TMI Blog2004 (7) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... aid judgment. The Department has preferred this appeal in this court. Appellant's 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. Respondent's 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 sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leased to allow the writ petition and set aside the order of rectification by its order dated April 25, 2003. Thus it appears the rectification was sought to be made on March 1/4, 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 December 17, 2002. Therefore at that point of time (March 1/4, 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 December 12, 1997, which, however, was operating in the field, which was not the basis on which this notice was issued. The Supreme Court (three-judges Bench) in Anjum Ghaswala [2001] 252 ITR 1 (SC) had settled the issue on October 18, 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). Reliance was placed by Mr. Shome on Anju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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-I in view of the provisions contended in section 245F(1). In support of this contention, he relied upon AOP 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 substitut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation 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 Kumar's 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. 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 November 27, 1997, whereas the decision in the seven-Member Bench of the Commission in Ghaswala [1998] 230 ITR (AT) 1 [SB] was rendered on thereafter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Kesoram Industries Ltd. v. CIT [2004] 271 ITR 501 (Cal) (I.T.A. No. 359 of 2000) disposed of by us on July 13, 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, ITO 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest 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 Agarwal's case [1992] 195 ITR 861 (ITSC), the Special Bench of the Settlement Commission has held that under section 245D(4) or under section 245D(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 Kumar's 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 Kumar's 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 g temporary support from the Special Bench decision in Anjum M.H. Ghaswala [1998] 230 ITR (AT) 1 (ITSC). However, the hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed altogether and that Ghaswala's 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 Ghaswala's 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. 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eason of section 245-1, the same becomes conclusive and cannot be reopened except as provided in Chapter XIX-A. Chapter XIX-A 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. 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 po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 A 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." It would thus be seen that in Ghaswah's 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 Ghaswala's c 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 sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that a subsequent decision of the Supreme Court cannot be the basis of any rectification proceedings. Special leave petition against the said decision was dismissed by the Supreme Court [1983] 142 ITR (St.) 2. In the case of Geo Miller and Co. Ltd. v. Deputy 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 Datnani 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 proc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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