KAKADIA BUILDERS PVT. LTD. & ANR. versus INCOME TAX OFFICER WARD 1(3) & ANR.

Citation: [2019] 5 S.C.R. 279 · Decided: 05-03-2019 · Supreme Court of India · Bench: ABHAY MANOHAR SAPRE · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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               KAKADIA BUILDERS PVT. LTD. & ANR.
v.
INCOME TAX OFFICER WARD 1(3) & ANR.
(Civil Appeal Nos.2491-2492 of 2019)
    MARCH 05, 2019
[ABHAY MANOHAR SAPRE AND
DINESH MAHESHWARI, JJ.]
Income Tax Act, 1961 – ss. 154, 234A, 234B and 234C,
Chapter XIXA – The appellants-assessee filed settlement applications
before the Settlement Commission during the pendency of the
assessment proceedings for determination of the tax liability – On
11.08.2000, the Settlement Commission passed an order and made
certain additions and waived interest chargeable u/ss. 234A, 234B
and 234C of the Act – Aggrieved, both appellant and Revenue filed
rectification applications – Consequent to which, Settlement
Commission by order dated 11.10.2002 rectified its order dated
11.08.2000 u/s.154 of the Act insofar as it pertained to waiver of
interest, which was granted to the appellant-assessee – However,
High Court set aside the Settlement Commission’s order dated
11.10.2002 – Thereafter, Revenue filed petitions against order dated
11.08.2000 in the High Court – High Court modified order of the
Settlement Commission dated 11.08.2000 by reversing the waiver
of interest in terms of Settlement Commission’s directions contained
in its order dated 11.10.2002 – On appeal, held: The approach of
the High Court was without jurisdiction – The High Court failed to
see that the order dated 11.10.2002 of the Settlement Commission
was already set aside by the High Court itself in the first round
passed in the light of the law laid down by the Supreme Court in
Brijlal case wherein it held that the Settlement Commission had no
power to pass orders u/s. 154 of the Act – Therefore, keeping in
view the law laid down in Ghaswala case and Brijlal case, the
impugned order of the High Court and order dated 11.08.2000
passed by the Settlement Commission to the extent it decided the
issue in relation to waiver of interest set aside – Case remanded to
the Settlement Commission to decide the issue relating to waiver of
interest payable by the assessee afresh.
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[2019] 5 S.C.R. 279
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SUPREME COURT REPORTS
[2019]  5 S.C.R.
Allowing the appeals, the Court
HELD: 1.  In a situation like the one arising in the case,
the High Court instead of going into the merits of the issue, should
have set aside the order dated 11.08.2000 passed by the
Settlement Commission and remanded the case to the Settlement
Commission for deciding the issue relating to waiver of interest
payable under Sections 234A , 234B, and 234C of the Act afresh
keeping in view the scope and the extent of powers of the
Settlement Commissioner  in relation to waiver of interest as
laid down in the  Commissioner of Income Tax, Mumbai vs. Anjum
M.H. Ghaswala & Ors., (2002) 1 SCC 633 and the other was
rendered on 21.10.2010 in Brij Lal & Ors. vs. Commissioner of
Income Tax, Jalandhar, (2011) 1 SCC 1. [Para 22] [285-E]
2. The High Court, however, committed a jurisdictional
error when it observed  that they (High Court) adopt the directions
contained in the order of the Settlement Commission dated
11.10.2002 and then went on to make the said directions as a
part of the impugned order in relation to waiver of interest. This
approach of the High Court is wholly without jurisdiction.
[Para 23] [285-F-G]
3. The High Court failed to see that the order dated
11.10.2002 of the Settlement Commission was already set aside
by the High Court itself in the first round vide order dated
03.03.2014 passed in S.C.A. Nos. 15097 & 15101 of 2004 in the
light of law laid down by this Court in Brijlal wherein it is laid
down that the Settlement Commission has no power to pass orders
under Section  154 of the Act. [Para 24] [285-G-H]
4. Since the order dated 11.10.2002 of the Settlement
Commission was already held bad in law on the ground that it
was passed under Section 154 of the Act, the same was neither in
existence for any purpose and nor it could be relied upon by the
High Court much less for making it a part of their order for issuing
a writ. [Para 25] [286-A-B]
5. Therefore, the impugned order and the order dated
11.08.2000 passed by Settlement Commission are set aside to
the extent it decided the issue in relation to waiver of interest
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and remand the case to the Settlement Commission to decide
the issue relating to waiver of interest payable by the assessee
(appellants herein) afresh keeping in view the law laid down by
this Court in  Ghaswala and Brijlal after affordin

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