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TMI Blog2014 (7) TMI 1131X X X X Extracts X X X X X X X X Extracts X X X X ..... from May 1, 1999 to March 24, 2009. The Commissioner of Income-tax (Appeals) allowed the claim of the assessee by placing reliance on the judgment of the Supreme Court in the case of Vikrant Tyres Ltd. v. First ITO [2001] 247 ITR 821 (SC). 3. The brief facts of the case are that the assessee filed a return of income for the year declaring total income of Rs. 10,940. The return was processed under section 143(1)(a) on March 31, 1998. Subsequently, the case was selected for scrutiny and the scrutiny assessment was completed on a total income of Rs. 50,01,050 on March 31, 1999. The assessment order, demand notice and challan were served on the assessee on April 1, 1999 and the demand became due on May 1, 1999. Against this, the assessee went ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with law. 5. The Commissioner of Income-tax (Appeals) allowed the claim of the assessee by placing reliance on the judgment of the Supreme Court in the case of Vikrant Tyres Ltd. v. First ITO [2001] 247 ITR 821 (SC) wherein it was held that no interest can be charged during the period when the assessee having paid tax demanded within the stipulated time, which was later on refunded to it when its appeal was allowed and again paid the taxes in time after demands of notice were revived. Following the reference, it would not be liable to pay interest under section 220(2) of the Income-tax Act. Against this, the Revenue is in appeal before us. 6. None appeared on behalf of the assessee nor any adjournment application filed before the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... First ITO [2001] 247 ITR 821 (SC) the Supreme Court was considering the correctness of charging interest under section 220(2) in the following facts. There, the assessee had paid the entire demand of tax pursuant to the assessment. He however preferred an appeal to the first appellate authority who decided the appeal in his favour. The Assessing Officer refunded the tax to the assessee. The Revenue carried the matter further appeal and ultimately the matter reached the High Court on a reference. The High Court ruled in favour of the Revenue and the assessment was restored. The assessee paid the taxes as demanded by the Assessing Officer after the judgment of the High Court. The question before the Supreme Court was whether the Revenue is en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax demanded of him by the Assessing Officer fully. The assessee paid only tax demanded as per intimation under section 143(1)(a) of the Act of Rs. 1,44,730 as against Rs. 7,05,953 vide assessment order under section 143(3) dated March 31, 1999. 8.1.. It is pertinent to refer to similar judgments of some of the other High Courts which are as under: 8.2. In A. V. Thomas and Co. Ltd. v. ITO [1982] 138 ITR 275 (Ker), it was held by a learned single judge of the Kerala High Court that if the assessee had paid the full tax at the right time (when demand was raised pursuant to the assessment order) and a portion of the tax was refunded to him as per the order of the first appellate authority, he had no liability to pay interest to the Depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P. Abdul Kareem Hajee v. ITO [1983] 141 ITR 120 (Ker), that the assessee was liable to pay interest on the unpaid amount of instalments of gift tax right from the date of the gift tax assessment order. 8.5. In ITO v. Ghanshyamdas Jatia [1976] 105 ITR 693 (Cal), the Calcutta High Court held that the combined effect of the Income-tax Act and the validating Act is that in the case of an order of the appellate authority reducing wholly the demand forming the basis of the certificate of tax recovery, the certificate proceedings shall be kept in abeyance until such order becomes final and conclusive. There is no question of extinction of the demand in such cases. It was further held that if the original assess ment order is restored, there is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, the Assessing Officer passed consequential orders calling upon the assessee to pay up the penalty with interest accrued thereon under section 220(2). The assessee challenged the order before the High Court by filing writ petition on the ground that fresh demand notices were not issued by the Assessing Officer for recovery of the penalty and interest. The High Court dismissed the petition holding (a) that the legal effect of the later order of the Tribunal (to give effect to the opinion expressed by the High Court on a reference) was that the earlier notice of demand stood revived and became valid, legal and enforceable against the assessee and there was no need to issue fresh demand notices, and (b) that in view of the validating Act the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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