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Issues Involved:
1. Interest for delayed deposit of tax deducted at source under Section 201(1A) 2. Interpretation of the term "substantial question of law" under Section 260A(1) 3. Mandatory nature of the levy under Section 201(1A) 4. Violation of natural justice in assessment proceedings Interest for Delayed Deposit of Tax Deducted at Source (Section 201(1A)): The judgment addressed the issue of interest for delayed deposit of tax deducted at source under Section 201(1A). It was noted that the Assessing Officer had wrongly passed orders due to a change in jurisdiction. The aggregate amount of interest exceeded Rs. 3 crores, and the assessee was unsuccessful on merits. The court considered whether the point raised before the Tribunal involved a substantial question of law. It was concluded that the phrase "substantial question of law" encompasses any question affecting the substance of the case. If a question of law substantially impacts tax liability or other substantive matters, the High Court is obligated to entertain the appeal, not just on points perceived as serious by the court. Interpretation of "Substantial Question of Law" (Section 260A(1)): The judgment delved into the interpretation of the term "substantial question of law" under Section 260A(1). The court emphasized that a substantial question of law is one that affects the essence of the case. If the question, if decided in favor of the appellant, significantly influences tax liability or other substantial matters, the High Court must entertain the appeal. The court clarified that appeals should not be entertained solely on points of law considered serious by the court, underscoring the importance of the question's impact on the case's substance. Mandatory Nature of Levy under Section 201(1A): Another issue addressed was whether the levy under Section 201(1A) is mandatory. The subsection specifies the liability to pay simple interest at a specified rate. The court noted conflicting decisions from the Bombay and Kerala High Courts regarding the mandatory nature of the term "shall." The court highlighted the need for a comprehensive examination of the Income-tax Act to determine the mandatory nature of the levy. Quoting Lord Coke, the court emphasized the importance of interpreting all parts of an act together for a holistic understanding. The court decided to entertain the appeal to explore this issue further. Violation of Natural Justice in Assessment Proceedings: The judgment also considered the issue of natural justice in assessment proceedings for the year 1985-86. While the correct officer had jurisdiction for this year, the assessee was not heard by the officer. However, the assessee was fully heard in appeal. Citing precedents, the court noted the significance of the assessee having the opportunity to present their case before the initial authority. Despite the initial officer not hearing the assessee, the court decided to entertain the appeal based on the principles of natural justice. The judgment outlined various questions to be heard in appeal, including the interpretation of sections 201(1A) and 246(1)(i) of the Income-tax Act, the imposition of financial burdens on a statutory body, and the validity of orders passed without jurisdiction. The parties were directed to file relevant documents before the court within a specified timeline, with all concerned parties expected to act upon the court's order.
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