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2012 (10) TMI 327 - HC - Income TaxLevy of interest under Section 234B, 234C and 220(2) - assessee contested against imposition of interest as 30 days time had not expired - Held that:- The original notice of demand under Section 156 creating a demand of Rs.3,29,371/- dated 31.3.1995 on the assessed income of Rs.5,23,020/- was duly served upon the assessee on 8.5.1995. As per provisions of Section 220(1), the assessee was required to satisfy the demand within 30 days from the date of service of notice of demand. Admittedly, the assessee did not deposit the said amount of tax of Rs.3,29,371/-. The appellant cannot take benefit of the time spent in the litigation because for the said period the department could not utilise the amount of tax. The rational behind the provisions of Section 220(2) to levy interest on delayed payment of tax is not to penalise the party but to make a provision for compensation for the department, on the failure of the assessee to make payment on the first notice of demand. The notice of demand dated 3.1.2003 cannot be said to be a first notice of demand because first notice of demand has already been issued to the assessee after completing the original assessment completed by the Dy. CIT(A), Gorakhpur. In these circumstances, there was no requirement in law to grant a further period of 30 days, after the service of the notice and thus it cannot be said that the demand has been raised for the first time on 3.1.2003. In these circumstances, no substance is found in the argument of assessee that interest under Section 234B, 234C and 220(2) could not have been charged before expiry of 30 days of serving the notice of demand - against assessee.
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