The Bombay High Court while dismissing writ petition ruled that Settlement Commission cannot make suo motu rectification of its own order passed under Section 245D (4) of the Income Tax Act in respect of any debatable issue.
In instant case petitioner filed an application for settlement under Section 245C (1) before the commission wherein Respondent Assessee declared its additional income for settlement for AY 2013-14 in its revised return of Income under section 139 (5) of the Act.
During the settlement proceeding Revenue raised an issue about the validity of revised return of income under Section 139(5) of the Act and thereafter, the commission upheld the validity of revised return which was accepted by the revenue. Eventually, final order for settling the dispute was passed.
The order passed for settling the dispute contained a typographical error, which leads to the filing of the application for rectifying the same by Assessee to the commission. Thereafter commission without having a personal hearing of parties corrected the error also suo motu for the Ay corrected the declared income to the tune of 21.90 crores instead of earlier declared amount of Rs.12.23 crores.
Eventually, Assessee filed an application under section 245D (6B) of the Act seeking restoration of the earlier figures of returned income. Before the commission majority of the members considered that the difference between two figures arose on account of the claim for deduction under section 80IA of the Act being made in revised return. Accordingly, the commission allowed the application filed by Respondent –Assessee.
The division bench comprising of Justice M.S.Sanklecha and Justice Sandeep K. Shinde has observed that “ once an order has been passed under section 245D(4) of the Act, it is a final order settling the dispute between parties. The provision of the rectification of the order passed under section 245D (4) of the Act is permissible under section 245 (6B) of the Act, Only to rectify mistakes apparent from the record. Therefore any issue which is debatable or which would require reconsideration of the issue which has already been decided would fall outside the scope of rectification application under section 245D (6B) of the Act”.
Accordingly, the court dismissed the petition and held that commission cannot make rectification on the debatable issue since the order passed under section 245D(4) of the Income Tax Act achieve its finality.
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