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Issues:
Interpretation of section 220(2) of the Income-tax Act, 1961 regarding the liability to pay interest on tax dues. Validity of interest calculation and demand under section 220 of the Act after orders by appellate authorities. Applicability of notice of demand under section 156 in determining interest liability. Analysis: The petitioner-assessee filed a special civil application seeking to quash the respondent-Department's decision to charge interest under section 220 of the Income-tax Act, 1961. The petitioner contested the interest calculation of Rs. 3,72,852, arguing that interest should only be charged from the date of the Tribunal's order and not from the original assessment order. The petitioner claimed that they had paid the demanded amount before receiving any notice of demand, thus negating the application of section 220 of the Act. The petitioner sought relief based on the interpretation of the Act's provisions and the timing of demand notices. The respondent opposed the petition, asserting that the liability to pay interest under section 220(2) is automatic and absolute, arising by operation of law without the need for specific demand notices. The petitioner's counsel contended that interest under section 220(2) can only be claimed after the Tribunal's order, citing relevant case law to support their argument. They emphasized the need for a notice of demand under section 156 for a valid interest claim. The respondent's counsel presented arguments based on case law and the automatic nature of interest liability under the Act. The court extensively reviewed the legal principles and case precedents cited by both parties to analyze the interpretation and application of section 220(2) in the context of the petitioner's case. The court's detailed analysis of section 220(2) highlighted the requirement for payment of interest if the amount specified in the notice of demand under section 156 is not paid within the stipulated period. The court considered the impact of various appellate stages on interest calculation and liability, emphasizing the continuity of proceedings during appeals. The court examined the proviso to section 220(2) and the reduction of interest in cases of modified demands. Ultimately, the court held that the notice of demand must relate back to the original demand, and interest can be claimed based on the final demand amount determined by the Tribunal. The court rejected the petitioner's arguments regarding the timing of interest calculation and upheld the respondent's authority to levy interest as per the provisions of the Act. The court found the Revenue authority's actions consistent with the law and ruled against the petitioner's claims. The petition was dismissed, and no costs were awarded.
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