Landmark Judgements of Supreme Court on Section 234A [Interest for defaults in furnishing return of income]

Settlement Commission in exercise of its power under section 245D(4) and (6) does not have power to reduce or waive interest statutorily payable under sections 234A, 234B and 234C

On application, Settlement Commission passed an order making addition and waiving interest

under sections 234A, 234B and 234C. Thereafter, on rectification application, Settlement Commission rectified its order of waiving interest. High Court set aside rectified order of Settlement Commission. Thereafter, on revenue’s questioning its legality, High Court modified order passed by Settlement Commission. Said issue had been considered by two Constitution benches of Supreme Court and it was held that Settlement Commission in exercise of its power under section 245D(4) and (6) does not have power to reduce or waive interest statutorily payable under sections 234A, 234B and 234C. Since these two decisions were rendered after Settlement Commission passed orders, impugned orders of Settlement Commission be set aside and case be remanded to Settlement Commission to decide issue afresh. Further High Court committed jurisdictional error since rectified order of Settlement Commission was already held bad in law on ground that it was passed under section 154, and thus, same was neither in existence for any purpose and nor it could be relied upon by High Court much less for making it a part of their order. [Matter remanded] – [Kakadia Builders (P) Ltd. v. ITO (2019) 262 Taxman 268 : 103 taxmann.com 53 (SC)]