2015 (5) TMI 792 - HC - Income Tax

Interest added under Section 245D(2C) cancelled by ITAT - Held that - Question of levying any additional interest over and above what is permissible under Chapter XIX-A would not arise in the given circumstances of the case. Concededly at the time when the application was filed before the settlement commission, the assessee deposited the admitted tax liability. Soon thereafter, when the application was admitted, the amount required was deposited within the time stipulated under Section 245D(6A). The further tax liability determined was payable after the final decision. The records and materials examined by the CIT(A) and upheld by the ITAT disclose that even the tax liability finally determined was satisfied. In these circumstances, the addition of interest for the period during the pendency of the application before the settlement commission was entirely unwarranted. We do not see any reason to disturb the concurrent findings of fact. - Decided against revenue..

Summary

Issues:
1. Error in upholding cancellation of interest under Section 245D(2C) of the Income Tax Act.
2. Calculation of interest payable by the assessee under Section 245D(2C).
3. Jurisdiction of the settlement commission under Chapter XIX-A.
4. Applicability of interest payment in the circumstances of the case.

Analysis:
1. The Revenue contended that the ITAT's order upholding the cancellation of interest under Section 245D(2C) was erroneous. The case involved a search at K.C. Group's premises resulting in the seizure of cash, stock, and documents. The assessee disclosed income to the Settlement Commission under Section 245D(1) and deposited the required tax. The CIT(A) found that the AO incorrectly charged interest under Section 245D(2C) despite the tax deposit. The ITAT affirmed the CIT(A)'s findings, dismissing the Revenue's appeal.

2. The CIT(A) highlighted the error in the AO's interest calculation under Section 245D(2C). The appellant had timely deposited the tax on the disclosed income under Section 245D(1), rendering the additional interest charge unwarranted. The ITAT concurred with this view, emphasizing that the tax liability was satisfied as per the final decision. The concurrent findings established that no further interest was justified, leading to the dismissal of the Revenue's appeal.

3. The ITAT extensively analyzed the settlement commission's jurisdiction under Chapter XIX-A, referencing relevant legal provisions and precedents such as the Supreme Court's judgment in Ajmera Housing Corporation & Anr. vs. CIT. The ITAT's decision underscored the importance of adhering to the CIT(A)'s findings in the absence of contradictory material from the Revenue. The ITAT's conclusion rejected the Revenue's challenge to the CIT(A)'s and ITAT's decisions, maintaining the dismissal of the appeal.

4. The Court observed that no additional interest beyond what Chapter XIX-A permits was warranted in this case. The timely tax deposit by the assessee upon filing the application before the settlement commission, along with subsequent payments, satisfied the tax liabilities. Consequently, imposing interest during the settlement commission's proceedings was deemed unjustified. The Court upheld the concurrent findings, concluding that no substantial legal question arose, and dismissed the appeals.