Court Dismisses Writ Petition on ITSC Order; Clarifies Limits on Rectification

The court dismissed the writ petition challenging the ITSC's order on rectification, stating that rectification of the order was not permissible under Section 245D(6B) of the Income Tax Act, 1961. The ITSC allowed the assessee's application for rectification of the order, directing that interest under Section 234B be charged only up to the date of the order under Section 245D(1). The court clarified that the ITSC cannot review or re-examine the order on rectification and advised the Revenue to file a separate petition if contesting the rectification order. The court reserved the right to review the matter if a new petition is filed.

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Issues:
1. Rectification of order by the Income Tax Settlement Commission (ITSC)
2. Application for settlement of disputes under Section 245C of the Income Tax Act, 1961
3. Charging of interest under Section 234B of the Act
4. Applicability of amended provisions of Section 234B(2A) introduced from 1st June, 2015
5. Challenge by Revenue to the order dated 17th March, 2016

Analysis:

1. The writ petition challenged the order passed by the ITSC on the miscellaneous application filed by the Principal CIT seeking rectification of the rectification order dated 31st December 2015. The impugned order dismissed the application, stating that rectification of the rectification order was not permissible as per Section 245D(6B) of the Income Tax Act, 1961.

2. The respondent-assessee had applied to the ITSC for settlement of disputes under Section 245C of the Act. The ITSC, in its order dated 29th June, 2015, enhanced the undisclosed income declared by the assessee and directed the payment of interest under Section 234B of the Act up to the date of the order under Section 245D(4).

3. The assessee later filed an application for rectification of the order dated 29th June, 2015, seeking correction of typographical errors and a direction to charge interest under Section 234B only up to the date of the order under Section 245D(1) and not beyond. The ITSC, by a majority decision of 2:1, allowed the rectification application, holding that interest would be chargeable only up to the date of the order under Section 245D(1) and not beyond.

4. The ITSC's order analyzed the impact of the amended provision of Section 234B(2A) introduced from 1st June, 2015. It was held that the amended provision would apply to settlement applications filed on or after 1st June, 2015, and not to orders passed by the ITSC after that date.

5. The Revenue challenged the order dated 17th March, 2016, but did not contest the order dated 31st December, 2015, which allowed the rectification application of the assessee. The Court clarified that the ITSC does not have the power to rectify, review, or re-examine the order passed in the rectification application. The Revenue was advised to file a separate writ petition to challenge the order dated 31st December, 2015.

6. The Court disposed of the present writ petition, reserving the right to examine the issue on merits if the Revenue files a fresh writ petition challenging the order dated 31st December, 2015. No opinion on the merits was expressed in the present judgment.

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