Settlement Commission review limited to decision-making process; section 234B interest runs only up to the first settlement order.

Judicial review of a Settlement Commission order is limited to the decision-making process, not the merits, and the challenge to settlement for assessment year 2012-13 failed because the relevant material was before the Commission and the Revenue had raised no objection on maintainability at the proper stage. On interest, the Court applied Brij Lal and held that section 234B interest in a settlement case is chargeable only up to the date of the section 245D(1) order, with the settled income alone governing computation. The writ appeals were allowed and the single judge's order was set aside.

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Issues: (i) whether the settlement of the assessees' case for assessment year 2012-13 before the Settlement Commission could be interfered with on the ground that the application was not maintainable for that year; (ii) whether interest under section 234B had to be charged only up to the date of the order under section 245D(1) and not up to the date of the final settlement order under section 245D(4).

Issue (i): whether the settlement of the assessees' case for assessment year 2012-13 before the Settlement Commission could be interfered with on the ground that the application was not maintainable for that year.

Analysis: The Court held that judicial review over an order of the Settlement Commission is confined to the decision-making process and not the merits of the decision itself. The assessees had produced books of account and other material for the relevant year, the Revenue had filed reports under Rule 9 without raising any objection that the year 2012-13 was outside the scope of settlement, and the Commission had considered the issue at more than one stage. The Court also referred to the statutory scheme under section 245C and the search-related provisions to hold that the year of search was properly taken into account.

Conclusion: The challenge to the settlement for assessment year 2012-13 was not sustainable and the finding on maintainability was in favour of the assessees.

Issue (ii): whether interest under section 234B had to be charged only up to the date of the order under section 245D(1) and not up to the date of the final settlement order under section 245D(4).

Analysis: The Court interpreted the Commission's order as requiring interest to be levied on the income ultimately settled by the Commission, while applying the principle laid down in Brij Lal. It held that the use of the word "disclosed" did not alter the substance of the settlement and that the settled income alone was relevant for the computation. The Court clarified that interest under section 234B would run only up to the date of the order under section 245D(1).

Conclusion: Interest under section 234B was directed to be computed only up to the date of the order under section 245D(1), in favour of the assessees.

Final Conclusion: The common order of the Single Judge was set aside and the writ appeals were allowed, with clarification on the manner of charging interest under section 234B in the settlement proceedings.

Ratio Decidendi: In proceedings before the Settlement Commission, judicial review is limited to the decision-making process, and interest under section 234B in a settlement case is chargeable only up to the stage prescribed by the statutory scheme and the governing settlement order.

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