2005 (8) TMI 536 - AT - Income Tax

Summary

Issues:
Charging of interest under section 220(2) of the Income-tax Act, 1961.

Analysis:
The judgment dealt with four appeals filed by the assessee challenging the charging of interest under section 220(2) of the Income-tax Act, 1961. The assessments were completed under section 143(3)/148 of the Act, and notice of demand under section 156 was issued by the Assessing Officer. The assessee did not pay the tax and preferred appeals before the CIT (Appeals), which partially allowed relief to the assessee. However, the Assessing Officer later raised the demand on the assessee, including interest under section 220(2) of the Act. The ITAT set aside the orders of the CIT (Appeals) and reinstated the additions made by the Assessing Officer. The assessee sought rectification of the interest charged under section 220(2) based on a Supreme Court decision, which was rejected by the Assessing Officer.

In the subsequent appeal before the CIT (Appeals), the contentions of the assessee were rejected, and the order of the Assessing Officer was upheld. The authorized representative for the assessee argued that no interest should be charged as the assessee was not in default, especially for certain assessment years where no demand was raised or a refund was given. The departmental representative contended that interest should be charged as per the provisions of section 220(2) of the Act and a circular issued by the CBDT.

The tribunal analyzed the arguments of both parties and referred to the CBDT Circular, which clarified the computation of interest under section 220(2) of the Act. The tribunal rejected the assessee's contention to exclude the period when no demand was outstanding against the assessee. Referring to the decision in Vikrant Tyres Ltd. case, it was established that interest could be charged if the assessee did not comply with the demand notice under section 156 of the Act. Since the assessee had not paid the tax demanded until the appeal was disposed of, the tribunal upheld the orders of the CIT (Appeals) and dismissed the appeals filed by the assessee.

In conclusion, the tribunal ruled against the assessee on the issue of charging interest under section 220(2) of the Act. The decisions of the CIT (Appeals) were upheld, and the grounds of appeal taken by the assessee were rejected. Consequently, all four appeals filed by the assessee were dismissed.