Flower Fashions vs Income Tax Settlement Commission, Additional Bench, Commissioner of Income Tax-III, The Income Tax Officer, Race Course and The Income Tax Officer

M. Jaichandren, J.—This Writ Petition has been filed challenging the impugned order of the first Respondent, dated 06.03.2007, in so far as

it pertains, to the issue relating to the levying of interest, under Sections 234A, 234B and 234C to the Income Tax Act, 1961.

At this stage of the hearing of the Writ Petition, the learned Counsel appearing on behalf of the Petitioner had submitted that the impugned order

of the first Respondent, dated 06.03.2007, in so far as it relates to the levying of interest beyond the Section 245D(1) stage of the Income Tax

Act,1961, is covered by the constitutional Bench decision of the Supreme Court, dated 21.10.2010, in Brij Lal and Ors. v. Commissioner of

Income Tax, in Civil Appeal Nos. 516 to 527 of 2004, wherein it had been concluded as follows:

16(1) Sections 234A, 234B and 234C are applicable to the proceedings of the Settlement Commission under Chapter XIX-A of the Act to the

extent indicated hereinabove.

(2) Consequent upon conclusion (1), the terminal point for the levy of interest u/s 234B would be up to the date of the order under s. 245D(1) and

not up to the date of order of Settlement under s. 245D(4).

(3) The Settlement Commission cannot reopen its concluded proceedings by invoking s. 154 of the Act so as to levy interest under s. 234B,

particularly in view of s. 245-I

The learned Counsel appearing on behalf of the Respondents had not refuted the said submission made by the learned Counsel appearing on

behalf of the Petitioner.

In such circumstances, the Impugned Order of the first Respondent, dated 06.03.2007, is set aside, in so far as it relates to the levying of

interest beyond the Section 245D(1) stage of the Income Tax Act, 1961. As stated in Paragraph 27 of the impugned order, the matter is remitted

back to the first Respondent to calculate the interest leviable on the Petitioner, up to Section 245D(1) Stage, as per the decision of the Supreme

Court, dated 21.10.2010, in Civil Appeal Nos. 516 to 527 of 2004. The first Respondent shall pass appropriate orders, on the interest leviable on

the Petitioner, within a period of four weeks from the date of receipt of a copy of this order, after giving an opportunity of hearing to the Petitioner.

This Writ Petition is disposed of with the above directions. Consequently, connected Miscellaneous Petition is closed.