TMI Blog2004 (9) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... OTI SENGUPTA. JUDGMENT Kalyan Jyoti Sengupta J.- All these matters were heard together as the points involved therein are identically the same. Therefore, the decision to be rendered will cover all these four matters. The facts are more or less identical. On different dates the learned Settlement Commission of the Income-tax Department accepted the proposal of the assessees for settlement of the cases and dues of the respective petitioners. In the case of Smriti Properties Private Ltd., the assessment years related to 1989-90 to 1994-95 and the orders were passed by the Settlement Commission by the Bench of three learned members on March 16, 1999. By the said order, interest which would ordinarily have been chargeable under the various provisions of the said Act was either partially or fully waived. On March 10, 2003, the income-tax authorities filed a miscellaneous petition before the Commission whereby it was contended on behalf of the Revenue that the said orders need rectification in view of the decision of the apex court rendered in the case of Hindustan Bulk Carriers [2003] 259 ITR 449; [2003] 3 SCC 57. By this judgment the apex court reversing the earlier decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowed in the quasi-judicial proceeding, demanded that the order of three members of the Bench ought not to have been dealt with by a two member-Bench. He further submits assuming the said Bench has jurisdiction then application for rectification under section 154 ought not to have been entertained as it is settled position of law that mistakes could be rectified when the same are found to be obvious and patent one and no further elucidation and/or argument are required. In other words any mistake of fact or law committed previously cannot be rectified under the aforesaid section. The Settlement Commission has power to waive or reduce statutory interest. The order impugned did not suffer from any patent or obvious mistake on the face of it. The grounds on which the earlier order in effect has been reversed so far the waiver of interest portion is concerned, are not tenable under the law as the subsequent decision of the Supreme Court though has got the force of law, cannot be applied retrospectively. In support of his argument he has sought reliance on the judgments reported in CIT v. Anjum M. H. Ghaswala [2001] 252 ITR 1 (SC); Netai Chandra Rarhi and Co. v. ITSC [2003] 263 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court judgment as no argument nor any elaboration of further fact or law was required. The Supreme Court while reversing the earlier judgment has held that the Settlement Commission has no jurisdiction to waive interest under Income-tax Act, 1961, in the case of Hindustan Bulk Carriers [2003] 259 ITR 449 (SC). Therefore, in this case it is a question of jurisdiction and/or authority to waive interest. The Commission itself on the subsequent pronouncement of the law rectified the same. According to him the pronouncement of the Supreme Court which has the effect of law, can be given retrospective effect, and this should be given effect from the date when the law itself came into force, though the Supreme Court might have explained the scope and effect of the provision of law by the judgment at a later stage. This is the principle of law for applying the Supreme Court judgment. However, there is an exception in the case where the Supreme Court makes it clear expressly that the judgment shall operate prospectively. In support of his submission he has relied on the decision of various courts reported in Walchand Nagar Industries Ltd. v. V.S. Gaitonde, ITO [1962] 44 ITR 260 (Mah); ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncipal Bench and the other Benches shall be known as additional Benches. (4) Notwithstanding anything contained in sub-sections (1) and (2), the Chairman may authorize the Vice-Chairman or other Member appointed to one Bench to discharge also the functions of the Vice-Chairman or, as the case may be, other Member of another Bench. (5) Notwithstanding anything contained in the foregoing provisions of this section, and subject to any rules that may be made in this behalf, when one of the persons constituting a Bench (whether such person be the Presiding Officer or other Member of the Bench) is unable to discharge his functions owing to absence, illness or any other cause or in the event of the occurrence of any vacancy either in the office of the Presiding Officer or in the office of one or the other Members of the Bench, the remaining two persons may function as the Bench and if the Presiding Officer of the Bench is not one of the remaining two persons, the senior among the remaining persons shall act as the Presiding Officer of the Bench: Provided that if at any stage of the hearing of any such case or matter, it appears to the Presiding Officer that the case or matter is of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicability of this sub-section depends upon certain situation mentioned therein. The circumstances and situations amongst others are absence, illness or any other cause or in the event of occurrence of any vacancy either in the office of the presiding officer or of one of other members. So, I am unable to accept the contention of the learned Additional Solicitor General that the Bench can be constituted with two members. In my reading and understanding the reasonable interpretation would be while harmonising sub-sections (1), (2) and (5) of section 245BA read with section 245BD that the Bench has to be formed with at least three members with the Chairman or the Vice-Chairman, as the case may, as a presiding officer and the case and/or the matter has to be placed before this body constituted as I have already observed. Anything short of these members, in my view, constitution of Bench is not lawful so also conferment of authority under section 245BA of the said Act, meaning thereby such Bench will not have any jurisdiction. However, after formation of the Bench and after the matter being placed before it, while the same is being heard if any of those situation arises as menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n support of my observation as above, I find a decision of the Supreme Court reported in Elpro International Ltd. v. Collector of Central Excise, AIR 1996 SC 3329, cited by Mr. Dutt. This decision while dealing with a case under the provision of the Customs, Excise and Gold (Control) Appellate Tribunal (Procedures) Rules, in paragraph 8 observed that the same Bench, which passed the final order, should hear the application for rectification of mistakes. Due to subsequent events a situation may emerge when one or more of the members who pronounced the order must cease to hold office as a member of the Tribunal by