TMI Blog2009 (12) TMI 569X X X X Extracts X X X X X X X X Extracts X X X X ..... ey-lending and consequent to the search in the premises of one Sri M. Champalal, the husband of the assessee, a notice under section 158BC read with section 158BD of the Income-tax Act, 1961 (hereinafter referred to as "the Act" for brevity) dated March 18, 1998 came to be served on the assessee on March 24, 1998, calling upon the assessee to file the return of income within the stipulated time, viz., May 7, 1998. However, the assessee filed the return of income onOctober 30, 1998in Form No. 2B. Thereafter, the assessment order came to be passed under section 158BC read with section 158BG of the Act determining the total undisclosed income at Rs. 27,36,811 and demanded tax there under. The Assessing Officer also noticed that return was file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel appearing for the respondent-assessee. 5. We notice from the order-sheet that, this appeal has been admitted onNovember 16, 2007for considering the following substantial questions of law : "(i) Whether the Tribunal was correct in holding that the interest under section 158BFA(1) of the Act, is levied to compensate the Government for withholding the taxes by the assessee and if the assessee has paid the taxes, the said interest cannot be levied ? (ii) Whether the Assessing Officer and the Commissioner of Income-tax (Appeals) had correctly levied interest under section 158BFA(1) of the Act, by holding that as the assessee was bound to file the return of income within May 7, 1998 and as the return was filed on October 30, 1998 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, viz., section 158BFA(1) which reads as under : "158BFA. Levy of interest and penalty in certain cases.-(1) Where the return of total income including undisclosed income for the block period, in respect of search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A on or after the 1st day of January, 1997, as required by a notice under clause (a) of section 158BC, is furnished after the expiry of the period specified in such notice, or is not furnished, the assessee shall be liable to pay simple interest at one per cent. of the tax on un disclosed income, determined under clause (c) of section 158BC, for every month or part of a month comprised in the period commencin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the period, which in effect would mean that, in order to compensate the Revenue as it would be deprived of the tax for the said period, the interest would be attracted. Hence, to accept the contention of the Revenue that interest is to be levied on the entire tax payable would be contrary to the provision of section 158BFA(1) of the Act. In the case of Pranoy Roy [2009] 309 ITR 231 (SC) (supra) it has been held by their Lordships as follows (page 233) : "Since the tax due has already been paid which was not less than the tax payable on the returned income which has been accepted, the question of levy of interest does not arise." 10. In the light of the said observation by their Lordships and applying the said observations enuncia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer has not given set off to the tax paid prior to the issue of notice and remanded the matter for reworking of the same to the Assessing Officer and thus, the question of paying interest on the entire tax component for the period May 7, 1998 to October 30, 1998 does not arise in the instant case and accordingly, the said question is answered partly in favour of the assessee and against the Revenue in the circumstances of the case. However, it is made clear that in the event the Assessing Officer on computation were to find that any tax was due and payable on computing the taxability, he would be entitled to levy the same in accordance with section 158BFA(1) of the Act which is automatic and as observed by the Tribunal in its order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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