2000 (11) TMI 12 - HC - Income Tax

Kar Vivad Samadhan Scheme Recovery Of Tax Interest On Unpaid Arrears - The submission of the petitioner is that notice having been issued as provided for in rule 119(3) of the Income-tax Rules 1962 the interest under section 220(2) of the Income-tax Act 1961 cannot be taken note of for the purpose of determination of the amount payable by the petitioner under the Kar Vivad Samadhan Scheme. - In the case of Rajam Pictures Circuit v. CIT it was held that the levy of interest under section 220(2) of the Income-tax Act is statutory and that no separate order is required. It is also held that the settlement of amount payable under section 88 of the Kar Vivad Samadhan Scheme would also be with reference to interest. Though rule 119 was not considered in that case the conclusion drawn therein would still be valid even after consideration of the rule 119. The rule is merely an aid to the statutory provision and is not meant to cut down the scope of the provision or the extent of its applicability.

Summary

The High Court of Madras dismissed the writ petitions related to the Kar Vivad Samadhan Scheme, stating that interest under section 220(2) of the Income-tax Act must be considered in determining the amount payable by the assessee. The court referred to a previous case, Rajam Pictures Circuit v. CIT, where it was established that the levy of interest is statutory and settlement under the scheme includes interest. The court emphasized that rule 119 is only an aid to the statutory provision and does not limit its applicability. The petitioner was granted four weeks to pay the amount.