ORDER BY SETTLEMENT COMMISSIONPower to reviseSettlement Commission has no power to exercise the power of rectification under section 154, except in exercise of power inherent in it to do justice in a case where because of its action a party is not injured or in other words to rectify the injury caused to the party by reason of an order.
Income Tax Act, 1961 s.154
Rectification–POWER OFWhen can be used Held: Section 154 only confers power of rectification if there is a mistake apparent on the face of the record. Limit of rectification can be stretched only to the field where the mistake is glaring, obvious, patent and apparent on the face of the record. Glaring, obvious, patent and apparent mistakes are those for which no investigation into facts or determination of law or discussion of debatable points are involved, to establish which long drawn argument would not be necessary and in respect of which no two opinions are possible.
Income Tax Act, 1961 s.154
In the Calcutta High Court Dilip Kumar Seth & Rajendra Nath Sinha, JJ.
JUDGMENT
D.K. Seth, J.
The decision by the learned single judge dated 25-4-2003 ((2003) 263 ITR 186), is under challenge before us. The learned single judge had found that rectification sought for in this case by the department does not come within the narrow scope and ambit of section 154 of the Income Tax Act, 1961, for the reasons given in the said judgment. The department has preferred this appeal in this court.
Appellants points :
Mr. Shome, learned senior counsel for the appellant, had pointed out that the law with regard to the power of the Settlement Commission in waiving interest is settled in the case of Anjum Mohammed Hussain Ghaswala, In re (1998) 230 ITR (AT) 1 (SB). It is pointed out that the Commission had no power to waive interest chargeable under sections 234A, 234B and 234C. Therefore, it is a case covered under the provisions of section 154. Elaborate submission was made by Mr. Shome with regard to the applicability of the various decisions cited by Mr. R. N. Bajoria, learned senior counsel for the respondents, and also to the validity of the submission advanced by him.
Respondents points :
At the same time Mr. Bajoria had also made elaborate submissions and had met all the submissions advanced by Mr. Shome and had pointed out that the rectification that was sought for was not free from doubt. At the point of time when the rectification was sought for the decision in Anjum Ghaswala (1998) 230 ITR (AT) 1 (SB) had not come and was pending reference to a larger Bench of five judges and was decided subsequent to the stage when the rectification was asked for. Similarly, the other decision in CIT v. Damani Brothers (2002) 254 ITR 91 (SC) on which Mr. Shome had anchored his submission was also pending decision before the three-judge Bench, which decided the same later on. Therefore, it does not come within the purview of the scope where section 154 can be applied.
Facts
We would refer to the detailed submission made by the respective counsel at appropriate stages when occasion would require. In order to appreciate the situation, we may refer briefly to the facts of this case on which we are called upon to apply the principles of law argued by both learned counsel with apt erudition.
2. The respondent/assessee was carrying on business of licensed moneylender, jewellery and goldsmith, etc. On 24/25-2-1993, a search was conducted at the business and residential complex of the respondents. In the course of such search, jewellery, cash and other assets were seized. On deposit of Rs. 39,01,400 the seized jewellery was returned and the said sum became part of the seized cash. The respondents made an application for settlement of their tax liabilities before the Settlement Commission. The Settlement Commission by its order dated 27-11-1997, passed under section 245D(4) settled the case by accepting a sum of Rs. 41.25 lakhs as assessable income (page 28 of the PB). By the said order, it was further directed that no interest was to be charged (page 41 of the PB). The assessing officer gave effect to the said order dated 27-11-1997, passed by the Settlement Commission on 17-2-1998. The assessing officer refunded a sum of Rs. 17,34,375 out of the seized cash after adjusting the tax determined. All matters relating to tax liability of the respondents were fulfilled and finally settled. Long thereafter on 6-3-2002, a copy of the application dated 1/4-3-2002, was served on the assessee-respondent. In the said application rectification was sought for by the department in respect of the order dated 27-11-1997, passed under section 245D(4) of the Act (page 91 of the PB). The respondents submitted their objection to the said application (page 91 of the PB) on 19-3-2002. This rectification was allowed under section 154 holding that the interest under sections 234A, 234B and 234C was mistakenly waived. The respondents moved a writ petition before the learned single judge. The learned single judge was pleased to allow the writ petition and set aside the order of rectification by its order dated 25-4-2003.
