Suo Motu Rectification of order passed u/s 245D(4) on debatable issue by Settlement Commission not valid

CIT Vs. Income Tax Settlement Commission & Another (Bombay High Court)

Once an order has been passed under Section 245D(4) of the Act, it is a final order settling the dispute between the parties. The provisions of the rectification of the order passed under Section 245D(4) of the Act is permissible under Section 245D(6B) of the Act, only to rectify mistakes apparent from the record. Therefore, any issue which is debatable or which would requires re-consideration of an issue which has already been decided, would fall out side the scope of a rectification application under Section 245D(6B) of the Act.

FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT

This Petition under Article 226 of the Constitution of India, challenges an order dated 2^nd December, 2016 passed by the Settlement Commission (Commission) under Section 245 D(6B) of the Income Tax Act, 1961 (the Act). The impugned order dated 2^nd December, 2016 of the Commission, allowed the application of the Respondent No.2­Assessee, seeking partial re-call the earlier order dated 25^th July, 2016 passed under Section 245 D(6B) of the Act. This on the ground that the order dated 25^th July, 2016 on the principal issue (not a typographical error) amounted to a Review of the order dated 27^th June, 2016 passed under Section 245D(4) of the Act. The impugned order dated 2^nd December, 2016 of the Commission is a split verdict and the application was allowed by a majority of 2:1 of the members of the Commission.

2 Briefly, the facts leading to this Petition, are that the Petitioner, had for Assessment Year 2013-14 along with other Assessment Years had filed an application for settlement under Section 245C(1) of the Act before the Commission. In its application for settlement, Respondent­- Assessee had proceeded to declare its additional income for settlement for Assessment Year 2013-14 on the basis of income declared in its revised return of income under Section 139(5) of the Act i.e. Rs. 12.23 Crores. During the Settlement Proceedings at 245D (2C) stage, before the Commission, Revenue had raised an issue about the validity of the revised return of income under Section 139(5) of the Act. However, by an order dated 6^th February, 2015, the Commission upheld the validity of the revised return of income under Section 139(5) of the Act, for Assessment Year 2013-14. This was accepted by the Revenue. Thereafter, a final order dated 27^th June, 2016 under Section 245D(4) of the Act, settling the dispute, was passed.

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