Settlement Commission cannot re-open the concluded proceedings u/s. 154: Madras HC

R.Kasi Viswanathan Vs Income-tax Settlement Commission (Madras High Court)

Madras High Court held that in terms of section 245I, the Settlement Commission cannot re-open its concluded proceedings by invoking section 154 of the Act so as to levy interest under section 234B of the Income Tax Act.

Facts- The impugned order has been passed in terms of Section 245F(1) read with Section 154 of the Income-tax Act, 1961 (in short, ‘Act’) on 21.03.2003. The Settlement Commission has rectified the component of interest levied under Section 245F(1) vide order dated 19.01.1998 passed under Section 245D(4) of the Act. However, as the Settlement Commission has been vested with the power of rectification only with effect from 01.06.2011 by insertion of sub­section 6B in Section 245D of the Act, the impugned rectification could not have been effected on 21.03.2003 when such a power did not enure to the Settlement Commission.

Conclusion- Hon’ble Apex Court in Brij Lal and others v. Commissioner of Income tax held that under section 245I the order of the Settlement Commission is made final and conclusive on matters mentioned in the application for settlement except in the two cases of fraud and misrepresentation in which case the matter could be re­opened by way of review or recall. Like ITAT, the Settlement Commission is a quasi-judicial body. Under section 254(2), the ITAT is given the power to rectify but no such power is given to the Settlement Commission. Thus, we hold that Settlement Commission cannot reopen its concluded proceedings by invoking section 154 of the Act.