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Issues Involved:
1. Levy of interest under section 220(2) of the IT Act. 2. Applicability of section 154 for rectification of the interest levy. Issue-Wise Detailed Analysis: 1. Levy of Interest under Section 220(2) of the IT Act: The primary issue in this appeal is the levy of interest under section 220(2) of the IT Act for the period from 1-10-1980 to 30-11-1992. The assessee was initially assessed to tax for the assessment year 1977-78, and a demand notice was issued on 14-8-1980, including interest under section 139(8). The assessee requested to pay the tax in instalments, which was allowed, and five instalments totaling Rs. 1,60,000 were paid. The CIT(Appeals) later allowed the assessee's appeal, and the amount paid was refunded with interest under section 244(1A). However, the High Court reversed the Tribunal's order, leading to a fresh demand of Rs. 1,99,403 and an additional interest demand of Rs. 3,61,911 under section 220(2). The assessee contended that interest under section 220(2) was not leviable for the period when there was no pending demand, citing the Kerala High Court decision in the case of ITO v. A. V. Thomas & Co. The CIT(Appeals) disagreed, stating that the facts were different and referenced the High Court decision in K.P. Abdul Kareem Hajee v. ITO, which justified the levy of interest for the period when there was a pending demand. The Tribunal analyzed the applicability of section 220(2) and noted that the assessee had paid Rs. 1,60,000 in instalments and received a refund after the appellate order. Following the decision in A. V. Thomas & Co., the Tribunal concluded that no interest was leviable under section 220(2) on the refunded amount of Rs. 1,60,000 for the period from 27-11-1981. However, for the balance amount of Rs. 31,231, the Tribunal held that interest was leviable from 1-10-1980, in line with the decision in K.P. Abdul Kareem Hajee. 2. Applicability of Section 154 for Rectification of the Interest Levy: The second issue pertains to whether the question of interest levy was debatable and thus not subject to rectification under section 154. The CIT(A) held that the issue was debatable, referencing decisions from other High Courts. However, the Tribunal disagreed, emphasizing that the assessee's contention was supported by the jurisdictional High Court's decision in A. V. Thomas & Co. The Tribunal noted that the Karnataka High Court in Vikrant Tyres Ltd. had dissented from the Kerala High Court's decision, but the Tribunal was bound by the jurisdictional High Court's ruling. The Tribunal held that the matter was not debatable and that the Assessing Officer had incorrectly calculated the interest payable under section 220(2). Therefore, the Tribunal directed the Assessing Officer to recalculate the interest in accordance with the decisions of the jurisdictional High Court. Conclusion: The Tribunal partly allowed the appeal, directing the Assessing Officer to revise the levy of interest under section 220(2) by excluding the period for which the refunded amount of Rs. 1,60,000 was involved, and to recalculate the interest on the balance amount of Rs. 31,231 from 1-10-1980. The Tribunal also clarified that the issue was not debatable, and rectification under section 154 was applicable.
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