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2019 (5) TMI 115 - HC - Income TaxLevy of interest u/s 220(2) - no complete setting aside of the Assessment Order in the present case - CBDT Circular No.334 dated 03/04/1982 - HELD THAT:- The levy of interest u/s 220, is consequential and the interest is payable if the Assessee fails to pay the tax payable as determined in the Assessment Order and a Notice of Demand is issued to the Assessee u/s 156. The levy of interest naturally therefore, depends upon the levy of tax itself. If the above Assessment Order is set aside or set at naught and the Assessing Authority is required to pass fresh Assessment Order, then naturally unless the tax liability is re-determined by the Assessing Authority, the question of interest as determined in the earlier Assessment Order, which has been set aside by the Tribunal, cannot arise. The present case is not a case of total cancellation or setting aside of the Assessment Order fully. It was for a limited purpose that the Tribunal in its order dated 24.08.2004 had asked the Assessing Authority to reconcile the accounts with regard to the amounts of ₹ 1,50,064/- and ₹ 3,58,877/- which two figures did not tally with the total of ₹ 4,54,566/-. Such re-computation at the hands of the Assessing Authority, pursuant to the remand of the learned Tribunal, will not amount to setting aside the Assessment Order altogether. No fresh determination of the tax liability was to take place upon such remand by the learned Tribunal. Question of suspension of the levy of interest for the interim period, upon the order passed by the Tribunal dated 24.08.2004 upto 22.03.2006, when a fresh Assessment Order was passed by the Assessing Authority, could not arise. Circular No.334 dated 03.04.1982 had no application to the facts of the present case and therefore, the contention of the learned counsel for the Assessee raised before us, is devoid of merit. Order under Section 220(2) as such, namely, adding of interest of ₹ 10,05,030/- in the Appeal Effect Order dated 22.03.2006 was per se appealable. Such provision is not included in the category of 'Orders Appealable' u/s 246A. If the levy itself is challenged, the levy of interest consequentially could only be challenged and if the tax liability is reduced or enhanced, the quantum of interest could go up or down, but without making a challenge to the tax liability itself, the levy of interest independently cannot be challenged before the CIT (Appeals). That is why it seems that the Assessee, conscious of this restriction, did not raise this issue as such in the “Grounds of Appeal” initially, but during the course of hearing of Appeal wrongly relying on the aforesaid CBDT Circular No.334 dated 03.04.1982, had raised the ground, against levy of interest under Section 220(2) and the same came to be not only entertained by the CIT (Appeals) but even the relief was granted by him, which in our opinion, was rightly reversed by the learned Tribunal. Decided against the Assessee and in favour of the Revenue
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