TMI Blog1984 (7) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessing authority was restored. When the original order was restored, the assessee was liable to pay back the amount it received by way of refund. Demand was made by the Department by directing the assessee to pay an amount of Rs. 45,767. The Department also demanded interest on the amount. The Department claimed interest under section 220(2) of the Act. They claimed interest from November 30, 1977, to February 26, 1980. November 30, 1977, is the date on which the excess amount of tax collected was refunded. February 26, 1980, is the date of the proceedings of the Income-tax Officer after the order of the Appellate Tribunal. The order directing payment of interest and the balance amount of tax is exhibit P-5. The assessee admitted its liability to pay the tax portion of exhibit P-5. It disputed its liability to pay interest on the amount refunded by the Department and challenged the order to the extent it directed payment of interest. Kochu Thommen J. allowed the original petition and held that the assessee had no liability to pay any amount to the Department by way of interest until exhibit P-5 demand notice was served on him, consequent on the reversal of the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed before us several provisions of the Act which enjoin the Department to pay interest to an assessee when the assessee is entitled to a refund. The counsel also referred to certain provisions of the enactment which enjoin the assessee to pay interest when the assessee is in default in making the return or making a wrong estimate in regard to the payment of advance tax. The counsel referred to sections 215, 216, 217(2), 243 and 244(1A). What the counsel wanted to impress us is that the Act provides for payment of interest in case where there is delay in making any payment to the assessee by way of refund or otherwise. He wants us to understand the provision contained in section 220(2) as a provision authorising the Department to collect interest from the assessee as and when the Department is entitled to the amount of tax. The counsel further submits that the reversal of the order of the assessing authority by the Appellate Assistant Commissioner whose decision was reversed by the Tribunal has no effect on the liability of the assessee in the matter of payment of interest. In substance, the appellant wants us to interpret section 220(2) in the light of the scheme of the Act in rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of the taxing enactment according to the ordinary and natural meaning of the language used and then to apply that meaning to the facts of the case. If, by the application of this process, the taxpayer is brought fairly within the net, he is caught. Otherwise he goes free, but there must be no straining of language either way. " Lord Donovan on the same question of interpretation observed in Mangin v. Inland Revenue Commissioners [1971] AC 739, 746 (PC) thus: " First, the words are to be given their ordinary meaning. They are not to be given some other meaning simply because their object is to frustrate legitimate tax avoidance devices. As Turner J. says in his (albeit dissenting) judgment in Marx v. Inland Revenue Commissioners [1970] NZLR 182, 208, moral precepts are not applicable to the interpretation of revenue statutes. Secondly, . ...... one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. (Per Rowlatt J. in Cape Brandy Syndicate v. Inland Revenue Commissioners [19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent in this case. The counsel for the Department relied on the Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964 (Act 11 of 1964). The counsel particularly relies on section 3 of Act 11 of 1964. He contends that the original notice under section 156 of the Act survives by virtue of section 3 of Act 11 of 1964 . He also referred us to the decision in ITO v. Seghu Buchiah [1964] 52 ITR 538 (SC). In that case, the Supreme Court held that as and when an assessment is challenged and the order of assessment is set aside or modified by the appellate authority, all consequential proceedings pursuant to the assessment order are also rendered ineffective. So, a notice issued under section 156 of the Act pursuant to an assessment order which was set aside subsequently by the appellate authority would not remain in force and the Department has to proceed afresh by issuing a fresh demand notice under section 156 of the Act. This decision caused great difficulty for the Revenue and in order to tide over the difficulty, the said Act, namely, the Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, was passed. Section 3 of the said Act provided t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ming the basis of the certificate, the certificate proceeding shall be kept in abeyance until such order becomes final and conclusive. It was further held that there is no question of extinction of the demand in such cases. Further, it was held that since the original order was restored, no fresh notice of demand is necessary in view of section 3(2) of the Validating Act. True, perhaps that no fresh notice is required in this case. But a consequential order is necessary and that has been issued by the assessing authority which is evidenced in this case by exhibit P-5. As stated earlier, issue of notice alone will not attract the liability to pay interest. The liability is attracted only if there is non-compliance of the demand made in the notice. In this case, there is non-compliance and so the ratio of the decision in ITO v. Ghanshyamdas Jatia [1976] 105 ITR 693 has no application. The appellant relied on a circular of the Department No. 334 dated April 3, 1982 levy of interest under section 220(2) when the original assessment is set aside-instructions regarding. We find it difficult to rely on the circular. The circular only gives the view of the Department in the matter. The p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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