Court rules interest provision applies to pending cases with orders post-June 1, 2015. Petitioners liable.

The court held that sub-section (2A) of Section 234B, inserted by the Finance Act, 2015, applies to pending proceedings with orders under Section 245D(4) passed on or after June 1, 2015. The petitioners were found liable to pay interest under this provision, dismissing their writ petitions without costs.

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Issues Involved:
1. Liability to pay interest under sub-section (2A) of Section 234B of the Income-Tax Act, 1961.
2. Retrospective application of sub-section (2A) to Section 234B.
3. Interpretation and applicability of the Finance Act, 2015.
4. Legal precedents and principles regarding retrospective legislation.

Detailed Analysis:

Issue 1: Liability to Pay Interest Under Sub-Section (2A) of Section 234B of the Income-Tax Act, 1961
The primary issue in the writ petitions is the liability of the petitioners to pay interest under sub-section (2A) of Section 234B of the Income-Tax Act, 1961. Sub-section (2A) was inserted by the Finance Act, 2015, effective from June 1, 2015. The petitioners had filed applications for settlement before the Settlement Commission prior to the enactment of sub-section (2A). The Settlement Commission, in its final orders, directed the levy of interest on the enhanced amount under sub-section (2A) to Section 234B. The petitioners contend that this provision should not apply to them as it was not in force when they filed their applications.

Issue 2: Retrospective Application of Sub-Section (2A) to Section 234B
The petitioners argue that sub-section (2A) of Section 234B is not retrospective and should not apply to applications filed before its enactment. They rely on the Supreme Court's interpretation in J.K. Synthetics Limited Vs. Commercial Taxes Officer and Brij Lal and Ors. Vs. Commissioner of Income-Tax, Jalandhar, which held that interest under Section 234B is applicable only up to the stage of Section 245D(1) and not up to the stage of Section 245D(4). The petitioners assert that the levy of interest is substantive and not procedural, and therefore, the new provision should not apply to their cases retrospectively.

Issue 3: Interpretation and Applicability of the Finance Act, 2015
The court examined whether the newly inserted sub-section (2A) to Section 234B would apply to pending applications before the Settlement Commission as of June 1, 2015. The court referred to the provisions of Section 234B, which mandates the payment of interest on failure or shortfall in payment of advance tax. The court also considered the Constitution Bench decision in Commissioner of Income Tax Vs. Anjum M.H. Ghaswala & Ors., which held that the Settlement Commission could not waive mandatory interest under Sections 234A, 234B, and 234C of the Act.

Issue 4: Legal Precedents and Principles Regarding Retrospective Legislation
The court referred to several legal precedents to determine the retrospective application of the new provision. The court cited the Constitution Bench decision in Mohanlal Jain Vs. His Highness Maharaja Shri Sawai Mansinghji, which held that when vested rights are affected, amended law should not be presumed to be retrospective unless the language of the enactment includes pending actions. The court also referred to Shyabuddinsab Mohidinsab Akki Vs. The Gadag-betgeri Municipal Borough & Ors., which emphasized that the language and manner of the statute must be examined to determine the legislature's intention regarding pending proceedings.

Conclusion:
The court concluded that sub-section (2A) to Section 234B, inserted by the Finance Act, 2015, is applicable to all pending proceedings in which orders under Section 245D(4) are passed on or after June 1, 2015. The court held that the amendment was intended to apply to pending proceedings, and therefore, the petitioners are liable to pay interest under sub-section (2A) of Section 234B. The writ petitions were dismissed, and the court did not order any costs.

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