High Court rules for petitioner in challenge to Income Tax Settlement Commission order under Income Tax Act, emphasizing limited review power.

The High Court ruled in favor of the petitioner in a challenge to the order of the Income Tax Settlement Commission under Section 245F[I] of the Income Tax Act, 1961. The Court emphasized that the Commission does not have inherent power of review and can only rectify mistakes apparent from the record under Section 245D. The judgment quashed the Commission's order related to the computation of the terminal date for charging interest under Section 234B, maintaining that subsequent legal developments cannot be a basis for review jurisdiction. The Revenue's interest rate concerns were addressed, affirming the finality of the Commission's order under Section 245D(4).

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Issues:
Challenge to order of Income Tax Settlement Commission under Section 245F[I] of the Income Tax Act, 1961.

Analysis:
The High Court heard arguments from both sides regarding the challenge to the order passed by the Income Tax Settlement Commission under Section 245F[I] of the Income Tax Act, 1961. The counsel for both parties referred to a previous decision of the Court in the case of R.Vijayalakshmi Vs Income Tax Settlement Commission and Others, where it was clarified that the Commission does not have the power of review unless specifically conferred by the statute. The Court emphasized that the power of review is not inherent and can only be exercised if explicitly provided for. The judgment highlighted that the power of rectification under Section 245D can only be used to rectify a mistake apparent from the record and not for a general review of the order. The Court also referenced a case involving Smt.U.Narayanamma, where the Andhra Pradesh High Court held that the Commission cannot rectify its earlier order if it was not a mistake apparent from the record. Additionally, the Court noted that subsequent legal developments cannot be a basis for review jurisdiction. The judgment concluded that the order of the Settlement Commission was unsustainable and quashed, specifically related to the computation of the terminal date for charging interest under Section 234B.

The Court further addressed the Revenue's concern regarding the setting aside of the interest rate ordered by the Commission. It clarified that the order passed by the Commission under Section 245D(4) had become final, and the Department would only be entitled to interest as per the Commission's order. Based on the above reasoning and the precedent set by previous judgments, the High Court allowed the writ petitions, quashed the impugned orders related to the computation of the terminal date for charging interest under Section 234B, and closed the connected Miscellaneous Petition without imposing any costs.

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