3. Thus it appears the rectification was sought to be made on 1/4-3-2002. The decisions in CIT v. Hindustan Bulk Carriers (2003) 259 ITR 449 (SC) and CIT v. Damani Brothers (2003) 259 ITR 475 (SC) by a three-judge Bench of the apex court was rendered on 17-12-2002. Therefore at that point of time (1/4-3-2002) the question decided in Damani Brothers (2002) 254 ITR 91 (SC) was still awaiting decision. However, the decision proceeded on the basis of the decision in Anjum M.H. Ghaswala (1998) 230 ITR (AT) 1 by a seven member Special Bench of the Settlement Commission rendered on 12-12-1997, which, however, was operating in the field, which was not the basis on which this notice was issued. The Supreme Court (three-judge Bench) in Anjum Ghaswala (2001) 252 ITR 1 (SC) had settled the issue on 18-10-2001. In that decision all the three judges had pointed out that the Settlement Commission had no power to waive interest chargeable under sections 234A, 234B and 234C while passing the order under section 245(4).
4. Reliance was placed by Mr. Shome on Anjum M.H. Ghaswala (1998) 230 ITR (AT) 1, a decision of a seven member Special Bench of the Settlement Commission on 12-12-1997. Whereas the Settlement Commission has passed the final order on 27-11-1997, namely, before Ghaswala (1998) 230 ITR (AT) 1 decision by the Settlement Commission overruling Ashwani Kumar Aggarwal, In re (1992) 195 ITR 861 (ITSC) (SB). In Ashwani Kumar Aggarwal (1992) 195 ITR 861 (ITSC) (SB) the jurisdiction of the Settlement Commission to waive interest was recognised. The order was given effect to on 17-2-1998. It was only on 18-10-2001, the five-judge Bench of the Supreme Court in CIT v. Anjum M.H. Ghaswala (2001) 252 ITR 1 approved Ashwani Kumars case (1992)195 ITR 861 (ITSC) (SB) reversing the seven-member Special Bench decision (1998) 230 ITR (AT) 1 (ITSC) (SB) holding that the Settlement Commission could reduce/waive the interest under sections 234A, 234B and 234C in accordance with the circular of the Board. A Bench of two learned judges of the Supreme Court in CIT v. Damani Brothers (2002) 254 ITR 91 noticed the Constitution Bench decision in Ghaswala (2001) 252 ITR 1 (SC) and referred the matter for consideration of a larger Bench on 11-2-2002, the application for rectification was made on 1/4-3-2002. On the basis thereof the Settlement Commission passed the order of rectification under section 154 holding that the interest payable under sections 234A, 234B and 234C was waived by mistake on 20-3-2002. Whereas the larger Bench of three judges of the Supreme Court delivered its decision on 17-12-2002 in CIT v. Hindustan Bulk Carriers (2003) 259 ITR 449 and CIT v. Damani Brothers (2003) 259 ITR 475.
