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Commissioner Of Income Tax v. Sant Ram Mangat Ram Jewellers And Others
Factual and Procedural Background
The appeal arose from a judgment and order dated 20-09-1999 of the Income Tax Settlement Commission. For Assessment Year 1993-94, the Settlement Commission held that waiver of interest chargeable under Section 234-B of the Income Tax Act was restricted to 50%. The appellant (Revenue) filed special leave petitions with a delay of 247 days; the delay was condoned, leave was granted, and costs of Rs 10,000 were imposed on the appellant for the delay.
Legal Issues Presented
- Whether, in light of the Supreme Court’s decision in CIT v. Anjum M.H Ghaswala, the Income Tax Settlement Commission could restrict/waive mandatory interest under Section 234-B (and related provisions) for Assessment Year 1993-94.
- Whether the issue required reconsideration on the ground that prior Supreme Court judgments allegedly did not consider Explanation 1 to Section 234-B(1).
Arguments of the Parties
Appellant (Revenue) Arguments
- The Settlement Commission’s order restricting waiver of Section 234-B interest to 50% was illegal and erroneous.
- The order was contrary to the Supreme Court’s judgments in CIT v. Anjum M.H Ghaswala (2002) 1 SCC 633 and CIT v. Hindustan Bulk Carriers (2003) 3 SCC 57.
Respondents’ Arguments
- In Ghaswala and Hindustan Bulk Carriers, the Court did not consider Explanation 1 under Section 234-B(1) of the Income Tax Act.
- Accordingly, the issue required reconsideration.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| CIT v. Anjum M.H Ghaswala (2002) 1 SCC 633 | The Settlement Commission has no power to waive mandatory interest under Sections 234-A, 234-B and 234-C of the Income Tax Act. | Treated as binding; the Court held it was not open to reconsider the matter after Ghaswala. |
| CIT v. Hindustan Bulk Carriers (2003) 3 SCC 57 | Cited by the Revenue to support the contention that the Settlement Commission’s waiver/restriction was erroneous. | Not independently analyzed; referenced in the parties’ submissions alongside Ghaswala. |
Court's Reasoning and Analysis
The Court noted the respondents’ submission that Explanation 1 to Section 234-B(1) had not been considered in the prior decisions. However, it held that after the pronouncement in CIT v. Anjum M.H Ghaswala, it was not open to reconsider the issue. The Court relied on the specific holding in Ghaswala that the Settlement Commission has no power to waive mandatory interest contemplated under Sections 234-A, 234-B and 234-C of the Income Tax Act. On that basis, the Settlement Commission’s restriction/waiver reflected in the impugned order could not stand.
Holding and Implications
ALLOWED; IMPUGNED ORDER SET ASIDE. The appeals were allowed and the Settlement Commission’s order was set aside. The Revenue was permitted to recover interest as provided under the Income Tax Act. Although costs of Rs 10,000 were imposed on the appellant for the delay in filing the special leave petitions, the final order in the appeals directed that there would be no order as to costs. The decision directly affected the parties by restoring the Revenue’s ability to recover statutory interest; no broader implications beyond applying the binding effect of Ghaswala are stated in the order.
Order
1. Heard the learned counsel for the parties.
2. The appellant shall pay Rs 10,000 as costs because of the delay of 247 days in filing these special leave petitions.
3. Delay condoned.
4. Leave granted.
5. This appeal is filed against the judgment and order dated 20-9-1999 passed by the Income Tax Settlement Commission holding that for Assessment Year 1993-94 waiver of interest chargeable under Section 234-B of the Income Tax Act is restricted to 50 per cent. It is the contention of the learned counsel for the appellant Revenue that the said order is illegal and erroneous, in view of the judgment rendered by this Court in CIT v. Anjum M.H Ghaswala (2002) 1 SCC 633 and also the decision rendered by this Court in CIT v. Hindustan Bulk Carriers (2003) 3 SCC 57 on 17-12-2002.
6. As against this, the learned Senior Counsel appearing on behalf of the respondents submitted that in the judgments rendered by this Court in Ghaswala case (2002) 1 SCC 633 as well as in Hindustan Bulk Carriers case (2003) 3 SCC 57 the Court has not considered Explanation 1 under Section 234-B(1) of the Income Tax Act and, therefore, the said issue requires reconsideration.
7. In our view, after the pronouncement of the judgment in Ghaswala case (2002) 1 SCC 633 it is not open to us to reconsider the same as it has been specifically held that the Settlement Commission has no power to waive mandatory interest as contemplated under Sections 234-A, 234-B and 234-C of the Income Tax Act.
8. In this view of the matter, these appeals are allowed and the impugned order passed by the Settlement Commission is set aside. It would be open to the Revenue to recover interest as provided under the Act. There shall be no order as to costs.
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