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Issues:
- Interpretation of provisions under the Income-tax Act, 1961 regarding the levy and waiver of interest under sections 139(8), 215/217, and penalty under section 271(1)(c). - Discrepancy between the orders of the Settlement Commission and the assessing authority regarding the quantification and levy of interest. - Consideration of waiver of interest under rule 40 of the Income-tax Rules and principles of natural justice. Analysis: The petitioner, a firm, applied for settlement of its tax liability for assessment years 1983-84 to 1987-88 under section 245C of the Income-tax Act, 1961. The Settlement Commission quantified income, liability, and interest/penalties. It held that no interest was leviable under section 139(8) for 1983-84. Interest was to be charged for subsequent years, with a waiver for 1987-88. However, the Commission's order was silent on the levy or waiver of interest under section 215/217. The assessing authority quantified interest for all years, leading to a dispute (Para. 1-3). The petitioner challenged the assessing authority's decision before the Karnataka High Court, which upheld it. Further appeals were made, resulting in a Division Bench confirming the order but allowing the petitioner to approach the Settlement Commission for relief (Para. 4-5). The petitioner sought waiver of interest under section 215/217, arguing that the Commission's order did not mention it and that the assessing authority's decision was contrary to law. The first respondent rejected the plea, leading to the current writ petition (Para. 6-7). The petitioner contended that the Commission's order did not contemplate interest under section 215/217, so the assessing authority could not impose it. The petitioner also argued for waiver under rule 40, alleging a violation of natural justice. The respondent supported the Commission's decision, stating that interest was chargeable if conditions were met (Para. 8-9). Citing a Delhi High Court decision, the petitioner argued that the assessing authority must strictly follow the Commission's order and cannot levy interest not indicated therein. The petitioner sought a remand for waiver consideration by the Commission (Para. 10-11). The Court rejected the petitioner's claim, emphasizing that waiver must be an overt act and that the Commission's order did not interfere with interest under section 215/217. However, it agreed that the plea for waiver should have been considered, remanding the matter for the Commission to review the waiver request (Para. 12-13). In conclusion, the Court upheld the petitioner's request for a remand but found no other grounds to interfere with the Commission's order (Para. 14).
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