Santosh Hegde, J. - (1.) CA Nos. 4126-50/2000: In these appeals the question that arises for our consideration is: whether the Settlement Commission (for short 'the Commission') constituted under Section 245B of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') has the jurisdiction to reduce or waive the interest chargeable under Sections 234A, 234B and 234C of the Act, while passing orders of settlement under Section 245D(4) of the Act
(2.) Earlier, this question arose before the Commission in the case of Ashwani Kumar Aggarwal, In re 1992 (195) ITR 861 wherein a 5-Member Special Bench of the Commission held that under Section 245D(4) or sub-section (6), the Commission does not have the power either to waive or reduce the statutory interest payable under the Act.
(3.) This view of 5-Member Bench of the Commission was overruled by a larger Bench comprising of 7 Members of the Commission which held otherwise by the impugned order. It held that the Commission is vested with the power to waive or reduce the interest chargeable under Section 234A, 234B and 234C of the Act in cases pending before it for the assessment year 1989-90 and onwards (i.e. the year in which Chapter XVII-F was introduced in the Act). It further held that this power can be exercised by any of the Benchesconstituted to settle cases under section 245 BA of the Act. While coming to this conclusion, the Commission held that the constitution of the Commission is based on the concept of "compromise and settlement", hence, it has the necessary power to waive or reduce the interest, even if statutorily mandated, in view of the wordings of Section 245D(6) of the Act.;