2024 (12) TMI 1279 - HC - Income Tax

Interest u/s 220(2) after expiry of four years from the date of assessment and as per Section 154 - HELD THAT - Contention of the appellant that the Tribunal as well as Commissioner without considering the grounds raised by the assessee in respect of charging of interest invoking the provisions of Section 220(2) of the Act beyond period of limitation of four years dismissed the appeal, is not tenable on the ground that the Tribunal as well as Commissioner after due verification of the records and also the provisions of the Act and law passed the order. The principles laid down in the above said judgment is squarely applicable to the facts and circumstances of the case on hand on the ground that the assessee in spite of the demand notice issued u/s 154 demanding an amount which is payable to the Department, has not paid the said amount within the stipulated time i.e., a period of 30 days. As per the provisions of Section 220(2) assessee is liable to pay interest, especially as there is no specific time for fixation of time limit for charging interest. The power to levy the interest, in the facts and circumstances of the case, has been exercised within a reasonable time. Substantial question of law is answered against the assessee and in favour of revenue.

Summary

Issues:
1. Whether the order passed by the Assessing Officer under Section 220(2) of the Income Tax Act, 1961, is barred by limitation?

Detailed Analysis:
The appeal pertains to the assessment year 1993-94, where the Assessing Officer passed an order under Section 143(3) of the Act, resulting in a demand notice for Rs.2,99,828. Subsequent orders were passed adjusting the total income and demand payable. The Assessing Officer, on 15.09.2006, directed the assessee to pay Rs.1,63,153, invoking Section 220(2) of the Act, for non-payment within the stipulated time. The assessee filed for rectification, which was rejected, leading to appeals and tribunal proceedings confirming the interest charged under Section 220(2).

The assessee contended that the interest levied after four years is barred by limitation under Section 154 of the Act. Citing various judgments, the counsel argued that the authorities did not consider the limitation issue properly. However, the Senior Standing Counsel argued that Section 154 is for rectification of errors, not for interest levy. The Assessing Officer rightly charged interest under Section 220(2) as the assessee failed to pay tax for over six years. The Counsel relied on legal precedents to support this argument.

The court analyzed the case, noting that the Assessing Officer's order under Section 220(2) was appropriate as the assessee did not pay the demanded tax within the stipulated time. Section 154 deals with rectification of errors, which was not applicable in this case. The Tribunal upheld the interest charged under Section 220(2) after due verification. The court found no merit in the appeal, ruling in favor of the revenue, as the power to levy interest was exercised within a reasonable time, considering the circumstances.

In conclusion, the court dismissed the appeal, stating that the assessee's failure to pay the demanded amount within the stipulated time warranted the interest charged under Section 220(2) of the Act. The court found the arguments against the interest levy beyond the limitation period untenable, as the authorities had considered all grounds and passed the orders in accordance with the law.