High Court upholds Settlement Commission's decision under Income Tax Act. Limited scope for rectification applications.

The High Court dismissed the Writ Petition challenging the Settlement Commission's order under Section 245D(6B) of the Income Tax Act, 1961. The Commission's decision to allow the Respondent-Assessee's application for a partial recall of the earlier order was upheld, emphasizing the limited scope of rectification applications under Section 245D(6B) to correct errors apparent from the record. The Court clarified that rectification is not a tool for reviewing final orders, highlighting the importance of upholding the sanctity of settlement orders.

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Issues:
1. Challenge to the order passed by the Settlement Commission under Section 245 D(6B) of the Income Tax Act, 1961.
2. Validity of rectification of typographical errors in the order dated 27th June, 2016.
3. Correctness of rectification application under Section 245D(6B) seeking to restore the figures of returned income.
4. Jurisdictional scope of rectification application under Section 245D(6B) of the Act.

Issue 1: Challenge to the Settlement Commission's Order
The High Court considered a petition challenging the order passed by the Settlement Commission under Section 245 D(6B) of the Income Tax Act, 1961. The impugned order allowed the application of the Respondent-Assessee seeking a partial recall of the earlier order, which was a split verdict by a majority of 2:1 members of the Commission.

Issue 2: Validity of Rectification of Typographical Errors
The Respondent filed an application for rectification of typographical errors in the order dated 27th June, 2016, under Section 245D(6B) of the Act. The Commission corrected the disclosed income without a personal hearing, leading to a discrepancy in the declared income. This prompted another application seeking restoration of the original figures of returned income.

Issue 3: Correctness of Rectification Application
The Commission, after hearing the parties, allowed the application by a majority view, emphasizing that the rectification made in the earlier order was a mistake. The difference in income arose due to a claim for deduction under Section 80-IA, which was a debatable issue not subject to rectification under Section 245D(6B).

Issue 4: Jurisdictional Scope of Rectification Application
The Tribunal deliberated on the jurisdictional aspect of rectification under Section 245D(6B) of the Act. The majority view found the rectification in the earlier order to be improper and passed without hearing the parties, thus withdrawing it to ensure justice. The minority view upheld the review of the order without considering the scope of the rectification application, highlighting the need for finality in settlement orders.

The High Court clarified that challenging an order under Section 245D(4) of the Act is permissible if it violates statutory provisions or principles of natural justice. However, rectification under Section 245D(6B) is limited to correcting errors apparent from the record. The Court emphasized that rectification is not a remedy for reviewing a final order. Ultimately, the Writ Petition was dismissed, underscoring the importance of maintaining the sanctity of settlement orders and the limited scope of rectification applications.

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