Summary
The Court remitted the interest-waiver issue to the Settlement Commission for fresh consideration under the governing Constitution Bench decisions. The High Court could not adopt directions from a rectification order that it had already set aside as beyond the Commission’s jurisdiction.
Issues
- Whether the High Court could incorporate an annulled rectification order to reverse interest waiver.
- Whether fresh consideration by the Settlement Commission was required under the intervening binding decisions.
Provisions considered
- Section 154 read with Section 245-I, Income-tax Act, 1961Applying Brij Lal to the historical proceedings, the Court held that the Commission could not reopen the concluded settlement through Section 154 to levy interest. The rectification order already annulled on that basis could not be incorporated into a later writ order. (¶¶ 18, 19, 23, 24, 25)
- Section 245D(4) and (6), Income-tax Act, 1961The waiver issue under the original settlement was remitted for decision within the limits on settlement powers stated in Ghaswala and Brij Lal, including the Board-circular exception described in Ghaswala. (¶¶ 16, 17, 19, 21, 22, 26)
Held
- Ghaswala and Brij Lal governed the scope of the Commission’s powers regarding statutory interest. As the original settlement preceded those decisions, the appropriate course was fresh consideration by the Commission with an opportunity to the parties. (¶¶ 16, 17, 18, 19, 20, 21, 22)
- The High Court committed a jurisdictional error by adopting directions from the October 2002 rectification order which it had itself annulled in March 2014. An order no longer in existence could not furnish the basis for that relief. (¶¶ 23, 24, 25)
- The remand concerned interest waiver and left its merits undecided. The Commission was to decide independently under the binding decisions within six months. (¶¶ 26, 27, 28)
Result
Assessees’ appeals allowed; High Court order and original settlement order on the interest-waiver issue set aside. Matter remitted to the Settlement Commission for fresh decision after hearing the parties within six months; no opinion on merits.