SANJIV KHANNA, J.

The aforecaptioned writ petitions raise a common issue of liability of the petitioners to pay interest under sub-section (2A) to Section 234B of the Income-Tax Act, 1961 (‘Act’ for short) and hence, we deem it appropriate and decide the same by this common judgment.

2. We would only notice the facts in brief as a legal issue relating to interpretation of sub-section (2A) to Section 234B arises and has to be decided. Sub-Section (2A) was inserted in Section 234B by Finance Act, 2015 with effect from 1st June, 2015.

WP(C) No. 12151/2016 [AJAY KUMAR GUPTA & ORS.]

3. The petitioners herein, 13 in number, had filed an application under Section 245 C (1) of the Act before the Settlement Commission on 14th May, 2015, which application was allowed to be proceeded with vide order dated 28th May, 2015 under Section 245 D (1) of the Act. The petitioners at the time of filing of the application had paid tax and interest payable on the additional or undisclosed income as mentioned in the applications.

4. The Settlement Commission by its final order dated 29th November, 2016 under Section 245 D (4) settled the case and had directed levy of interest on the enhanced amount under sub-section (2A) to Section 234 B of the Act.

W.P.(C) No. 10313/2016 [Orchid Infrastructure Developers Pvt. Ltd.]

5. Petitioner had filed an application for settlement under Section 245 C (1) of the Act before the Settlement Commission on 30th April, 2015. The said application was admitted by the Settlement Commission vide order dated 8th May, 2015 under Section 245 D (1) of the Act. As noticed above, sub-section (2A) to Section 234 B was enacted and inserted in the statute by Finance Act, 2015 with effect from 1st June, 2015. The Settlement Commission vide its order dated 16th September, 2016 under Section 245 D (4) of the Act had settled the case, whereby further addition of Rs.17,40,82,296/- was made to the amount already disclosed to the Settlement Commission. Accordingly, the petitioner would be liable to pay tax on the enhanced amount. To this extent, however, there is no dispute. The dispute pertains to direction of the Settlement Commission for charging of interest on the additional tax payable under sub-section (2A) to Section 234 B, which it is stated amounts to Rs.1,98,66,722/-.

Submissions.

6. The primary contention of the petitioner is that sub-section (2A) to Section 234 B introduced by the Finance Act, 2015 is not retrospective and would not be applicable as the petitioner had filed the application for settlement before sub-section (2A) to Section 234B was enacted. Hence the petitioners’ applications for settlement were governed by the law on the Statute Book i.e. the Income Tax Act as on the date when the applications were filed. It is contended that levy of interest, even if compensatory, is substantive and not procedural in nature as was held by the Supreme Court in J.K. Synthetics Limited Vs. Commercial Taxes Officer (1994) 4 SCC 276. Insertion of sub-section (2A) to Section 234B cannot be construed as declaratory or clarificatory since the Supreme Court had interpreted and held in Brij Lal and Ors. Vs. Commissioner of Income-Tax, Jalandhar (2011) 1 SCC that interest under Section 234B is applicable upto the stage of Section 245 D(1) and not upto the stage of Section 245 D (4) of the Act. This was notwithstanding the legal position that interest under Section 234B of the Act was payable upto the date of the order under Sections 143 (1), 143 (3) and 144 of the Act. The reason is that there is difference between assessment in law, be it regular, re-assessment or intimation under Section 143 (1); and assessment by settlement under Chapter XIX-A of the Act. Clause 56 of the Explanatory Note pertaining to the provisions of the Finance Act, 2015 states that insertion of Section 234B (2A) was not retrospective.

7. On the question of retrospective legislation reference was made to the observations of the Supreme Court in the Constitution B