cal). The relevant extracts have already
been quoted above in para 7.1. Respectfully following
the decision of the Hon’ble Calcutta High Court it is
held that as on the date of application the matter
regarding the ratio of decision in the case of CIT v.
W.P.(C) No.36138/2004 3
Anjum M.H.Ghaswala and Others was debatable and
therefore, rectification was not possible as on the
date of filing of Miscellaneous Petition by the
Department.”
4. The petitioner attacks the above decision contending
that when there is a direct decision of the Constitution Bench of
the Apex Court, the same can never be treated as a debatable
point by Inferior courts and Tribunals, even assuming a Bench of
two Judges of the Hon’ble Supreme Court have raised doubts
regarding the correctness of that decision.
5. Ext.P2(A) application was filed to correct the error in
Ext.P1(A) regarding the terminal date for charging interest
under Section 234B of the Income Tax Act. The Settlement
Commission ordered to charge interest for the respective
assessment years upto the date of order of assessment or the
date of intimation of that order, as the case may be. But, in view
of the decision of the Apex Court, the terminal date should be
the date of the decision of the Settlement Commission. The said
application was considered and rejected by the Settlement
Commission as per Ext.P3 order in the following manner.
W.P.(C) No.36138/2004 4
“11.1 As regards the second Miscellaneous Petition
filed by the Department on 3.7.2003 relying on the
decision of the Hon’ble Supreme Court in the case of
CIT v. Hindustan Bulk Carriers [2003] 259 ITR 449
(SC) it is held that the decision of the Hon’ble
Supreme Court was pronounced much after the
expiry of limitation period and therefore, the same
cannot be pressed into service for rectifying a
mistake which already got time barred on an earlier
date.
11.2 The second Miscellaneous Petition filed by the
Department on 3.7.2003 is also dismissed.”
6. The petitioner would submit that the Settlement
Commission has got inherent power to correct any mistake by
virtue of Section 245F of the Act and therefore, the Commission
should have allowed Ext.P2(A) application.
7. The 2nd respondent has filed a counter affidavit
supporting the impugned order and the petitioner has filed a
reply affidavit.
8. I heard Mr.P.K.R.Menon, learned Senior Counsel for
the Government of India (Taxes), and Mr.K.R.Sudhakaran Pillai,
learned Counsel who appeared for the 2nd respondent.
W.P.(C) No.36138/2004 5
9. It is not seriously disputed that when an application
for rectification is filed, within the permitted time limit, based on
a subsequent decision of the Apex Court, directly on the point ,
normally, it has to be entertained. But, in this case, the
Settlement Commission has rejected Ext.P2 on the ground that
the issue raised is a debatable issue. But, I feel that when there
is a decision of the Apex Court, no inferior court or Tribunal can
say that the issue is a debatable issue for the reason that a
Bench of two judges of the Apex Court has doubted the
correctness of the decision of the Constitution Bench. Even
assuming there is a final judgment of a two Judge Bench of the
Apex Court, the same has to be ignored and inferior courts and
Tribunals are bound to follow the decision of the Constitution
Bench in view of the law relating to precedents and also article
141 of the Constitution of India. So, the rejection of Ext.P2
application is unjustified. Accordingly, Ext.P3 order to the
extent it rejects Ext.P2 is set aside and the said application is
remitted to the 1st respondent for disposal, in accordance with
law, as expeditiously as possible.
W.P.(C) No.36138/2004 6
10. Ext.P2(A) application has been rejected on the ground
of limitation. Though the learned senior counsel appearing for
the writ petitioner raised several points to review that decision, I
feel that the view taken by the Settlement Commission is a
plausible view and this Court, while exercising its jurisdiction
under Article 226 of the Constitution of India, is not justified in
interfering with it. Normally, power to review or recall an order
can be exercised, if only, it is expressively conferred by the
statute. In limited circumstances, to correct patent mistakes
inherent jurisdiction is also conceded to Courts and Tribunals.
But, I think on the facts of the case, the point involved is not one,
where this Court should compel the Settlement Commission to
entertain a time barred petition. Normally, a petition barred by
time limit has to be rejected. Such an order cannot be described
as an order which is ultravires or one passed without
jurisdiction. In the result, the challenge against the rejection of
Ext.P2(A) is repelled.
The writ petition is disposed of as above.
(K.BALAKRISHNAN NAIR, JUDGE)
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