TMI Blog2014 (11) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... pensation for the department on the failure of the assessee to make payment on the first notice of demand. As pointed out in the case of Vikrant Tyres Ltd., vs. ITO [2001 (2) TMI 129 - SUPREME Court] - the condition precedent u/s 220 is that there should be a demand notice and there should be a default in paying the amount so demanded within the time stipulated in the notice - the communication dated 31.03.2008, is a consequence to the order passed by the Settlement Commission dated 18.03.2008 - Therefore, the interpretation given by the petitioner for computation of the period for the purpose of levy of interest cannot be adjudicated in a Writ Petition and the petitioner has to necessarily avail the remedy available under the Act – thus, the petitioner is directed to file a Revision before the Commissioner of Income Tax under Section 264 of the Act – Decided against assessee. - W. P. No. 8604 of 2014 - - - Dated:- 27-10-2014 - Hon'ble Mr. Justice T. S. Sivagnanam,JJ. For the Petitioner : M/s. Dr. Anita Sumanth For the Respondents : Mr. T. Pramod Kumar Chopra ORDER The petitioner a company engaged in the business of manufacturing, commissioning, operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able was computed and a demand notice dated 31.03.2008, was issued to the petitioner calling upon the petitioner to pay ₹ 2,24,74,375/-. This was followed by a notice of demand under Section 156 of the Income Tax Act. Subsequently, by another proceedings dated 30.06.2008, the petitioner was intimated that while passing orders on 31.03.2008, the tax paid by the petitioner to the extent of ₹ 46.30 lakhs was omitted to be given credit and hence, the order dated 31.03.2008, was revised and the amount payable was computed as ₹ 17,82,437/-. Further, the order dated 30.06.2008, was modified by order dated 20.07.2009, wherein it was stated that the petitioner is eligible for total refund of ₹ 19,52,311/- and this will be adjusted against the arrears of assessment years 1998-99, 1999-2000 and 2004-05. Subsequently, the impugned proceedings dated 12.06.2012, was passed calling upon the petitioner to pay interest under Section 220(2) of the Income Tax Act to the tune of ₹ 73,43,132/-. The petitioner submitted a representation dated 18.06.2012, stating that the tax liability has been fully paid and there is no demand which was payable and hence interest under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sted against the pending demand of ₹ 3,27,18,094/- as per the due procedure and process of the law enshrined in I.T., Act. Further, loss of about 31.06 crores including those carried forward by these two years has been allowed to be carried forward and same is set off against the business income for 2009-10. Hence, department has duly discharged its august duty with due diligence considering huge quantum of pending demand. 5. Though the respondent Department took the above stand in the counter affidavit, the learned Senior counsel for the petitioner submitted that no such order has been communicated to the petitioner by the respondent. In such view of the matter, this Court by order dated 11.12.2012, directed the respondents to pass a speaking order and communicate the same to the petitioner so as to enable it to work out the remedy in accordance with law, a time frame of twelve weeks was stipulated. Pursuant there to, an order dated 06.02.2013, was issued to the petitioner stating that the order of the Settlement Commission pertains to the assessment years 1998-99 to 2003-04 and on giving effect to the same, the total demand has reduced/or resulted in refunds and the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest is leviable. Further, it is submitted that the order of assessment having telescoped into the order of settlement, a notice of demand under Section 156 of the Income Tax Act was issued on 31.03.2008 and thus, the notice of demand/order of assessment dated 31.03.2006, thus cease to be operative, as there can be only one legal enforcable demand in respect of an assessment. Further, it is submitted that in terms of Section 245D(4) of the Act, the order of the Settlement Commission is a consolidated order that addresses the total remittance to be effected by the petitioner on account of tax, interest and penalty and therefore, no further levies are envisaged in the light of Section 245(6A) of the Act. In any event, the impugned order purporting to raise a demand over and above the demand directed to be made by the Settlement Commission is an obvious of jurisdiction. Further, it is reiterated that the disputed demand having been paid before 31.07.2007 itself, which has been admitted by the respondent, the question of demanding interest will not arise. Further, it is submitted that the Income Tax Act provides for remedy by way of waiver of interest in terms of Section 220(2) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. The challenge in this writ petition is to an order dated 12.06.2012, by which the respondent has demanded interest under Section 220(2) of the Income Tax Act for delayed payment of tax. Sub-section (2) of Section 220 of the Act states that if the amount specified in any notice of demand under Section 156 is not paid within the period limited under sub-section (1) of Section 220, the assessee shall be liable to pay simple interest for every month or part of a month comprised in the period commencing from the day immediately following the end of the period mentioned in sub-section(1) and ending with