Appellants submission :
Mr. Shome had contended that the principle was settled by the five-judge Bench in Ghaswala (2001) 252 ITR 1 (SC) on 18-10-2001, after which the notice was issued. The reference to a larger Bench in Damani Brothers (2003) 259 ITR 475 did never cast any doubt on the principle laid down in Ghaswala (2001) 252 ITR 1 (SC). He contended further that the subsequent settlement of the legal proposition is one of the grounds on which rectification can be asked for. He also referred to sections 245-1 and 24517(1) to support his contention. According to him, mistake of law on the basis of the subsequent Supreme Court decision is rectifiable under section 154. To support this contention, he relied on Nav Nirman (P) Ltd. v. CIT (1988) 174 ITR 574 (MP) ; Kil Kotagiri Tea and Coffee Estates Co. Ltd. v. ITAT (1988) 174 ITR 579 (Ker) ; CIT v. Smt. Aruna Luthra (2001) 252 ITR 76 (P&H)(FB). He also contended that the Settlement Commission can rectify errors under section 154 notwithstanding section 245-1 in view of the provisions contended in section 245F(1). In support of this contention, he relied upon assessing officer of Sanjaybhai R. Patel v. assessing officer, Asst. CIT (2004) 267 ITR 129 (Guj). To support his contention that the Settlement Commission has no power to waive or reduce interest, he relied on the decision in CIT v. Anjum M.H. Ghaswala (2001) 252 ITR 1 (SC), of a five-judge Bench. This decision, according to him, cannot be doubted neither was it doubted by the two-judge Bench in Damani Brothers (2002) 254 ITR 91 (SC) nor in the three-judge Bench decision in Damani Brothers (2003) 259 ITR 475 (SC). On the other hand, the two-judge Bench in Damani Brothers (2002) 254 ITR 91 (SC) followed the ratio of the five-judge Bench and referred only one question to the three-judge Bench, whether the Settlement Commissioner gets a complete role in substitution of the other authorities under the Act. The three-judge Bench in Damani Brothers (2003) 259 ITR 475 (SC) followed Ghaswala (2001) 252 ITR 1 (SC). The three-judge Bench clearly held that interest under sections 234A, 234B and 234C becomes payable on the income already disclosed in the return as well as those disclosed before the Settlement Commission. Another three-judge Bench in Hindustan Bulk Carriers (2003) 259 ITR 449 (SC) following Ghaswala (2001) 252 ITR 1 (SC) took the same view. Therefore, there was no doubt as to the ratio in Ghaswala (2001) 252 ITR 1 (SC). According to him, the Settlement Commission failed to consider the decision in Ashwani Kumar (1992) 195 ITR 861 (SB) and, therefore, it had committed a mistake as such the error was rectifiable under section 154. Thus the decision in Geo Miller and Co. Ltd. v. Dy. CIT (2003) 262 ITR 237 (Cal) has no manner of application in the present case. The error was not sought to be rectified on the basis of the pre-existing law laid down by the larger Bench in Ashwani Kumars case (1992) 195 ITR 861 (ITSC) (SB) and incidentally the ratio in Ashwani Kumars case (1992) 195 ITR 861 (ITSC) (SB) was subsequently affirmed by the Constitution Bench in Ghaswala (2001) 252 ITR 1 (SC). Therefore, the order passed by the learned single judge cannot be sustained and that of the Settlement Commission should be affirmed. Mr. Shome had also in his reply distinguished all the decisions cited by Mr. Bajoria and had contended that here the rectification does not require any long drawn argument and mistake is apparent and there cannot be any two opinions with regard thereto.
The respondents submission
Mr. Bajoria, on the other hand, had contended that no proceeding for rectification would lie where investigation into facts or determination afresh of the facts or issues and the debatable points are involved. It is offl glaring, obvious and patent mistake that can be the subject matter of rectification. In this case, the factual position apart from other legal issues was required to be determined. Even in the factual position there was no glaring patent mistake apparent on the face of the record rectifiable. The notice of rectification was issued on the basis of presumption and assumption for the purpose of appreciating the situation. It would be necessary to examine the statements made in the rectification application forming the foundation therefor. He pointed out that the grounds made out are based on assumption and presumption and that the Commission had never examined or considered the circular issued by the Board and that the waiver or reduction of interest could not be on the basis of any circular of the Board. However, the Supreme Court had reversed the seven-Member decision of the Settlement Commission in Anjum Ghaswala (1998) 230 ITR (AT) 1 (SB). In Anjum Ghaswala (2001) 252 ITR 1, the Supreme Court had held that the Commission had power to waive interest only to the extent and in accordance with the circular issued by the Board under section 119 of the Act and no further. In Ashwani Kumars case (1992) 195 ITR 861 (ITSC) (SB) the five-Member Bench had also held so since approved by the Supreme Court in Ghaswala (2001) 252 ITR 1.
