TMI Blog1999 (2) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... te order, the Assessing Officer refunded the sum of Rs. 1,60,000 paid by the assessee along with interest under section 244(1A). The order of the CIT(Appeals) was subsequently confirmed by the Tribunal by the order dated 12-6-1985. The department took the matter in reference before the High Court and by the order dated 25-6-1990, the High Court reversed the order of the Tribunal. Consequently, the Tribunal passed the order under section 260(1) on 4-4-1991. The Assessing Officer thereafter passed the order on 26-11-1992 in which a sum of Rs. 1,99,403 was determined as payable by the assessee. In addition, the Assessing Officer also demanded a sum of Rs. 3,61,911 as interest under section 220(2) for the period from 1-10-1980 to 30-11-1992. The assessee then made a petition under section 154 pointing out that the levy of interest under section 220(2) was not in order in view of the decision of the Kerala High Court in the case of ITO v. A. V Thomas Co. 11986] 160 ITR 818/[1985] 21 Taxman 292. The assessee's request for rectification under section 154 was not allowed by the Assessing Officer. The CIT(Appeals) concurred with the Assessing Officer and held that the levy of interest sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand. The CIT (Appeals) held that the facts of the present case were different and so the above decision was not applicable. The distinction as noted by the CIT (Appeals) was that the assessee had not paid tax as per the assessment order dated 14-8-1980 and that there was only part payment as per the instalments granted by the Assessing Officer. According to the CIT (Appeals), the levy of interest was in order as per the decision of the High Court in the case of K.P. Abdul Kareem Hajee v. ITO[1983] 141 ITR 120/12 Taxman 191 (Ker.) 5. Section 220(2) provides that an assessee is liable to pay interest if the amount specified in the notice under section 156 is not paid within the period limited under sub-section (1) of section 220. Sub-section (1) provides a period of 35 days from the date of service of the notice for the amount demanded. It was after considering the aforesaid period of 35 days, that the Assessing Officer has charged interest for the period starting from 1-10-1980 even though the demand notice was issued on 14-8-1980 raising the demand of Rs. 1,91,231. The question to be considered is whether the assessee is liable to pay interest under section 220(2) for the per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay the tax in instalments from Oct. 1980 onwards and the assessee had also paid Rs. 1,60,000 in five monthly instalments. According to the CIT (Appeals), this being a case of the demand not being paid as per the demand notice, the ratio of the decision in the case of K.P. Abdul Kareem Hejee (applicable). The CIT (Appeals) has relied on that decision of the jurisdictional High Court for the view that interest Could be levied for the period when there was demand pending after giving effect to the order of the first appellate authority. In that case a certain amount seized by the Enforcement Directorate from H was claimed by the assessee as his. As a result of the claim of the assessee, the ITO made a protective assessment on the assessee and an assessment on H. Both the assessments were set aside by the Appellate Assistant Commissioner. On further appeal, the Tribunal affirmed the order of the Appellate Assistant Commissioner relating to H but however affirmed the order of the ITO relating to the assessee. Since the assessee alone became liable for the tax due in respect of the seized amount, the Department claimed interest under section 220(2) from the assessee. The assessee conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod from 27-11-1981 in view of the decision of the jurisdictional High Court in the case of A. V. Thomas Co. But as regards the balance amount of Rs. 31,231 there was clear default on the part of the assessee and there was no occasion for refund of the same and so interest was leviable for the period of default i.e. from 1-10-1980. In view of the decision in the case of K.P. Abdul Kareem Hajee. On the entire demand of Rs. 1,91,231 interest was leviable under section 220(2) for the period from 1-10-1980 till the date of actual payment i.e. with reference to the remittance of each instalment. We may mention here that our finding that interest is leviable in respect of the unpaid tax amount of Rs. 31,231 finds support in the subsequent decision of the jurisdictional High Court in the case of Mohammed Essa Moosa Sait v. GTO [1987] 167 ITR 338/34 Taxman 66 (Ker). It is important to note that both the earlier decisions in K.P. Abdul Kareem Hajee's case and A. V Thomas Co.'s case were considered in the case of Mohammed Essa Moosa Sait. The Assessing Officer will recalculate the interest leviable under section 220(2) on the above basis. 9. We may also mention here that the CIT(A) was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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