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2010 (7) TMI 25 - HC - Income TaxInterest u/s 234B – order of settlement commission u/s 254D – power u/s 254 - Section 234B(4) provides, among other things, that where as a result of an order of the Settlement Commission under Section 245D(4) “the amount on which interest was payable under subsection (1) or subsection (3) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly.” - The contention of the assessee is that unless initially, interest was chargeable under the original assessment order, the question of an increase or reduction would not arise and that a prior levy of interest in the original assessment order is a precondition for the levy of interest under Section 234B(4). – Held that: The amount by which the advance tax paid by the assessee falls short of the assessed tax has been increased as a result of the order passed by the Settlement Commission. This is the amount on which interest was payable under Subsection (1) for if the assessee were to make a correct disclosure of his income in the first instance, the assessee would have been liable to pay interest under Subsection (1) on the short fall. The words, “the interest shall be increased”, would contemplate both a situation where interest had been levied on the assessee in the first instance, and a situation where no interest has been levied on the assessee in the original order of assessment. - the Settlement Commission justified in exercising the power under Section 254 and in allowing the miscellaneous application. – decided against the assessee
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