5. According to Mr. Bajoria, the rectification proceeding is wholly without jurisdiction and illegal for the following reasons, namely, (1) the order sought to be rectified was passed under section 254D(4) on 27-11-1997, whereas the decision in the seven-Member Bench of the Commission in Ghaswala (1998) 230 ITR (AT) 1 (SB) was rendered on thereafter on 12-12-1997. Thus Ghaswalas case (1998) 230 ITR (AT) 1 (SB) was not the basis of waiver of interest ; (2) the application for rectification proceeds on surmises, assumption and presumption as to what the Commission might have taken into consideration while waiving interest ; (3) how far the Commission had taken into consideration Ashwani Kumars case (1992) 195 ITR 861 (ITSC)(SB) and the circular while granting waiver needs an investigation into facts and also to arguments with reference to presumption, assumption and surmises made in the rectification application ; (4) in Ghaswalas case (2001) 252 ITR 1 the Supreme Court did not hold that in no circumstances interest can be waived, on the other hand it had held that waiver should be granted in terms of the circular. According to him, investigation into facts, debate and fresh adjudication on the question of applicability of the circular would be involved. It was alleged in the rectification application that the circular was not considered. Whether the circular was considered or not or the extent of its applicability cannot be gone into afresh; (5) the contention that Rs. 45,000 was the tax liability and the rest of the benefit of the circular would be hardly of any consequences. The contention that Rs. 45,000, was assessed is incorrect. Inasmuch as Rs. 39.01 lakhs was assessed and after adjustment having been furnished in replacement of the seized jewellery and even then out of the said amount income-tax liability after adjusted to the tune of Rs. 17.34 lakhs was returned ; (6) in a rectification application the facts cannot be gone into for determining the applicability of this circular and its extent for determining the quantum for which the waiver or reduction is allowed ; (7) inordinate delay stands in the way ; and (8) under section 245D(4) the order of the Settlement Commission under section 245D is conclusive and cannot be reopened except as otherwise provided in Chapter XIX-A itself. To support this contention, reliance was placed in Capital Cables (India) Pvt. Ltd. v. Income-tax Settlement Commission (2004) 267 ITR 528 (Del).
Scope of section 154 : The present case :
6. Extreme erudite arguments have been made by the respective counsel. Complicated issues or questions and questions of law were dealt with. Extensive citations were cited by the respective counsel. We do not think that in this case it is necessary to go into all those intricacies of law as has been ably argued by both learned counsel. The question is to be looked into within the scope and ambit of section 154 of the Income Tax Act, 1961. The rectification would be permissible if the case comes within the purview of the scope for rectification as has been settled by various decisions operating in the field. We have occasion to deal with this question in the decisions in Vijay Mallya v. Asst. CIT (2003) 263 ITR 41 (Cal) and Kesorant Industries Ltd. v. CIT (2004) 271 ITR 501 (Cal) (ITA No. 359 of 2000) disposed of by us on 13-7-2004. The learned single judge has also proceeded on the said principle and rightly allowed the writ petition. On which the scope of section 154 is hinged can be found in the decision in T.S. Balaram, Income Tax Officer v. Vokart Brothers (1971) 82 ITR 50 (SC). The proposition of law is well settled. The Income Tax Act has not conferred any jurisdiction to review any or either of the authorities under the provisions. The Code of Civil Procedure is not applicable in a proceeding under the Act ; neither section 151, Code of Civil Procedure, can be conceived of to enable the authorities under the Act to exercise inherent power. The power that has been specifically conferred upon the authorities is that under section 154 or under section 254 or section 263, as the case may be. We are now concemed with section 154. Section 154 only confers power of rectification if there is a mistake apparent on the face of the record. The settled proposition as has been laid down by different decisions including Volkart Brothers (1971) 82 ITR 50 (SC) and all subsequent decisions following it are that the limit of rectification can be stretched only to the field where the mistake is glaring, obvious, patent and apparent on the face of the record. Glaring, obvious, patent and apparent mistakes are those for which no investigation into facts or determination of law or discussion of debatable points are involved, to establish which long drawn argument would not be necessary and in respect of which no two opinions are possible.
