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High Court Of Calcutta
Bhaskar Bhattacharya
NETAI CHANDRA RARHI AND CO., BRINDABAN CHANDRA DAS AND SATYA NARAYAN DAS - Appellant
Versus
INCOME-TAX SETTLEMENT COMMISSION - Respondent
W. P. 5899 Of 2002
Decided On : 04/25/2003
INCOME TAX - SECTION 154 - RECTIFICATION OF MISTAKES - WAIVER OF INTEREST - SCOPE OF SECTION 154 - SUBSEQUENT CONTRARY DECISION OF SUPREME COURT - WHETHER A GROUND FOR RECTIFICATION - HELD, NO.
Fact of the Case:
The petitioners filed applications before the Settlement Commission for settlement of their tax liabilities. The Commission, by orders dated November 27, 1997, accepted the additional amount offered by the petitioners and disposed of the settlement applications. In the facts and circumstances of the case, the Commission further directed that in view of the co-operation extended by the petitioners in settlement of their cases, no interest under various sections would be charged. On March 20, 2002, the Commissioner of Income-tax filed an application under Section 154 of the Income-tax Act, 1961 (the Act) for rectification of the orders dated November 27, 1997, on the ground that the Supreme Court, subsequently, in the case of Anjum M. H. Ghaswala having specifically held that waiver of interest chargeable under Sections 234a, 234b and 234c being not permissible except in cases where granting of relief is authorised by the circulars issued by the Board, the orders dated November 27, 1997, should be rectified for error apparent from record.
Finding of the Court:
The Court held that the Settlement Commission was not justified in amending the orders dated November 27, 1997, by invoking Section 154 of the Act. The Court further held that a subsequent contrary decision of the Supreme Court on a question of law does not afford a ground of rectification within the meaning of Section 154 of the Act.
Issues: 1. Whether the Settlement Commission was justified in amending the orders dated November 27, 1997, by invoking Section 154 of the Act? 2. Whether a subsequent contrary decision of the Supreme Court on a question of law affords a ground of rectification within the meaning of Section 154 of the Act?
Ratio Decidendi: 1. The scope of Section 154 of the Act is limited to rectification of mistakes apparent from the record. A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. 2. The subsequent decision of the Supreme Court in the case of Anjum M. H. Ghaswala was doubted by another Bench of the Supreme Court in the case of CIT v. Damani Brothers on February 11, 2002, being subsequently. Therefore, on the date of filing of the application in March, 2002, Ghaswala's case was not final and the matter was referred to a larger Bench. If there were two opinions on a point of law by two separate Benches of the apex court, and the matter was referred to a larger Bench, the matter cannot be called \"settled\" justifying rectification on the basis of Ghaswala's case.
Final Decision: The Court set aside the orders impugned and restored those dated November 27, 1997. The writ applications succeeded.
( 1 ) IN all these applications the same question of law being involved, those were heard analogously.
( 2 ) BY these writ applications the petitioners have prayed for cancellation of orders dated March 20, 2002, passed by respondent No. 1 thereby allowing an application under Section 154 of the Income-tax Act, 1961 ("the Act"), thereby withdrawing the waiver of interest under Sections 234a, 234b and 234c of the Act which was earlier allowed by the original order under Section 245d (4) of the Act. By the orders impugned, direction for charging interest under Sections 234a, 234b and 234c of the Act has been given.
( 3 ) THE facts giving rise to filing all these applications may be summarised thus : (a) Notices under Section 148 of the Act for reassessment of the petitioners for several assessment years having been given, the petitioners filed applications before respondent No. 1 for settlement of their tax liabilities. The final hearing of those settlement applications before respondent No. 1 took place on November 27, 1997, after the reports were filed by the Department on those applications. After considering all the facts, respondent No. 1 desired that in order to settle the matter, the petitioners should offer some additional amount in their settlement applications and the petitioners agreed to the said proposal of paying further amount over and above the amount already offered in their settlement applications. By orders dated November 27, 1997, respondent No. 1 accepted the additional amount offered and disposed of all the settlement applications filed by the petitioners. In the facts and circumstances of the case, by those orders, respondent No. 1 further directed that in view of the co-operation extended by the petitioners in settlement of their cases, no interest under various sections would be charged. (b) On March 1/4, 2002, the Commissioner of Income-tax filed an application under Section 154 of the Act for rectification of the orders dated November 27, 1997, on the ground that the Supreme Court, subsequently, in the case of Anjum M. H. Ghaswala having specifically held that waiver of interest chargeable under Sections 234a, 234b and 234c being not permissible except in cases where granting of relief is authorised by the circulars issued by the Board, the orders dated November 27, 1997, should be rectified for error apparent from record. (c) On the basis of such applications, notices were issued upon the petitioners to show cause why those orders should not be rectified. (d) Pursuant to such notices, the petitioners filed objections to the aforesaid applications under Section 154 of the Act contending that the conditions mentioned in Section 154 of the Act were not satisfied in the facts of these cases. It was contended that the question whether any interest under Sections 234a, 234b and 234c of the Act could be levied or not, required investigation into the facts and raised issues which were controversial and debatable. It was further contended that the issue whether any liability for any interest under Sections 234a, 234b and 234c of the Act was attracted or not and if so, to what extent, and whether the cases fell within the circumstances enumerated in the circulars justifying waiver, required detailed investigation of facts and consideration of the submissions and as such, those points could not be decided in an application under Section 154 of the Act. (e) Ultimately, by the orders impugned herein, respondent No. 1 had turned down objections raised by the petitioners and has allowed the applications under Section 154 mentioned above.
( 4 ) BEING dissatisfied, the petitioners have raised five-fold submissions before this court.
( 5 ) FIRST, it does not appear from the original orders dated November 27, 1997, that respondent No. 1 really waived interest under Sections 234a, 234b and 234c of the Act in exercise of inherent power. By referring to the application under Section 154 of the
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