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It is not in dispute that the respondents 1 to 5 herein/assessee filed settlement applications under section 245E of the I.T. Act, 1961 on 25-6-1997 for settlement of its cases relating to the assessment years 1988-1989 to 1992-93 and 1995-96 and allowed to proceed by the Settlement Commissioner. The Settlement Commissioner passed the Combined final order dated 7-1-2000, directing the Assessing Officer to compute the tax and interest payable on the basis of the total income as worked out in the Annexure to the order for the assessment years under consideration. It is given that the total additional income of all the applicants would work out to Rs. 39,45,943/- and Rs. 9,30,000/-additional income offered in the case of M/s. M.A. Jacob's Carpet & Furnishing Co., is accepted and therefore, the same is not added. The order reads that in the case of all the old firms, interest u/s. 139(8) is waived for the assessment year 1988-89 since the assessment was reopened u/s.245E; in the case of all the old firms, the interest is waived since the assessments were reopened u/s.245E, and for that reason, interest u/s.234B in the case of M.A. Jacob & Co., is waived. The Settlement Commission further stated that in the case of M.A. Jacob Furnishing Co. the only assessment year involved is 1995-96 and the return has been filed within the due date.

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Section 234B and 245D of the Income Tax Act, 1961 - Settlement Commission - The terminal point for the levy of interest under section 234B would be up to the date of the order under section 245 D (1) and not up to the date of the Order of Settlement under section 245D(4).

Facts: ITSC held that there is no case for waiver of interest leviable u/s.234B and interest u/s.234B shall be charged up to the date of order u/s.245D(4). AO is authorised to re-compute the interest u/s.234B in view of the directions given and amend the order giving effect to the order of the Settlement Commission u/s.245D(4). Aggrieved by the said order passed by ITSC, the respondents/Partnership Firm filed petition before this court on the ground that ITSC has no power to reopen its earlier order passed on 7-1-2000 and sought to set aside the order passed by the ITSC dated 19-2-2004.

Held, that order passed on the Settlement Applications filed by the assessee is dated 7-1-2000. The second order of ITSC was passed on 19-2-2004. After those orders passed by ITSC on the issue in question, concerning the assessee, in the year 2010, the Honourable Supreme Court had an occasion to deal with the said issue in the case of Brij Lal & Others v. CIT, Jalandhar [CDJ 2010 SC 968]. Another Constitution Bench also dealt with the issue and rendered its decision on 18-10-2011 in the case of CIT v. Anjum M.H. Ghaswala [2001] 119 Taxmann 352/252 ITR 1 . In the said decisions, the Honourable Supreme Court held that the Settlement Commission cannot re-open its concluded proceedings by invoking Section 154 so as to levy interest under section 234B in view of Section 245I. The terminal point for the levy of interest under section 234B would be up to the date of the order under section 245 D (1) and not up to the date of the Order of Settlement under section 245D(4). Sections 234A, 234B and 234C are applicable to the proceedings of the Settlement Commission under Chapter XIX-A of the Act to a certain extent. The matter is remitted back to ITSC, to decide the issue relating to waiver of interest payable by the assessee, afresh keeping in view the law laid down by the Honourable Supreme Court. - CIT V/s M.A. JACOB & COMPANY - [2020] 29 ITCD Online 008 (MAD)