the day on which the amount is paid. The first proviso under sub-section (2) of Section 220 states that where as a result of an order under Section 154 or 155 or 250 or 254 or 260 or 262 or 264 or an order of the Settlement Commission under sub-Section (4) of Section 245D, the amount on which interest was payable under Section 220(2) had been reduced, the interest shall be reduced accordingly and the excess interest paid, if any, shall be refunded. The second proviso states that in respect of any period commencing on or before the 31st day of March, 1989, and ending after that da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant immediately along with the demand notice and challen under intimation to the Commission. Consequent to the order passed by the Commissioner, the Assistant Commissioner of Income Tax Company Circle III(3), Chennai passed an order dated 31.03.2008, computing the income payable and directed the petitioner to pay the said amount as per the demand notice. This was followed by a notice of demand dated 31.03.2008, under Section 156 of the Act, notice of demand dated 31.03.2008 was revised by subsequent order dated 30.06.2008 and further revised by order dated 20.07.2009. It is thereafter the impugned communication dated 12.06.2012 was sent to the petitioner demanding interest under Section 220(2) of the Act. The petitioner submitted a representation on 18.06.2012, requesting to process the application for refund and issue the same together with applicable interest. Further, it was stated that the tax liability has been fully paid and there is no demand which was payable and hence the interest under Section 220 does not arise and requested the respondent to pass necessary orders to nullify/rectify the demand. The petitioner filed a Writ Petition before this Court in W.P.No.27071 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs has been arrived at and duly set off in accordance with the provisions of the IT Act. Petitioner's petitions for rectifications in various years have been considered and after giving effect to the order of the Hon'ble ITSC, refunds in respect of Asst. Years 2000-2001 and 2001-02 amounting to ₹ 22,52,311/- has been adjusted against the demand payable by the petitioner. Further, the refunds due to the petitioner for the asst. years 2008-09 and 2011-12 for a sum of ₹ 49,53,180/- have also been adjusted against the demand payable by the petitioner for AY 2009-10 and earlier years. The petitioner's contention of further refunds, if any, needs to be reconciled and worked out after due consideration of pending proceedings and adjustments as assessee's issues cover a period of 10 years from A.Y.2000-01 to 2009-10. Even otherwise, after reconciling all such TDS claims/rectifications the same is to be adjusted against the pending demand of ₹ 3,27,18,094/- as per the due procedure and process of the law enshrined in I.T. Act. Further loss of about 31.06 crores including those carried forward by these two years has been allowed to be carried forward and sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt of Madras, dated 11.12.2012 in W.P.No.27071 of 2012. ***** Please refer to the above The Hon'ble High Court of Madras has disposed your petition by directing this office to give a speaking communication to your goodselves with regard to the relevant subject of giving effect to Settlement Commission order and issue of consequent refunds. The relevant Income Tax Settlement Commission order pertains to Assessment Year 1998-99 to 2003-04 and on giving effect to the same the total demand has reduced/ (or) resulted in refunds and the same is as per annexure 'A' enclosed. The status of demand or refund in respect of subsequent assessment years is also detailed in the annexure 'B' enclosed. In case, if any further clarification is needed you may approach the undersigned independently for each assessment year. It may be seen that after issue/adjustment of refunds, there is a pending demand of ₹ 2,43,14,969/- in assessment year 2009-10 and demand under Section 220(2) of ₹ 73,43,132/- in assessment year 2001-02. The refunds pertaining to assessment year 2005-06 2006-07 can be determined and issued on completion of proceedings which have pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be a default in paying the amount so demanded within the time stipulated in the notice. It is not the case of the petitioner that the tax payable was paid without any default. The contention of the petitioner is that the tax liability was paid well before 31.07.2007 and the demand having been issued on 21.03.2008, the levy of interest under Section 220(2) of the Act is not in accordance with law. It is to be noted that the communication dated 31.03.2008, is a consequence to the order passed by the Settlement Commission dated 18.03.2008. Therefore, the interpretation given by the petitioner for computation of the period for the purpose of levy of interest cannot be adjudicated in a Writ Petition and the petitioner has to necessarily avail the remedy available under the Act. 20.Section 264 of the Act provides for revision of other years other than an order to which Section 263 of the Act applies, by an authority subordinate to the Commissioner and the Commissioner either on his own motion or on application by the assessee for revision, call for the records of any proceedings under the act in which any such order has been passed and may make such enquiry or cause such enquiry ..... X X X X Extracts X X X X X X X X Extracts X X X X
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