Settlement Commission's Time-Barred Decision Upheld on Income Tax Rectification Application

The High Court upheld the Settlement Commission's decision to dismiss the rectification application under Section 245D(6B) of the Income Tax Act, 1961 as time-barred, emphasizing that the limitation period starts from the date of passing the order, not its receipt. The Court rejected the petitioner's argument to count the limitation from the date of service, citing the specific provision in the Act and lack of evidence regarding the date of service. The judgment highlighted the importance of adhering to statutory provisions, including limitation periods, in seeking rectification of orders under the Income Tax Act.

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Issues:
Challenge to order of Settlement Commission dismissing rectification application under Section 245D(6B) of Income Tax Act, 1961 as barred by limitation.

Analysis:
The petitioner, an individual assessee, filed an application under Section 245D(4) of the Act before the Settlement Commission for settlement, disclosing additional income for the period 2007-08 to 2013-14. The application was decided on 28.11.2016. Subsequently, the petitioner filed an application under Section 245D(6B) for rectification of errors on 30.06.2017, which was dismissed by the Settlement Commission as barred by limitation. The main contention was regarding the computation of the limitation period under Section 245D(6B) from the date of order or its service. The petitioner argued for counting the limitation from the date of service, relying on various judgments, while the Revenue contended that the limitation starts from the date of the order.

The key provision under scrutiny was Section 245D(6B) of the Act, allowing rectification of mistakes in the Settlement Commission's order within six months from the end of the month in which the order was passed. The first proviso to sub-section (6B) clearly states that no rectification application shall be entertained after six months from the end of the month in which the order was passed. In this case, the order was passed on 28.11.2016, making the rectification application filed on 30.06.2017 time-barred. Even if the petitioner's argument of counting the limitation from the date of service was considered, there was no evidence presented regarding the specific date of service in December 2016, further weakening the petitioner's case.

The judgments cited by the petitioner, including Raja Harish Chandra Raj Singh and D. Saibaba, were found inapplicable as they dealt with different enactments and did not align with the provisions of Section 245D(6B). The Settlement Commission also clarified that the proviso to Section 245D(6B) clearly indicates the limitation period starts from the date of passing the order, not its receipt. The Commission's decision to reject the rectification application was upheld, emphasizing the legislative intent behind setting a specific limitation period for rectification applications.

In conclusion, the High Court found no error in the Settlement Commission's decision and dismissed the writ petition, emphasizing the legislative authority to regulate rights and impose conditions for their exercise. The judgment reaffirmed the importance of adhering to statutory provisions, including limitation periods, in seeking rectification of orders under the Income Tax Act, 1961.

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