7. In order to find out all these ingredients, one has to look into the basis on which the rectification was sought to be made. This can be found from the application made by the party, detailing the grounds for rectification. It may be mentioned either in the notice under section 154 or it may be found from the application on the basis whereof the notice under section 154 was issued. In case such notice is issued suo motu, then it has to be found out from the formation of opinion in the order pursuant to which the section 154 notice is issued.
8. In the present case, there was an application in which the grounds were disclosed. We would find that application at page 91 of the paper book. We may beneficially quote the text of the said application as hereafter :
“1. The Settlement Commission, Addl. Bench, Kolkata, vide its order passed under section 245D(4) on 27-11-1997, in the above case/ cases has waived interest under sections 234A, 234B and 234C of the Income Tax Act, 1961, for the above assessment years vide page 14 of the said order. While waiving the interest the honble Commission has observed as under :
Interest chargeable
In view of the co-operation extended by the applicant in the settlement of his case, no interest under various sections will be charged.
2. The Commission has not specified which interest they are waiving. Since the assessment years involved are 1989-90 to 1992-93, it is presumed that they are waiving interest chargeable under sections 234A, 234B and 234C. It seems the Commission has waived the above interest by presuming that they have inherent power under section 245D(6) to waive or reduce interest chargeable under sections 234A, 234B and 234C of the Income Tax Act. However, in Ashwani Kumar Agarwals case (1992) 195 ITR 861 (ITSC), the Special Bench of the Settlement Commission has held that under section 245D(4) or under section 24513(6), the Commission does not have power either to waive or to reduce the statutory interest payable under the Act. The waiver/reduction of interest chargeable under these sections, is not permissible and the Commission is bound to follow the Special Bench decision in Ashwani Kumars case (1992) 195 ITR 861 (ITSC) which was decided by a larger Bench and this additional Bench was legally bound to follow the decision of the larger Bench. Ignoring the decision of the Special Bench in Ashwani Kumars case (1992) 195 ITR 861 (ITSC) is an error of law apparent from the record. The erroneous view of the Additional Bench, Kolkata, found a temporary support from the Special Bench decision in Anjum M.H. Ghaswala (1998) 230 ITR (AT) 1 (ITSC). However, the honble Supreme Court vide its judgment in the case of CIT v. Anjum M.H. Ghaswala (2001) 252 ITR 1 has reversed the said decision of the Special Bench of the Settlement Commission and upheld the decision of the Commission in Ashwani Kumars case (1992) 195 ITR 861 (SB). It has been held by the Supreme Court in Ghaswalas case (2001) 252 ITR 1 that the Commission does not have power to reduce/waive statutory interest chargeable under sections 234A, 234B and 234C, except to the extent of granting relief under the circulars issued by the Board. In this regard it is also submitted that the Commission has been waiving or reducing interest only on the basis of the Special Benchs decision in Ghaswalas case (1998) 230 ITR (AT) 1 (ITSC) quoted above. The Commission never examined or considered any circular issued by the Board for such waiver or reduction of interest. Thus the waiver or reduction of the interest by the Commission could not be on the basis of any circular of the Board.
3. Now that the Special Benchs decision of the Commission has been reversed by the honble Supreme Court, the said interest under sections 234A, 234B and 234C was incorrectly waived. You are accordingly requested to rectify/modify/withdraw that part of the order of the Commission, waiving or reducing interest under sections 234A, 234B and 234C restore the said interest charged/chargeable by the assessing officer.
4. The order under section 245D(4) was passed by the Commission on 27-11-1997. Thus the limitation to pass order under section 154 by the Commission expires on 31-3-2002. The honble Commission is prayed to decide this petition before the expiry of limitation.”
