2002 (12) TMI 58 - HC - Income Tax

Demand notices issued by AO Settlement Commission - The said demand notices have been challenged by the petitioners in all the three cases on the ground that once the Settlement Commission has determined the tax and the interest payable thereon and the Assessing Officer made the calculation in terms of the said order vide annexure 2 in all the three cases, and thereafter the petitioners made the payment, the Assessing Officer subsequently cannot issue a further demand notice with regard to the said period in pursuance of the order of the Settlement Commission. no case for quashing the impugned demand notices is made out as the same are in terms of the orders of the Settlement Commission. - Held that Assessing Officer was justified in issuing a further demand notice with regard to the period in pursuance of the order of the Settlement Commission

Summary

Issues involved:
Challenge to demand notices issued by Assessing Officer post determination of tax and interest by Settlement Commission.

Analysis:
The case involved three writ applications by a partnership firm and its partners challenging demand notices issued by the Assessing Officer after the Settlement Commission determined the tax and interest payable. The search and seizure operation by income-tax authorities led to the Settlement Commission's order directing the Assessing Officer to verify tax calculation and charge interest. The Department moved for rectification of interest under section 154 of the Income-tax Act, which was dismissed. Subsequently, the Assessing Officer sent demand notices for payment of tax and interest. The petitioners contended that issuing further demand notices post the Settlement Commission's order was improper.

The Department argued that the demand notices were in accordance with the Settlement Commission's orders and that the initial communication from the Assessing Officer was not a demand notice. The court noted that the Settlement Commission determined the tax and interest payable by the petitioners, who were asked to provide evidence of payment. Unsatisfied with the response, the Assessing Officer issued demand notices as per the Settlement Commission's orders. The court found the petitioners' argument devoid of substance, stating that the demand notices were in line with the Settlement Commission's directives.

The court rejected the petitioners' challenge to the demand notices, emphasizing that the notices were consistent with the Settlement Commission's orders. It clarified that the initial letters from the Assessing Officer were not demand notices. The court declined to address the conformity of demand notices with Settlement Commission orders, suggesting the petitioners seek rectification under section 154 of the Act if needed. Ultimately, all three writ applications were dismissed with the observation that the demand notices were issued in compliance with the Settlement Commission's orders.