High Court limits Income Tax Settlement Commission's power to reopen proceedings post-conclusion, emphasizing rectification constraints.

The High Court held that the Income Tax Settlement Commission lacked the power to reopen proceedings after conclusion and alter the terminal date for charging interest based on a subsequent Supreme Court decision. The Court emphasized that rectification powers could only be used for correcting mistakes apparent from the record and that subsequent legal developments cannot be a basis for review. As a result, the impugned order was deemed unsustainable, and the writ petition was allowed, leading to the quashing of the order without costs.

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Issues involved:
Challenge to order of Income Tax Settlement Commission dated 19.02.2004; Validity of reopening proceedings after conclusion; Alteration of terminal date for charging interest based on subsequent Supreme Court decision.

Analysis:
The petitioners challenged the order passed by the Income Tax Settlement Commission dated 19.02.2004, which granted waiver of interest under Sections 234A & 234B for assessment years 1988-89 to 1992-93 and 1995-96. The petitioners paid a sum pursuant to the order. Subsequently, the Departmental representative sought a counter to a miscellaneous petition for varying the order. The petitioners contended that the Department cannot unilaterally withdraw concessions and misquoted a Supreme Court judgment. Despite contesting before the Settlement Commission, the impugned order was passed, reopening the earlier order, leading to the writ petition challenging the same.

In a similar case, the High Court considered the power of the Commission to reopen proceedings after conclusion and alter the terminal date for charging interest based on a subsequent Supreme Court decision. The Court held that the Commission lacked the power of review unless specifically conferred by statute. The power of rectification under Section 245D could only be exercised to rectify a mistake apparent from the record. The Court cited a case where the Commission's order rectifying an earlier decision was held unsustainable. It emphasized that subsequent legal developments cannot be a ground for review jurisdiction, leading to the quashing of the impugned order in the present case.

The Revenue did not dispute the legal principle from the above decision, which was followed in other cases as well. Applying this decision to the petitioners' case, the Court concluded that the impugned order was unsustainable. Consequently, the writ petition was allowed, and the impugned order was quashed, with no costs incurred.

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