retirement, death or otherwise. Though ordinarily, the rectification application should be heard by a Bench consisting of the members who heard the appeal giving rise to the application, the subsequent events or the change in situation or altered circumstances, may render it impossible. In such a situation it is certainly open to the President to direct that the application may be heard by a Bench consisting of member/members who did not originally hear the appeal and passed the order. In other words, the members, who constitute the Tribunal for hearing the rectification pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different Bench. At least an attempt should be made to place before the same personnels who constituted the earlier Bench to decide the case originally, if all the members not being available, then available member or members with other new members should be allowed to form the Bench. Even from the common sense point of view I do not find any justification as to why in these cases orders passed by three members could be placed before two members in the absence of excepted circumstances as contemplated under sub-section (5) of that section. Collective deliberation by the more persons ensures reasonable and fair decision. Every human being has got his own limitation and/or horizon of his intellectual faculty, and logic, one may be deficient in one aspect and another may be brilliant to make good such deficiency in exercise of the mental faculty. The object is to achieve the fairest and most reasonable judgment and decision and that is why the idea of formation of a Bench with a number of members is evolved. Therefore, I think respondent No. 1 was not justified to place these applications for rectification before a Bench consisting of two members, that too different ones. As the Benc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is issue the relevant portion of section 154 of the Income-tax Act under which rectification of mistake can be done is required to be quoted hereunder: "154.(1) With a view to rectifying any mistake apparent from the record an income-tax authority referred to in section 116 may,- (a) amend any order passed by it under the provisions of this Act..." The plain language of the section is very clear that the income-tax authority (here the Settlement Commission) has jurisdiction to rectify any mistake apparent from the record. The learned Additional Solicitor General has drawn my attention to the judgment of the Full Bench of the Punjab and Haryana High Court rendered in the case of CIT v. Smt. Aruna Luthra reported in [2001] 252 ITR 76. In this case the word "records" has been held that record would include everything on the case file. The return, the evidence and the order are a part of the record. In the case here record relates to the order of the Settlement Commission nothing else. It appears from the aforesaid decision of the Punjab and Haryana High Court that subsequent exposition of law by the High Court was made a ground for rectification of an order passed previously. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is possible. The scope of section 154 suggests that the officer concerned is to examine all the records including order, returns and accompanying documents forming assessment, and to find any apparent mistake or defect nor the correctness of the decision on law or fact. For example if it is found on the facts there is a mistake in calculation or misquoting of the relevant law and further ordering portion of the judgment is not the logical conclusion or does not conform to the decision and reasoning recorded in the order itself rectification under section 154 is permissible. In my view even misapplication of the provision of law stated in the impugned order cannot be a ground for rectification. The power under this section is not akin to the power of the Civil Procedure Code under Order 47 or section 114 of the Civil Procedure Code. According to me the power of review in the Civil Procedure Code under its Order 47 and section 114 is wider than the provisions of section 154 of this Act. In exercising the power of review under section 114 with Order 47, rule 1 of the Code of Civil Procedure, the court can reverse the judgment and order in its entirety if the conditions as mentione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision. In my view it is a debatable issue as to which decision should be followed or not. Wrong application of law is not a mistake apparent in the records. Consequently it cannot be a mistake within section 154. A mistake could be defined if something unintended is done inadvertently on the existing facts and law. This type of mistake can be rectified under the provision of section 154 but not the ones, which have been done consciously and on the basis of deliberation and/or on its own logic. The second category of mistake can be rectified in my view by the appropriate forum in appropriate proceedings. In this context the observation of the apex court in the case of CIT v. Hero Cycles Pvt. Ltd. [1997] 228 ITR 463 is helpful to the extent as follows: "However, the rectification can be made only when a glaring mistake of fact or law committed by the officer passing the order becomes apparent from the record. Rectification is not possible if the question is debatable." By the impugned order it is observed held that the ratio laid down in the case of Gulraj Engineering Construction Co. [1995] 215 ITR (A.T.) 1 (ITSC) [SB] has been upset by necessary implication by the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided finally and the same is pending for adjudication. This will be clear from the judgment of the Supreme Court in the case of M.A. Murthy v. State of Karnataka [2003] 264 ITR 1 (SC); [2003] 7 SCC 517. The observation of the court in paragraph 8 is very relevant for this purpose. It is observed in paragraph 8 amongst other: "Normally, the decision of this court enunciating a principle of law is applicable to all cases irrespective of its stage of pendency because it is assumed that what is enunciated by the Supreme Court is, in fact, the law from inception." I think one cannot take advantage of the subsequent pronouncement of a superior court in a closed and settled matter particularly in the matter decided and settled four years back, in the guise of rectification. I find in neither of the judgments rendered in Hindustan Bulk Carriers case [2003] 259 ITR 449 (SC) and in Gulraj Engineering case [1995] 215 ITR (AT) 1 (ITSC), the Supreme Court did have any occasion to examine the power of waiver of the Commission in view of the Board's notification issued under section 119(2)(a) dated May 23, 1996. The Board has power to issue necessary notification under the aforesaid secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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