TMI Blog2016 (5) TMI 1255X X X X Extracts X X X X X X X X Extracts X X X X ..... the in-genuineness of the order passed by the learned CIT(A). In view of the above said circumstances we are of the view that the learned CIT(A) has passed the order judiciously and correctly which does not require to be interfere with at this appellate stage. - Decided against revenue - I.T.A. No. 1176/Mum/2013 & 1177/Mum/2013 - - - Dated:- 25-5-2016 - Shri R. C. Sharma, AM And Shri Amarjit Singh, JM For the Assessee : Shri Prakash Jotwani For the Department : Shri Vikram Batra ORDER Per Amarjit Singh, JM The revenue has filed the above mentioned two appeals against the order dated 14.11.2012 passed by the learned Commissioner of Income Tax (Appeals) 37, Mumbai [hereinafter referred to as the learned CIT(A) ] relevant to the A.Y.1991-92 1992-93. These appeals are being taken together because the matter of controversy and the parties are also same which can conveniently be decided by a single order. 2. The brief facts of the case are that the assessee moved an application before the Settlement Commission on 18.10.1993 which was admitted by the Settlement Commissioner through order u/s.245D(1) of the Income Tax Act, 1961( in short the Act ) on 17.11. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Settlement Commission reckoning the due date w.e.f.01.05.1993, holding order being reframed afresh vide order of Settlement Commission dt. 03.05.2011 without appreciating the fact that the order of the Hon ble ITSC was equated with assessment order only. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the facts that the initial order of Hon ble ITSC was set aside only for limited purpose and as such the case clearly falls under para 2 of Board s circular no.334 dt. 03.04.1982 wherein interest u/s. 220(2) was to be computed with reference to the due date reckoned from original demand notice and with respect to the tax liability finally determined. 4. Issue no.1 and 2 are inter connected infact these issues are raised only one issue with regard to implementation of order passed by the Settlement Commission on the application of the assessee wherein the Assessing Officer passed the order for giving effect to the order of Settlement Commission raising the demand of interest to the tune of ₹ 67,20,291/- for A.Y.1991-92 and interest to the tune of ₹ 64,00,115/- for A.Y.1992-93 of the Act for the period w. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tlement Commission in charging interest u/s.220(2) without giving opportunity of being heard to the appellant. 2.4.3 Upon hearing the appellant, I find that the appellant has filed more appeals for these assessment years bearing appeal Nos. CIT(A)- 37/I.T.No.413 414/DCCC-10/11-12 against order u/s.154 passed by Ld. A.O. on the same subject. A plain reading of sec. 246A of the I.T. Act where the appealable orders before the CIT(Appeals) have been narrated, I find that he charging of interest u/s.220(2) does not fall in any of the clauses mentioned therein. Reliance in this regard is placed on: (i) Sk. Munner SK. Manu Choudhary, 300 ITR 216 (Bom). (ii) CIT Vs. Dailemer Benz AG 108 ITR 961(Bom) (iii) National Products Vs. CIT 108 ITR 935(Kar.) 2.4.4 The above being the case, I do not find any merit in the appeal filed by the appellant bearing appeal Nos. I.T.No.314 315/DCCC-10/11-12 and these are accordingly dismissed as infructuous. 2.5.1 As regards appellant s other appeals filed on the same subject bearing I.T.No.413 414/DCCC- 10/11-12, it is seen that appellant s claim falls u/s.246A(1)(c) as the Ld. A.O. s order was to the effect of refus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the original order of the Settlement Commission was not fully set aside and the remand of the case was confined only to the question of determination of total income, penalty etc. Further, it is evidence that the Hon ble Supreme Court has held clearly that the Settlement Commission was not required to go into the maintainability of application u/s.245C(1) of the Act. Therefore, in view of the above para of Board s Circular, as the order of the Settlement Commission has been partially restored in further appeal, the interest u/s.220(2) in the instant case is chargeable with reference to the due date reckoned from original demand notice and with reference to the tax determined as per final order. Further, it is worth mentioning that the case of the assessee firm is clearly distinguishable from the facts of the case law cited by it wherein the original assessment order passed by the Assessing Officer was wholly set aside by Hon ble ITAT. 6. In the above factual matrix, the undersigned is of the view that the assessee has wrongly misinterpreted the contents of the Board s aforesaid circular and as such, there is no infirmity in levying interest u/s.220(2) while giving effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court. However, Hon ble Supreme Court