TMI Blog1995 (7) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed by the tax authorities. To appreciate the respective arguments, it would be necessary on our part to set out certain relevant dates and events as follows : (i) Assessment was completed on 24th Sept., 1984 on an income of Rs. 30,02,710 ; (ii) Order of the Commissioner of Income-tax (Appeals) passed on 13th February, 1985 whereby certain relief was allowed and certain issues restored to the file of the Income-tax Officer ; (iii) Order under section 154 passed on 3rd October, 1985 by the Assessing Officer computing taxable income at Rs. 21,87,310 ; (iv) Order passed by the Tribunal on 16th June, 1987 on the appeals of the parties allowing a relief of Rs. 82,140 and setting aside certain issues to the file of the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd within the stipulated period vis-a-vis the latest order passed by the Assessing Officer and that being the one on 20th March, 1989. It was further stated that as a result of the order passed by the Tribunal on 16th June, 1987 and appeal effect in respect of which was given on 10th August, 1987 the assessee had become entitled to a refund of Rs. 67,262 and that meant that no tax was payable on its part. It was further stated that no interest had been charged in any of the earlier orders passed by the Assessing Officer and, therefore, there was no justification on his part to levy the said interest from the period of the original assessment order which had been passed in Sept. 1984. According to him the judgment of the Hon'ble Kerala High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal the Income-tax Officer's order is deemed to have operated in full vigour and consequently interest under section 220(2) was chargeable for the relevant period. Circular No. 334 dated 3rd April, 1982 also supports the case of the Revenue and the said circular is reproduced as under : " Doubts have been raised as to the quantum of interest chargeable under section 220(2) of the Income-tax Act, when the original assessment order passed by the income-tax Officer is : (i) cancelled by him under section 146 of the Income-tax Act ; (ii) set aside/cancelled by an appellate/revisional authority and such appellate/revisional order has become final ; or (iii) set aside by one appellate authority but, on further appeal, the order setti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the officers working in your charge." [Emphasis supplied by us]. 7. It is apparent that para 2(ii) of the circular would squarely apply as this takes care of a situation where the assessment originally made is varied subsequently either up wards or down wards by the appellate authorities and in such a case interest under section 220(2) is required to be computed with reference to the due date reckoned from the original demand notice, but with reference to the tax "finally determined." The said circular further notes that there would be no difference in the aforesaid position even if during the intervening period there was no tax payable by the assessee. The facts contemplated by the circular are squarely present in the instant case and wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tober 27, 1984 to July 29, 1988, was valid. The first notice of demand dated September 21, 1984, issued after the original assessment order passed by the Income-tax Officer could not be deemed to have been extinguished by virtue of the appeal having been filed before the Commissioner (Appeals) or conditional stay of the operation of the assessment having been allowed by the Commissioner (Appeals) pending disposal of the appeal before him or by virtue of the subsequent reduction of the taxable income, for the reason that under the order of the Tribunal which had attained finality, the original assessment had been restored with the result that the first demand notice which at the most lay in abeyance or suspension stood revived and there was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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