TMI Blog2015 (10) TMI 478X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Assessing Officer in charging interest u/s.220(2) of the Act for the entire period from the date of original demand notice till the time when the order giving effect to the Hon'ble High Court of Karnataka was passed. Provisions of Section 220(1A) of the Act; in terms of which the demand would be valid till the disposal of appeal before the last appellate authority was introduced only in Finance Act, 2014 w.e.f. 1.10.2014 and therefore does not apply to the case on hand. We, however, find from a perusal of the impugned order that the learned CIT (Appeals) has neither invoked the provisions of Section 220(1A) of the Act nor even discussed the same while deciding the issue. We are of the view that the issue raised by the assessee does not require adjudication for deciding the issue at hand and these grounds are therefore dismissed as infructuous. - Decided against assessee. - I.T. (S.S) A. No.11/Bang/2014 - - - Dated:- 4-9-2015 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER For The Appellant By : Shri C. Ramesh, C.A. For The Respondent By : Dr.Shankar Prasad, JCIT (D.R). ORDER Per Shri Jason P. Boaz, A.M. : This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of original demand i.e. 30.4.2003 up to the date of giving effect to the order of the High Court ignoring the fact that consequent to giving effect to the order of the Tribunal on 26.7.2005 there was no demand payable and hence from 26.7.2005 no interest could be levied. 3. The learned CIT (Appeals) erred in ignoring the fact that consequent to giving effect to the order of the Tribunal on 26.7.2005, the appellant was issued a refund and from that date the appellant could not have been treated as an assessee in default. 4. The learned CIT (Appeals) erred in ignoring the ratio laid down by the Hon'ble High Court of Kerala in the case of Income Tax Officer Vs. A.V. Thomas Co. (1986) 160 ITR 818 (Ker). 5. The learned CIT (Appeals) erred in ignoring the ratio laid down by the Hon'ble High Court of Kerala in the case of P.P. Koya Vs. CIT, Calicut in ITA No.1428 of 2009. 6. The learned CIT (Appeals) erred in not appreciating the position of law that, the provisions of section 220(1A) of the Act, specifying that, in cases where appeals are filed, the demand would be valid till the disposal of appeal before the last appellate authority was introduced ony ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2.3 The learned CIT (Appeals) distinguished the facts of the case decided by the Hon'ble Apex Court with the facts of the assessee's case. The learned CIT (Appeals) observed that in the cited case, i.e. Vikrant Tyres Ltd. (supra), the entire demand raised by the demand notice was paid by the taxpayer and the decision of the Hon'ble Apex Court was rendered in the context of the entire demand raised by the demand notice being paid and no part of the demand was outstanding. However, in the case on hand, only part of the demand raised by the demand notice was paid and not the entire demand and in that view of the matter, the learned CIT (Appeals) held that the decision of the Hon'ble Apex Court was not applicable to the assessee's case. 3.3.1 Before us, the learned Authorised Representative of the assessee put forth oral and written submissions. While reiterating the submissions made before the authorities below, the assessee assailed the decision of the learned CIT (Appeals) on the issue of interest charged under Section 220(2) of the Act. It was submitted that soon after raising of the original demand, the assessee had approached the Addl. CIT who had gra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied on the decision of the Hon'ble High Court of Kerala in the case of ITO V A V Thomas (1986) 160 ITR 818 (Ker). A similar issue had been decided by the Hon'ble High Court of Karnataka in the case of Vikrant Tyres Ltd. (supra) in which the Hon'ble High Court had upheld the charging of interest under Section 220(2) of the Act. On appeal, Hon'ble Apex Court, however, did not concur with the decision of the Hon'ble High Court of Karnataka, but rather agreed with the stand of the Kerala High Court in the case of A.V. Thomas (supra). 3.5.3 The learned CIT (Appeals), however, has distinguished the applicability of the decision of the Hon'ble Apex Court in the case of Vikrant Tyres Ltd. (supra) to the case on hand on the ground that a condition precedent in the said decision is the payment of full amount of tax due as per the original demand notice within the time allowed as per such notice. In other words, it is the view of the learned CIT (Appeals) that the decision of the Hon'ble Apex Court is applicable only if the demand has been fully paid as per the demand notice. Since in the case on hand, the entire tax raised as per the demand notice has not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a month comprised in the period commencing from the day immediately following the end of the period mentioned in sub-s. (1) and ending with the day on which the amount is paid : Provided that, where as a result of an order under s. 154, or s. 155, or s. 250, or s. 254, or s. 260, or s. 262, or s. 264 or an order of the Settlement Commission under sub-s.(4) of s. 245D, the amount on which interest was payable under this section had been reduced, the interest shall be reduced accordingly and the excess interest paid, if any, shall be refunded : . Sub-s. (4) reads thus : (4) If the amount is not paid within the time limited under sub-s. (1) or extended under sub-s. (3), as the case may be, at the place and to the person mentioned in the said notice the assessee shall be deemed to be in default. 5.2 To complete the narration, Section 221 of the Act provides for the levy of penalty when the assessee is in default or is deemed to be in default in making payment of tax. This penalty is in addition to the amount of arrears and interest payable u/s.220(2) of the Act. The language of Section 221 of the Act indicates that discretionary power is given to the assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppropriate to argue that the demand subsisted in the time between the original demand notice and the first appeal stage and did not subsist between the Tribunal order and the order of the Hon'ble High Court and was again revived after the High Court s order. In case the Hon'ble High Court had confirmed the relief granted by Tribunal, the inevitable conclusion will be that the original notice of demand will survive and the default existed even in the period between the order of the Tribunal and that of the Hon'ble High Court and therefore interest u/s.220(2) of the Act was liable to be paid. Once the Tribunal s order is vacated and the original order is revived, the original demand that remained unpaid also gets revived. The principle of continuing liability is applicable to the Income Tax Act, being a Scheduled Act. 5.6 The principle of continuing liability was highlighted in the CBDT Circular No.334 dt.3.4.1982. This Circular (1982) 135 ITR (St.) 10, quoted in the order of the Hon'ble High Court of Karnataka in the case of Vibrant Tyres Ltd. (supra) reads as under :- Subject: levy of interest under s. 220(2) when the original assessment is set aside- Instru ..... X X X X Extracts X X X X X X X X Extracts X X X X
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