Court upholds decision on rectification application under Income Tax Act - Limitation period and consent recording

The court upheld the Income Tax Settlement Commission's decision to reject a rectification application filed beyond the statutory limitation period under Section 245D(6B) of the Income Tax Act 1961. The court emphasized that the recording of consent in the settlement order was conclusive and could only be corrected for clear errors or injustices. The Commission's exclusion of time spent on a writ petition from the limitation period calculation was deemed appropriate. The court dismissed the petition, questioning whether the alleged mistake in consent recording was rectifiable under the circumstances.

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Issues involved:
The judgment involves the rejection of a rectification application under Section 245D(6B) of the Income Tax Act 1961 by the Income Tax Settlement Commission. The main issue revolves around the correctness of the consent recorded in the settlement order and the timeliness of the rectification application.

Issue 1: Consent in Settlement Order
The respondent's application before the Commission was allowed based on consent between the parties, leading to the settlement of the case. The Revenue challenged this settlement, alleging a failure to make full and true disclosure of income. The court relied on the principle that statements of fact recorded in a judgment are conclusive and cannot be contradicted, unless there is a clear error or injustice. The court held that the Revenue's remedy was to seek correction from the Commission if there was an incorrect recording of consent in the order.

Issue 2: Timeliness of Rectification Application
Following the court's decision, the petitioner filed a rectification application under Section 245D(6B) to correct the alleged incorrect recording of consent. However, the Commission dismissed the application as being filed beyond the six-month period stipulated in the Act. The Commission excluded the time spent pursuing a writ petition from the calculation of the limitation period, following the principles laid down by the Supreme Court in a similar context. The Commission found the rectification application to be time-barred and rejected it.

Conclusion:
The court upheld the Commission's decision, stating that the rectification application was indeed filed beyond the statutory limitation period. The court also expressed reservations about whether the petitioner's grievance regarding the consent recorded could be considered a "mistake apparent from the record" that the Commission could rectify. Ultimately, the petition was dismissed.

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