2008 (11) TMI 65 - HC - Income Tax

Cancellation of interest u/s 220(2) relevant date - Tribunal relying upon the Circular No.334 dated 3.4.1982 hold that interest under Section 220(2) can be awarded only from the due date of demand notice issued for the reframed assessment order on the amount finally determined as taxable and not from the due date of the original assessment order there is no any error in the finding recorded by the Tribunal revenue s appeal have no force and are dismissed

Summary

Issues:
1. Interpretation of interest under Section 220(2) in a tax matter.

Analysis:
The High Court dealt with an appeal filed by the Revenue against the Tribunal's order regarding the computation of interest under Section 220(2). The case involved a block assessment that was set aside twice by the Tribunal, leading to a fresh assessment order determining undisclosed income. The key issue was whether interest on the revised amount should be calculated from the original assessment order date or the date of the fresh assessment order after remand. The Tribunal relied on Circular No.334, holding that interest is chargeable only after the fresh assessment order. The Revenue argued that a different provision of the Circular applied. The High Court analyzed the Circular's provisions and concluded that the situation fell under the latter part of sub-para (i) of the Circular, as the original assessment order was not restored on further appeal but fresh assessment was made as per Tribunal's direction.

The Court also considered a judgment of the Supreme Court cited by the Revenue, but found it did not support their contention. The High Court upheld the Tribunal's order, stating that there was no error in the findings. Consequently, the appeals were dismissed summarily, indicating that the Revenue's arguments were not valid in this case.