9. It appears that the department has not contended that the mistake is glaring, obvious, patent and apparent on the face of the record. On the other hand, it proceeds to surmise and presume certain things, which weighed with the Settlement Commission. It proceeded on the basis of assumption and presumption. At the same time, we have also found that there was a circular which is at page 126 of the paper book under which the power of reduction or waiver of interest under sections 234A, 234B and 234C was recognised by the department itself. Whether pursuant to such circular, the interest was waived or not is not apparent from the order. Whether in spite of Ghaswalas decision, the circular could be overlooked altogether and that Ghaswalas case (2001) 252 ITR 1 (SC) proceeded on the basis that there was no power to waive or reduce interest except under any circular. How the circular would be fitting in the decision of Ghaswala (2001) 252 ITR 1 (SC) is a question of argument and in respect whereof two opinions may be possible and at the same time the role of the Settlement Commission as a whole was in question in Damani Brothers (2002) 254 ITR 91 (SC) since referred to a larger Bench. Despite the decision in the five-judge Constitution Bench in Ghaswala (2001) 252 ITR 1 (SC) and the decision on Damani Brothers (2003) 259 ITR 475 (SC) by a three judge Bench upon such reference was rendered after the final order of rectification was passed, namely, expiry of limitation. Thus by reason of Ghaswalas decision (2001) 252 ITR 1 (SC), it cannot be conclusively concluded that the mistake was rectifiable under section 154, though a subsequent contrary decision in law is a ground for rectification.
11. In the present case, what the department had asked for on the strength of the application at page 91 is virtually a review, a power which is absent in the authorities. As discussed above, this is not a case, as rightly pointed out by the learned single judge, coming within the narrow scope and ambit of rectification under section 154. On the other hand, it stretches to the field of review, a power not available with the income-tax authorities.
An analysis of the appellants submission :
In view of our above decision, we may now answer Mr. Shomes contention on point No. 1 that a mistake of law on the basis of the subsequent Supreme Court decision is rectifiable under section 154 is a settled proposition of law and the decisions cited by Mr. Shome seem to propound the settled principle of law on which we need not dilate any more. Since the mistake does not come within the purview of section 154 as we have observed, it is not necessary to answer the second question raised by Mr. Shome whether the Settlement Commission can rectify an error under section 154 notwithstanding section 245-1 and section 24517(1). But, however, the question has since been raised, we may express our view as hereafter.
Scope of section 245-I vis-a-vis section 245F(1) :
It appears to us that by reason of the scheme of Chapter XIX-A once an order under section 2451)(4) is passed, the same becomes final and cannot be reopened except as provided in Chapter XIX-A. But the provisions of section 245-1 have to be read in consonance with the scope of the entire Chapter and all the provisions incorporated in the Chapter are to be given its due meaning so as to reconcile each other. Section 245F(1) gives all powers to the Settlement Commission in addition to the powers conferred upon it under Chapter XIXA as are vested in an income-tax authority under the Act which includes the authority to rectify under section 154 alone with which we are concerned. The intention of the Legislature was to give finality to a determination under section 245D(4) and it cannot be reopened in any proceeding under the Act or under any other law for the time being in force. Having regard to the scheme of the Chapter, it appears that section 245F was introduced in order to give full power to the Settlement Commission to exercise its power under Chapter XIX-A. But by reason of section 245-1, it seems to us that this power under section 245F is limited and confined within the scope of exercise of the power under Chapter XIX-A that is up to the passing of the final order. As soon as a final order is passed by reason of section 245-I, the same becomes conclusive and cannot be reopened except as provided in Chapter XIX-A. Chapter XIX does not provide for any power of rectification except in exercise of power inherent in it to do justice in a case where because of its action a party is not injured or in other words to rectify the injury caused to the party by reason of an order. Apart from this extremely limited scope, it has no power to exercise the power of rectification under section 154 under any other circumstances. This is apparent from section 245HA where the application of section 154 is confined only in respect of cases coming under section 245C since remanded to the assessing officer on account of non-co-operation of the assessee. When the statute specifically provides that section 154 is applicable only in a limited sphere, then on the face of the provisions contained in section 245-1 such power cannot be exercised by the Settlement Commission unless it is necessary in extreme cases.
