2013 (7) TMI 40 - AT - Income Tax

Rectification of mistake - Cancellation of interest charged Held that - Assessing Officer made order u/s. 220(2) levying interest on outstanding demand tax assessee claimed interest on seized material kept with Department and requested to adjust interest levied u/s. 220(2) against interest accrued on seized material No appeal prescribed against order made u/s. 220(2) As assessee is required to point out any mistake apparent from record but assessee failed to point out any mistake apparent from order No infirmity in CIT s order Following the decision of Hariharnath Agrawal & Sons (HUF) vs. CIT 1996 (2) TMI 96 - ALLAHABAD High Court and Shri Ganesh Enterprises (P) Ltd. vs. Union of India 1994 (5) TMI 20 - DELHI High Court Appeal dismissed. Quantum of interest charged Assessing officer failed to consider relevant facs Held that - relief granted by CIT in other assessment year therefore for the assessment year 1998-99 liability for tax and interest would reduce assessee entitled for relief in respect of interest levied u/s. 220(2) Appeal allowed.

Issues:
- Rectification application under section 154 of the Income Tax Act for re-computing interest under section 220(2) of the Act.
- Justification of interest levied under section 220(2) against seized material.
- Delay in finalizing assessment proceedings and subsequent imposition of interest.
- Applicability of rectification application in challenging interest charges.
- Relief granted in other assessment years impacting interest liability for the year in question.

Analysis:

1. The appeals by the legal heirs of the assessee were against orders of the Commissioner of Income-tax for different assessment years. The facts and issues were identical across all appeals.

2. During the hearing, no one appeared on behalf of the assessee, but written submissions were considered. The grounds raised in all appeals were the same, so the case for one assessment year was taken as the lead case for convenience.

3. The main ground raised by the assessee was the Assessing Officer's alleged error in not considering the facts of the case while disposing of the rectification application under section 154 of the Income Tax Act for re-computing interest under section 220(2) of the Act.

4. The background involved a search and seizure operation at the assessee's premises, leading to the framing of assessment and subsequent demand for income tax. The assessee's application for rectification of interest calculation was rejected, leading to the appeal.

5. The Revenue supported the interest levy under section 220(2) and cited case laws to justify the automatic nature of the levy.

6. The written submission by the assessee highlighted the prolonged retention of seized material by the Department, leading to the contention that interest under section 220(2) was unreasonable. Reference was made to relevant case law and the delay in finalizing assessment proceedings.

7. The Tribunal considered the contentions of both parties and found that the scope of section 154 was limited, and the assessee failed to point out any mistake in the interest calculation. The appeal against the rejection of the rectification application was dismissed.

8. In another appeal for a different assessment year, the Tribunal maintained a consistent view and dismissed the appeal based on similar grounds.

9. However, in a separate appeal for a different assessment year, the Tribunal remitted the matter back to the Commissioner for verification regarding relief granted in other years, potentially impacting the interest liability for the year in question.

10. Ultimately, the Tribunal dismissed some appeals while allowing one for statistical purposes, based on the specific circumstances and relief granted in other assessment years.

11. The order was pronounced in open court, concluding the proceedings for the appeals.

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