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2016 (5) TMI 1255 - AT - Income TaxInterest charged u/s.220(2) - CIT(A) deleted the addition - order passed by the Settlement Commissioner - Held that - Apparently the demand was raised in pursuance of order dated 17.11.1994 u/s. 245D(1) of the Act and in pursuance of final order dated 245D(4) of the Act determining the income to the tune of ₹ 21,91,030/- for the A.Y.1991-92 and ₹ 21,19,492/- for the A.Y.1992-93 had already been paid which is not in dispute. Subsequently, the demand was raised in pursuance of order dated 03.05.2011 u/s 245D(4) of the Act and this demand was not in knowledge of the assessee. When this demand was raised the same is required to be payable in accordance with law and not from the period of relevant assessment year i.e.1991-92 and 1992-93. Nothing new material brought before us to which it can be assumed that the learned CIT(A) has passed the order wrongly and illegally. The learned departmental representative nowhere produced any law before us, contrary to the finding of the learned CIT(A) in question. No tangible material was produced before us which may speak about the in-genuineness of the order passed by the learned CIT(A). In view of the above said circumstances we are of the view that the learned CIT(A) has passed the order judiciously and correctly which does not require to be interfere with at this appellate stage. - Decided against revenue
Issues Involved:
1. Implementation of the Settlement Commission's order. 2. Calculation and liability of interest under Section 220(2) of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Implementation of the Settlement Commission's Order: The revenue filed appeals against the order of the Commissioner of Income Tax (Appeals) [CIT(A)] concerning the assessment years (A.Y.) 1991-92 and 1992-93. The case began when the assessee applied to the Settlement Commission on 18.10.1993, which was admitted on 17.11.1994. The Settlement Commission initially determined the income for A.Y. 1991-92 and 1992-93, but the department challenged this order, leading to multiple rounds of litigation, including appeals to the Bombay High Court and the Supreme Court of India. Ultimately, the Settlement Commission passed a fresh order on 03.05.2011, assessing higher incomes for both years. The Assessing Officer (AO) then calculated interest under Section 220(2) of the Income Tax Act for the period from the last date of the original assessment to the date of the fresh order. 2. Calculation and Liability of Interest under Section 220(2): The primary issue was whether the interest under Section 220(2) should be calculated from the original demand date or from the date of the fresh order by the Settlement Commission. The CIT(A) ruled in favor of the assessee, stating that interest should only be charged from the date of the fresh order (03.05.2011) and not from the original assessment dates. The CIT(A) relied on several legal precedents, including the case of Commissioner of Income Tax – 1 Vs. Chika Overseas (P.) Ltd. and CBDT Circular no.334, which clarified that interest under Section 220(2) should not be charged for the period before the fresh assessment order. The CIT(A) found that the original order was set aside in toto by the Bombay High Court and confirmed by the Supreme Court, making the case fall under clause (1) of Para 2 of Circular No.334, not clause (2). The Tribunal upheld the CIT(A)'s decision, agreeing that the interest under Section 220(2) should be calculated from the date of the fresh order by the Settlement Commission. The Tribunal noted that the assessee had paid the original demand within the prescribed period and that subsequent demands were not in the assessee's knowledge until the fresh order was passed. The Tribunal found no new material or contrary law presented by the revenue to challenge the CIT(A)'s findings and concluded that the CIT(A) had passed the order judiciously and correctly. Conclusion: The Tribunal dismissed the revenue's appeals, confirming that interest under Section 220(2) is chargeable only from the date of the fresh order by the Settlement Commission (03.05.2011) and not from the original assessment dates. The Tribunal's decision was based on the legal precedents and the specific circumstances of the case, ensuring that the interest calculation was in accordance with the law.
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