11. In our view the present case does not fall within such an extreme case where the power of rectification that inheres in the Tribunal can be exercised. The Settlement Commission has no inherent power to exercise the jurisdiction under section 154 after a final order is passed and becomes conclusive by reason of section 245-1. We are unable to agree with the reasoning given by the Gujarat Division Bench in Assessing Officer of Sanjaybluzi R. Patel v. Assessing Officer Asst. CIT (2004) 267 ITR 129 (Guj). On the other hand, we are in full agreement with the reasoning given by the Delhi High Court Division Bench in Capital Cables (India) Pvt. Ltd. v. Income-tax Settlement Commission (2004) 267 ITR 528 (Del).
We have already answered questions Nos. 3 and 4 raised by Mr. Shome, as discussed above.
Analysis of the respondents submission
If we rely on the decision in CIT v. Oriental Co. Ltd. (1995) 215 ITR 844 (Cal) of this court, in that event, it would be difficult for us to arrive at a definite conclusion with regard to the present situation. Inasmuch as in the said decision, it was held that the allocation of expenses between business income and income from other sources would not be the subject matter of rectification proceedings. Drawing analogy therefrom Mr. Bajoria had contended that this is also such a case where it is just not possible to decide whether interest can be waived or not. The Delhi High Court in Capital Cables (India) Pvt. Ltd. (2004) 267 ITR 528 had held that rectification proceeding for charging interest on the basis of the Supreme Court decision in Ghaswalas case (2001) 252 ITR 1 was struck down. In the case of CIT v. Damani Brothers (2002) 254 ITR 91, a Division Bench of the Supreme Court considering the power of the Settlement Commission to waive interest under sections 220(2) and 234B of the Act referred the matter to a larger Bench on 11-2-2002. After noticing Ghaswalas case (2001) 252 ITR 1 (SC) at page 94 of the reports, it was observed that :
“Serious issue has been raised in the matter before us with directly conflicting stands on either side as to the extent of powers that could be exercised by the Settlement Commission, pursuant to the applications filed under section 245C of the Act.”
Thereafter, at page 97 of the reports, the issue was posed as under :
“Does the Settlement Commission get a complete role in total substitution of the other authorities under the Act, and if so, for what purpose and to what extent. An answer to the questions thus raised before us may call for a detailed consideration of the views expressed in the earlier decisions in order either to further elaborate or to confine them in a matter that is desirable or permissible in terms of the scheme, the language used and the purpose underlying the various statutory provisions. Therefore, we would consider it more appropriate as well as proper to have the matter referred for the consideration of a larger Bench than merely a Bench of two judges as we are. Such questions, being recurring in nature, deserve to be decided at an early date.”
12. It would thus be seen that in Ghaswalas case (2001) 252 ITR 1 all the aspects relating to waiver of interest had not been dealt with by the Supreme Court. The distinction sought to be made by the appellants that the case of Damani Brothers (2002) 254 ITR 91 (SC) was dealing with section 220(2) of the Act and not sections 234A, 234B and 234C of the Act dealt with in Ghaswalas case (2001) 252 ITR 1 (SC) is not correct. It would appear from page 94 of the reports, where the facts of S. L. P. (C) Nos. 18012-18015 of 2000 have been noted, that section 234B was also involved. Even otherwise, under section 220 also circumstances are specified under which interest can be waived as in the case of interest under sections 234A, 234B and 234C by the circular. Merely because such circumstances are specified in one case in the statute itself and in the other by the circular issued under the statutory provisions would make no difference. The matter was reconsidered by the Supreme Court in the case of CIT v. Hindustan Bulk Carriers (2003) 259 ITR 449 and in the case of CIT v. Damani Bros. (2003) 259 ITR 475 (SC), both decided on 17-12-2002. In the said decision in Hindustan Bulk Carriers (2003) 259 ITR 449 (SC) each of the learned judges delivered separate judgments running into 26 pages. The case of Damani Brothers (2003) 259 ITR 475 (SC) was also considered by the same Bench and the said decision also runs into 10 pages. In the said decisions, interest under sections 234A, 234B and 234C was also considered and the law clarified. In the circumstances, the submission of the appellants that the law had been finally settled by the Supreme Court in all its aspects in Ghaswalas case (2001) 252 ITR 1 and the reference by the Division Bench of the Supreme Court to the larger Bench of the issues involved is not relevant is not correct. It appears that all aspects relating to charging of interest had not been finally decided by the Supreme Court in Ghaswalas case (2001) 252 ITR 1.