upheld the order of the High Court and the matter was sent back to the Settlement Commission to decide application afresh. Thereafter, a fresh order u/s.245D(4) was passed by the Settlement Commission on 03.05.2011 assessing the income at ₹ 81,92,874/- for A.Y.1991-92 and ₹ 79,21,543/- for A.Y.1992-93. Pursuant to the order of the Settlement Commission, as above, an order giving effect to the same was passed by the Ld. A.O. on 03.05.2011. However, calculation sheet for interest was allegedly not given to the Settlement Commissions order. The appellant, therefore, requested the Ld. A.O. to provide the calculation sheet and upon receipt of the same, rectification application u/s.154 was filed before the Ld. A.O. on 18.02.2011 stating that the interest u/s.220(2) of ₹ 67,20,291/- for A.Y.1991-92 and ₹ 64,00,115/- for A.Y.1992-93 were wrongly calculation since if the amount specified in any notice of demand u/s.156 is of paid within 30 days of the service of the notice, the assessee shall be liable to pay simple interest at one percent every month or part of the month comprised in the period commencing from the day on whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment order was passed on 24.12.2006 and the demand notice was notice was served on 24.12.2006. As per Section 220(1) of the Act, the assessee was liable to pay the amount of demand within thirty days from the service of demand notice dated 24.12.2006. It is only if the assessee fails to pay the amount demand, within thirty days of the service of the demand notice dated 24.12.2006 as stipulated under 220(1) of the Act, the assessee was liable to pay interest under section 220(2) of the Act. If the liability to pay interest under sec. 220(2) arises after thirty days of the services of the demand notice dated 24.12.2006 does not arise at all. Neither the assessment order dated 24.12.2006 nor the demand notice dated 28.02.1997. Since the demand itself was crystallised under the assessment order dated 24.12.2006 and the assessee under section 220(1) of the Act had time to pay that demand upto thirty days of the service of the demand notice dated 24.12.2006, the argument of the revenue that the assessee was liable to pay interest under section 220(2) of the Act, for the period prior to the crystallization of the demand on 24.12.2006 can not be sustained. Therefore, in the facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant satisfied the said demanded nothing was due pursuant to the said demand notices. However, after the judgement of the appellate authority which went in favour of the assessee, the revenue refunded the amount due as per the said order of the authority. Thereafter, when the matter was taken up ultimately in reference to the High Court and the assessee lost the case, fresh demand notices were issued and it was also an admitted fact that in satisfaction of the said demand notice, the appellant had paid the amount as demanded within the time stipulated therein. The question, therefore, was whether the revenue was entitled to demand interest in regard to the amount which was refunded to the assessee by virtue of the judgment of the appellate authority and which was repaid to the revenue after the decision in the reference by the High Court on fresh demand notices being issued to the assessee. Admittedly, on a literal meaning of the provisions of section 220(2), such a demand for interest cannot be made. The High Court by a literal meaning of the provisions of section 220(2), such a demand for interest cannot be made. The High Court by a liberal interpretation of the said section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res Ltd (Supra). This principle in law is settled by this court in India Carbon Ltd. Vs. State of Assam 1997 (6) SCC 479 wherein this Court held Interest can be levied and charged on delayed payment of tax only if the statute that levies and charges the tax makes a substantive provision in this behalf. A Constitution Bench of this Court speaking through one of us (Hon. Bharucha, J) in the case of V.V.S. Sugars V. Government of A.P. 1999 (4) SCC 192 reiterated the preposition laid down in India Carbon Ltd. s case (supra) in the following words: The Act in question is a taxing statute and therefore, must be interpreted as it reads, with no additions and no subtractions, on the ground of legislative intendment or otherwise. If we apply this principle in interpreting section 220, we find that the condition precedent for invoking the said section is only if there is a default in payment of amount demanded under a notice by the revenue within the time stipulated therein and if such a demand is not satisfied, then section 220(2) can be invoked. 2.5.9 Respectfully following the above mentioned decisions of Hon ble Supreme Court and Hon ble Bombay High Court and in the facts o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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