Settlement Commission cannot waive statutory interest beyond CBDT circulars, Supreme Court clarifies.

The Supreme Court allowed appeals challenging the Settlement Commission's authority to waive statutory interest, clarifying that the Commission cannot reduce or waive interest beyond relief granted by CBDT circulars. The Commission was directed to examine the applicability of specific circulars for relief entitlement. The Court held that the Commission lacked jurisdiction to reopen proceedings for shifting the terminal date for interest calculation under Section 234B. The judgment favored the petitioners on this issue, quashing the Commission's order and confirming the original terminal date determined by the Commission.

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Issues:
1. Interpretation of the Settlement Commission's authority to waive or reduce statutory interest.
2. Application of circulars issued by the Central Board under the Income Tax Act, 1961.
3. Jurisdiction of the Settlement Commission to reopen proceedings for shifting terminal date for interest calculation under Section 234B.

Issue 1:
The petitioners argued that the Settlement Commission's decision should be set aside based on a previous court ruling. The Supreme Court allowed appeals challenging the Commission's authority to waive statutory interest. The court clarified that the Commission cannot reduce or waive interest beyond relief granted by CBDT circulars. The Commission was directed to examine the applicability of specific circulars to determine relief entitlement.

Issue 2:
The Commission, following the Supreme Court's direction, withdrew waivers of interest not covered by the circulars. The petitioners did not contest these decisions. However, they challenged the Commission's alteration of the terminal date for interest calculation under Section 234B. The court held that the Commission lacked jurisdiction to reopen proceedings for shifting the terminal date, citing statutory limitations on the Commission's review powers.

Issue 3:
The court referenced a case where the High Court held that the Commission cannot rectify its order under Section 245D. The court emphasized that subsequent legal developments cannot justify a review. Consequently, the court quashed the Commission's order related to the terminal date for interest calculation under Section 234B. The court confirmed the original terminal date determined by the Commission. The judgment favored the petitioners on this specific issue, and the writ petitions were allowed without costs.

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