C.M. SMITH AND SONS Vs. ASSISTANT COMMISSIONER OF INCOME TAX
LAWS(GJH)-2014-2-77
HIGH COURT OF GUJARAT
Decided on February 03,2014

C.M.Smith and Sons Appellant
VERSUS
ASSISTANT COMMISSIONER OF INCOME TAX Respondents

JUDGEMENT

- (1.) These petitions arise out of common background. They have therefore, been heard together for final disposal and would be disposed of by this common order.
(2.) We may notice the facts arising in Special Civil Application No.16249/2013. The petitioner assessee for the assessment years 19881989 to 19951996 applied for settlement of the assessment to the Settlement Commission ("the Commission" for short) in terms of provisions contained in the Income Tax Act, 1961 ("the Act"for short). Such application was entertained and the Commission passed order dated 11.10.2002 assessing the tax liability of the petitioner. In such order, the Commission gave the following directions for charging interest : "(C) Interest under section 215/217, 234B and 234C shall be charged according to law except in respect of ASST. Year 199394 in the case of the firm for the reasons mentioned below : The assessment under section 143(3) for assessment year 199394 in the case of M/s. Smith and Sons was completed by A.O. After the submission of the settlement application but before the same was admitted. In view of the Special Bench decision in case of Damani brothers (238 ITR 36(AP)), the assessment completed would have to be considered as nonest. In the circumstances, the interest chargeable in respect of assessment year 199394 in the case of M/s. T.M. Smith and sons would have to be restricted upto the date of the order under section 143(1) (a)." It is not in dispute that the petitioner paid up the remaining tax as per the order of the Settlement Commission within the time permitted.
(3.) Based on such order of the Commission, the Assessing Officer passed a consequential order dated 4.2.2003. In the said order, he calculated the interest under section 234B and 234C of the Act upto the stage of the Settlement Commission passing the final order of settlement as envisaged under section 245D(4) of the Act. He observed that such interest would be chargeable as per the directions contained in para. 26(c) of the Commission's order which has been produced hereinabove. Contending that the interest under section 234B and 234C could not have been charged beyond the stage of section 245D(1) of the Act, the petitioner moved an application for rectification before the Commission on 19.6.2003. In such an application, the petitioner prayed interalia that : "(a) The Hon'ble ITSC may be pleased to hold that no interest u/sec.234B is chargeable in respect of A.Y.198889. (b) The interest u/sec.234B be ordered to be calculated only upto the date of the order of the Hon'ble ITSC u/sec.245D(1).";


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