By TIOL News Service

CHENNAI, AUG 30, 2016: THE issue is - Whether the order of Settlement Commission is required to be taken as conclusive and it cannot be reopened/revised belatedly, in absence of proof of any allegation of fraud or misrepresentation. YES is the answer.

Facts of the case

The assessee had preferred the present petition seeking quashing of the order passed by the Settlement Commission, wherein the Commission had suo-motu revised its final order, as according to assessee, there was no authority for the Commission to rectify such mistake that too by way of suo-motu action.

Having heard the parties, the High Court held that,

1. It is seen that the power of the Settlement Commission to rectify its order much belatedly by way of an application or otherwise came up for consideration before this Court in the case of R.Vijayalakshmi v. Income Tax Settlement, Commission Additional Bench, Chennai and others, wherein it was held that: "....Section 245-I states that only order of the Commission passed u/s 245 shall be conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwise provided in that Chapter, be reopened in any proceeding under the Act or under any other law for the time being in force. The said provision does not cover the power of review on the commission. It is settled legal position that power of review is to be specifically conferred on the authority by the statute and power of review is not inherent with the authority. However, the statute does not provide power of review with the authority and if it is so, it has to be termed as wholly without jurisdiction. Section 245(F)(1) which states that Settlement Commission shall have all powers which are vested in Income Tax Authority under the Act cannot be read in isolation but it should be read in tandem with Section 245(I) and if it is done, then it is to be held that there is no power of review conferred on the Commission to reopen the proceedings. This position held the field till an amendment was inserted u/s 245D(6b) by Finance Act 2011 with effect from 1.6.2011. Even the said provision is not a power of review. But the phraseology used by the legislation is "rectification" and such rectification can be done on any mistake apparent from the record. Therefore, such power exercisable u/s 245D(6D) can be exercised only to rectify a mistake and such mistake should be apparent from the record. Thus, even as per the amendment made by Finance Act, 2011, power of review is not conferred on the Settlement Commission....".

2. It is clear from the facts of the present case also that what has been done by the Settlement Commission is by virtue of the decision of Supreme Court in Brij Lal and Ors. vs. Commissioner of Income Tax, which was subsequent to the decision of the Settlement Commission. Thus, by applying the decision of the Supreme Court in Brij Lal, the order of Settlement Commission has to be taken as final and conclusive and when there is no allegation of fraud or misrepresentation, the question of reopening or revising the order, that too in the manner done in the impugned orders cannot be sustained. Accordingly, the impugned orders are set aside.

(See 2016-TIOL-1902-HC-MAD-IT)