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Issues: Challenge to tax challan validity, validity of order under section 210, liability to pay interest under section 217(1A), validity of interest charged under section 220(2), validity of notice of demand under section 156.
Analysis: The petitioner challenges a tax challan issued to him after a notice under section 221(1) of the Income-tax Act, 1961. The petitioner was also served with a notice under section 56 for payment of advance tax under section 210. However, the notice and order under section 210 were not signed by the Income-tax Officer, rendering them invalid. As per the court's interpretation of the law, a valid order under section 210 is necessary to trigger the obligation for the assessee to file an estimate and subsequently pay interest under section 217(1A) for failure to pay tax on the estimate of enhanced income. Since the order under section 210 was not signed, the obligation to file an estimate and the liability to pay interest do not arise. In the case at hand, the original notice of demand was served on the assessee, but the assessee pointed out discrepancies in the tax liability calculation due to amounts not being credited. Despite the reduction in the tax liability, interest under section 220(2) was still charged. The court ruled that the assessee is not liable to pay this interest as there was no valid notice of demand under section 156 issued to the assessee. Therefore, the interest charged under section 220(2) is deemed invalid. The court ordered the petitioner to pay the reduced tax liability amount and directed a third party to pay this sum with interest to the Income-tax Officer. The petitioner was held liable to pay interest on the said sum from a specified date. The rule was disposed of with these directions, and no costs were awarded in the case.
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