DILIP KUMAR SETH & RAJENDRA NATH SINHA,JJ. - (1.) IN the Calcutta High Court
(2.) THE decision by the learned single judge dated 25 -4 -2003 : [2003]263ITR186(Cal) , is under challenge before us. The learned single judge had found that rectification sought for in this case by the department does not come within the narrow scope and ambit of section 154 of the Income Tax Act, 1961, for the reasons given in the said judgment. The department has preferred this appeal in this court. Appellants points : Mr. Shome, learned senior counsel for the appellant, had pointed out that the law with regard to the power of the Settlement Commission in waiving interest is settled in the case of Anjum Mohammed Hussain Ghaswala, In re : [1998]230ITR1(SC) . It is pointed out that the Commission had no power to waive interest chargeable under sections 234A, 234B and 234C. Therefore, it is a case covered under the provisions of section 154. Elaborate submission was made by Mr. Shome with regard to the applicability of the various decisions cited by Mr. R. N. Bajoria, learned senior counsel for the respondents, and also to the validity of the submission advanced by him. Respondents points : At the same time Mr. Bajoria had also made elaborate submissions and had met all the submissions advanced by Mr. Shome and had pointed out that the rectification that was sought for was not free from doubt. At the point of time when the rectification was sought for the decision in Anjum Ghaswala : [1998]230ITR1(SC) had not come and was pending reference to a larger Bench of five judges and was decided subsequent to the stage when the rectification was asked for. Similarly, the other decision in CIT v. Damani Brothers : [2002]254ITR91(SC) on which Mr. Shome had anchored his submission was also pending decision before the three -judge Bench, which decided the same later on. Therefore, it does not come within the purview of the scope where section 154 can be applied. Facts We would refer to the detailed submission made by the respective counsel at appropriate stages when occasion would require. In order to appreciate the situation, we may refer briefly to the facts of this case on which we are called upon to apply the principles of law argued by both learned counsel with apt erudition. The respondent/assessee was carrying on business of licensed moneylender, jewellery and goldsmith, etc. On 24/25 -2 -1993, a search was conducted at the business and residential complex of the respondents. In the course of such search, jewellery, cash and other assets were seized. On deposit of Rs. 39,01,400 the seized jewellery was returned and the said sum became part of the seized cash. The respondents made an application for settlement of their tax liabilities before the Settlement Commission. The Settlement Commission by its order dated 27 -11 -1997, passed under section 245D(4) settled the case by accepting a sum of Rs. 41.25 lakhs as assessable income (page 28 of the PB). By the said order, it was further directed that no interest was to be charged (page 41 of the PB). The assessing officer gave effect to the said order dated 27 -11 -1997, passed by the Settlement Commission on 17 -2 -1998. The assessing officer refunded a sum of Rs. 17,34,375 out of the seized cash after adjusting the tax determined. All matters relating to tax liability of the respondents were fulfilled and finally settled. Long thereafter on 6 -3 -2002, a copy of the application dated 1/4 -3 -2002, was served on the assessee -respondent. In the said application rectification was sought for by the department in respect of the order dated 27 -11 -1997, passed under section 245D(4) of the Act (page 91 of the PB). The respondents submitted their objection to the said application (page 91 of the PB) on 19 -3 -2002. This rectification was allowed under section 154 holding that the interest under sections 234A, 234B and 234C was mistakenly waived. The respondents moved a writ petition before the learned single judge. The learned single judge was pleased to allow the writ petition and set aside the order of rectification by its order dated 25 -4 -2003.
(3.) THUS it appears the rectification was sought to be made on 1/4 -3 -2002. The decisions in CIT v. Hindustan Bulk Carriers : [2003]259ITR449(SC) and CIT v. Damani Brothers : [2003]259ITR475(SC) by a three -judge Bench of the apex court was rendered on 17 -12 -2002. Therefore at that point of time (1/4 -3 -2002) the question decided in Damani Brothers : [2002]254ITR91(SC) was still awaiting decision. However, the decision proceeded on the basis of the decision in Anjum M.H. Ghaswala : [1998]230ITR1(SC) by a seven member Special Bench of the Settlement Commission rendered on 12 -12 -1997, which, however, was operating in the field, which was not the basis on which this notice was issued. The Supreme Court (three -judge Bench) in Anjum Ghaswala : [2001]252ITR1(SC) had settled the issue on 18 -10 -2001. In that decision all the three judges had pointed out that the Settlement Commission had no power to waive interest chargeable under sections 234A, 234B and 234C while passing the order under section 245(4).;