1999 (8) TMI 29 - HC - Income Tax

Summary

Issues Involved:
1. Appealability of charging interest u/s 220(2) of the IT Act, 1961.
2. Justification of AO's action in withdrawing interest paid u/s 214 of the IT Act, 1961.
3. Justification of the Tribunal in upholding the charge of interest u/s 220(2) amounting to Rs. 42,97,063.
4. Justification of charging interest u/s 220(2) for the period from 26th Oct., 1982, to 31st May, 1986.
5. Justification of withdrawing interest paid to the assessee based on earlier Tribunal orders.

Summary:

1. Appealability of Charging Interest u/s 220(2):
The Tribunal held that charging interest u/s 220(2) of the IT Act, 1961, is not an appealable order. The Court agreed, stating that s. 246 does not provide for an appeal against an order u/s 220(2). The interest under s. 220(2) is not part of the assessment order and is merely a calculation based on outstanding tax payable, thus not appealable.

2. Justification of AO's Action in Withdrawing Interest Paid u/s 214:
The Tribunal upheld the AO's action in withdrawing the interest paid to the assessee u/s 214, which was already refunded. The Court confirmed this, citing that under s. 214(1A), if the amount on which interest was paid is reduced upon regular assessment, the interest should be reduced accordingly, and any excess paid is deemed tax payable by the assessee.

3. Justification of the Tribunal in Upholding the Charge of Interest u/s 220(2):
The Tribunal upheld the charge of interest u/s 220(2) amounting to Rs. 42,97,063. The Court agreed, noting that the AO correctly calculated the interest based on the outstanding tax payable after giving effect to the Tribunal's orders in both the assessee's and Revenue's appeals.

4. Justification of Charging Interest u/s 220(2) for the Period from 26th Oct., 1982, to 31st May, 1986:
The Tribunal justified the charge of interest u/s 220(2) for the specified period. The Court upheld this, stating that the AO's calculation of interest was in accordance with the provisions of the Act and based on the outstanding tax payable.

5. Justification of Withdrawing Interest Paid to the Assessee Based on Earlier Tribunal Orders:
The Tribunal held that interest paid to the assessee based on earlier Tribunal orders can be withdrawn or recovered after the final order of the Tribunal. The Court agreed, emphasizing that any interest paid under s. 214, which is not due, can be recovered if the net result after regular assessment shows outstanding tax payable by the assessee.

Conclusion:
The Court answered all questions in the affirmative, in favor of the Revenue and against the assessee, confirming that the orders charging interest u/s 220(2) are not appealable and that the AO's actions in withdrawing and adjusting interest were justified.