13. Another contention, which was raised before the learned trial judge in the alternative was that a subsequent decision of the Supreme Court in another case could not be the basis for any rectification proceedings. The learned trial judge decided the issue against the respondents relying upon a decision of the Supreme Court in the case of S.A.L. Narayana Row, CIT v. Model Mills Nagpur Ltd. (1967) 64 ITR 67. The contention of the appellants that the respondents cannot agitate the said issue is not correct as they are entitled to support the judgment of the learned trial judge on any ground decided against them as provided in order 41, rule 22 of the Civil Procedure Code.
14. The decision in the case of Narayana Row (1967) 64 ITR 67 (SC) does not deal with the issue whether a subsequent decision of the Supreme Court in the case of another person can form the basis for rectification.
15. The decision of the Supreme Court laying down the law cannot be equated with retrospective legislation. A Division Bench of this hon’ble court in the case of Jiyajeerao Cotton Mills Ltd. v. Income Tax Officer (1981) 130 ITR 710 had held that a subsequent decision of the Supreme Court cannot be the basis of any rectification proceedings (page 731 of the reports). Special leave petition against the said decision was dismissed by the Supreme Court (1983) 142 ITR (St.) 2. In the case of Geo Miller & Co. Ltd. v. Dy. CIT (2003) 262 ITR 237, a learned single judge of this hon’ble court has also so held.
Conclusion :
The decision of the Gujarat High Court in the case of AOP of Sanjaybhai R. Patel v. Assessing Officer/Asst. CIT (2004) 267 ITR 129 is not relevant and in any event is erroneous for the reasons following : (a) in the said case the order-of settlement was passed after Ghaswala’s case (1998) 230 ITR (AT) 1 (SB) was decided by the Settlement Commission unlike the respondents’ case herein; (b) the rectification order was passed by the Settlement Commission after the reference to a larger Bench in the case of Damani Bros. (2002) 254 ITR 91 (SC), but before it was decided by the Supreme Court; (c) it does not deal with and decide the issue that in rectification proceedings investigation into facts relating to circumstances in which order of waiver was passed ; applicability of circular, etc., cannot be considered. It has rather proceeded on the basis as if interest had to be charged in all circumstances ignoring the fact that the Supreme Court had not so held ; (d) the decision, as the Delhi High Court points out, proceeded after recording that it need not go into the issue whether section 154 of the Act applied or not ; (e) the finding that the subsequent decision of the Supreme Court can be a ground for rectification is contrary to the Division Bench decision of this hon’ble court in the case of Jiyajeerao Cotton Mills Ltd. (19811130 ITR 710.
16. We do not think we are called upon to answer the other questions raised by the respective counsel for the parties or dwell on the decisions cited by them respectively.
Order :
In the result, the appeal fails and is hereby dismissed. The order of the learned single judge is hereby affirmed. The order of rectification impugned in the writ petition is hereby set aside and quashed.
There will, however, be no order as to costs.
Urgent xerox certified copy of this judgment, if applied for, the same be supplied within seven days.
Rajendra Nath Sinham, J.
I agree.
