LexBRIJ LAL & ORS. versus COMMISSIONER OF INCOME TAX ACT, 1961
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[2010) 11 S.C.R. 1167 BRIJ LAL & ORS. v. COMMI~ SIONER OF INCOME TAX, JALANDHAR (Civil Appeal No. 516-527 OF 2004) OCTOBER 21, 2010 [S.H. KAPADIA, CJI, B. SUDERSHAN REDDY, K.S. PANICKER RADHAKRISHNAN, SURINDER SINGH NIJJAR AND SWATANTER KUMAR, JJ.] INCOME TAX ACT, 1961: A B c CHAPTER X1X-A - Sections 245-C, 245-0 (1) and 245- 0(4) rlw s. 234-B - Settlement Commission - Settlement of cases - Interest for default in payment of advance tax - Applicability of s. 234-B - Held: Sections 234-A, 234-B and 0 234-C are applicable to the proceedings of the Settlement Commission under Chapter XIX-A - Sections 234-B, 245- 0(2C) and s.245-0(6A) operate in different fields - Section 234-B comes into operation when there is default in payment of advance tax whereas liability to pay interest u/s 245-0(2C) arises when the additional amount of income tax is not paid E · within time specified u/s 245-0(2A) - Section 245-0 (6A), on the other hand, imposes liability to pay interest only when the tax payable in pursuance of an order of Settlement Commission uls 245-0(4) is not made within the specified time.. · F s. 234-B - Terminal point for levy of interest in settlement of cases under Chapter XIX-A - Held: Would be up to the date of the Order u/s 245-0(1) and not up to the date of the Order of Settlement u/s 245-0(4). G ss. 154, 234-B, 245~0(4) and 245-1 - Rectification of mistake - Levy of interest'- Order of settlement uls 2450(4) to be conclusive - Held: In view of s. 245-1, the Settlement Commission cannot re-open its concluded proceedings by 1167 H 1168 SUPREME COURT REPORTS [2010] 11 S.C.R. ~ invoking s. 154 so as to levy interest uls 234-8 - Section 154 is not applicable to Chapter XIX proceedings. Pursuant to the referral orders dated 14.12.2004 and 21.1.2005, the instant appeals were referred to the 8 Constitution Bench of the Supreme Court. The questions for consideration before the Court were: (i) whether s. 2348 of the Income Tax Act, 1961 would apply to proceedings of the Settlement Commission under Chapter XIX-A of the said Act? If yes; (ii) what would be C the terminal point for levy of such interest - whether such interest should be computed up to the date of the Order u/s 245-D (1) or up to the date of the Order of the Commission u/s 245-D (4)? and (iii) whether the Settlement Commission could reopen its concluded proceedings by invoking s. 154 of the said Act so as to D levy interest u/s 234-8, though it was not so done in the original proceedings? E Answering the reference and disposing of the appeals, the Court HELD: 1.1 Sections 234-A, 234-B and 234-C of the Income Tax Act 1961 are applicable to the proceedings of the Settlement Commission under Chapter XIX-A of the Act to the extent indicated in the judgment. (para 16] F [1220-D-E] 1.2 Levy of interest is incidental to the liability and computation of advance tax. Liability and computation of advance tax is done under section C of Chapter XVII. On the other hand, interest for defaults in paymenLof G advance tax falls u/s 234-8, apart from ss.234-A and 234- C, in section F of Chapter XVII. It is significant to note that s.234-A(4) refers to the increase or reduction of interest subsequent to the Order of the Commission u/s 245-0(4) increasing or reducing the amount of tax payable and so H also s.234-8(4). [para 9] (1207-A-C] BRIJ LAL & ORS. v. COMMISSIONER OF INCOME 1169 TAX, JALANDHAR 1.3 Chapter XIX-A deals with Settlement of Cases. A The word "case" is defined u/s 245-A (b). It is an exhaustive definition, which makes it clear that an application for Settlement shall lie only when any proceedings for assessment or re-assessment or an appeal or revision in connection with such assessment s or re-assessment is pending before the Income Tax Authority. [para 10] [1207-H; 1208-A-B] 1.4 An application for settlement made u/s 245-C(1) will not be maintainable without full and true disclosure of the income by the applicant, the manner in which such C undisclosed income was derived and that the applicant had furnished his return of income and that the additional tax payable on such income exceeds the specified amount. This was the position prior to Finance Act of 2007. However, s.245-C(1A) inter a/ia provides that D additional amount of income tax payable in respect of the income disclosed shall be calculated in accordance with the provisions of s.245-C(1B). [para 10] [1208-8
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