2015 (9) TMI 995 - AT - Income Tax

Rectification of mistake - interest u/s. 220(2) and 234D of the Act had not been charged - CIT (Appeals) deleted the charge of interest u/s.220(2) - Held that - CIT (Appeals) has cancelled the charging of interest by placing reliance on the decisions which are not germane to the issue under consideration. We are also of the view that the decision of the learned CIT (Appeals) appears to have been based on facts which have not been placed in the proper perspective before him. It is also seen that the learned CIT (Appeals) has not dealt with and adjudicated on the specific grounds related to the issue raised before him. In view of all of the above, in our considered view, we feel that it would be in the fitness of things to remand the matter back to the file of the CIT (Appeals) to examine the issue afresh after affording the assessee adequate opportunity of being heard and make submissions and file details required in this regard. It is ordered accordingly. - Decided in favour of revenue for statistical purposes

Issues:
1. Charging of interest under Section 220(2) of the Income Tax Act without appreciating relevant provisions.
2. Double charge of interest under Section 220(2) and 234B of the Act for the same period.
3. Interpretation of the first proviso to Section 220(2) regarding reduction of interest.
4. Applicability of judicial decisions in determining the charge of interest under Section 220(2).

Issue 1: Charging of Interest under Section 220(2)
The case involved a dispute regarding the charging of interest under Section 220(2) of the Income Tax Act for Assessment Year 2007-08. The Assessing Officer rectified the assessment order to include interest amounting to Rs. 12,77,77,868 under Section 220(2) after the initial assessment. The appellant contended that interest should only be charged under Section 234B/234D until the final assessment under Section 143(3) is determined. The CIT (Appeals) allowed the appeal, canceling the interest charged under Section 220(2).

Issue 2: Double Charge of Interest
The appellant raised concerns about the double charge of interest under Section 220(2) and 234B of the Act for the same period. The argument was centered on the timing and appropriateness of levying interest under these sections simultaneously. However, the specific details of the computation revealed that interest under Section 234B was charged for a different period than interest under Section 220(2), thereby addressing the issue of double charging.

Issue 3: Interpretation of the First Proviso to Section 220(2)
The appellant also contested the charge of interest under Section 220(2) by invoking the first proviso to the section, which provides for the reduction of interest following a rectification order. The interpretation of this proviso was crucial in determining the validity of the interest charged under Section 220(2) post-rectification of the assessment order.

Issue 4: Applicability of Judicial Decisions
The case involved a detailed analysis of various judicial decisions cited by both parties to support their arguments regarding the charge of interest under Section 220(2). The Tribunal observed discrepancies in the application of these decisions to the facts of the case. The Tribunal emphasized the need for a thorough examination of the facts and proper adjudication of the specific grounds raised by the appellant before making a final determination.

This detailed analysis of the judgment highlights the key issues raised, the arguments presented by both parties, and the Tribunal's decision to remand the matter back to the CIT (Appeals) for a fresh examination. The case underscores the importance of accurate interpretation of legal provisions and the need for a comprehensive assessment of facts before making determinations in tax matters.

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