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TMI Blog2004 (5) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... e specifying the sum payable. Since the assessee has not paid the specified sum in the demand notice the Assessing Officer levied interest under section 220(2) of the Income-tax Act. The assessee is challenging the levy of interest under section 220(2) on the ground that interest on the interest cannot be charged. In other words, interest levied under sections 217 and 234B of the Income-tax Act cannot be further subject to levy of interest under section 220(2) of the Income-tax Act. The Assessing Officer rejected the contention of the assessee and the same was confirmed by the first Appellate Authority. Therefore, the assessee is now in appeal before this Tribunal. 3. Shri V.D. Gopal, the learned counsel for the assessee submitted that the levy of interest on belated payment of interest under sections 217 and 234B is foreign to the scheme of the Income-tax Act. Therefore, there cannot be any levy of interest under section 220(2) in respect of interest levied under sections 217 and 234B. The learned counsel submitted that interest on interest cannot be levied in view of the provisions of section 3(3)( c ) of the Interest Tax Act, 1974. The learned counsel placed his reliance on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso gone through the provisions of sections 156 and 220 of the Income-tax Act. Section 156 of the Income-tax Act reads as follows : "When any tax, interest, penalty, fine or any other sum is payable on consequence of any order passed under this Act, the Assessing Officer shall serve upon the assessee a notice of demand in the prescribed form specifying the sum so payable." After determining the amount payable by the assessee either as tax, interest or penalty under the Income-tax Act, the Assessing Officer shall serve upon the assessee a demand notice in the prescribed form specifying the sum so payable. Therefore, it is very clear when the Assessing Officer served the demand notice in prescribed form specifying the sum payable by the assessee which may include interest penalty apart from the tax, the assessee is bound to pay the same within the specified date. 6. Section 220 of the Income-tax Act reads as follows : "(1) Any amount, otherwise than by way of advance tax, specified as payable in a notice of demand under section 156 shall be paid within thirty days of the service of the notice at the place and to the person mentioned in the notice : Provided that, wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessing order, when the Assessing Officer issued notice of demand under section 156, there is an obligation on the part of the assessee to pay the amount within the date mentioned in the notice. If the assessee fails to comply with the demand notice, the Assessing Officer is empowered to levy interest under section 220(2) of the Income-tax Act. What is excluded is the advance tax and not any other amount payable by the assessee. Therefore, in our view, if the assessee has not paid the interest under sections 217 and 234B and which is included in the demand notice issued under section 156, then the assessee is liable to pay interest even on the interest levied under sections 217 and 234B. Therefore, we do not find any merit in the submission of the learned counsel for the assessee that interest on interest cannot be levied. 7. The other submission of the learned counsel for the assessee is that under section 3(3)( c ) of the Interest Tax Act, interest cannot be levied on interest. Now we are concerned with the Income-tax Act and not the Interest-tax Act. We have to interpret the law as provided in the Income-tax Act. When the Income-tax Act provides for levy of interest in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vation, the Tribunal cancelled the penalty. On a reference to the High Court, the High Court found that the Tribunal was justified in deleting the penalty. On appeal before the Supreme Court, the Supreme Court confirmed the order of the High Court. The Supreme Court held that the ITO would have extended the date only upon being satisfied that there is a good reason on doing so and that could have been on the ground mentioned by the assessee and in those circumstances of this case, a presumption can be validly raised. Therefore, the return filed within the extended period will fall under section 139(1) and they are not the return furnished with section 139(4). The Supreme Court found that the additional period consequent upon such extension of time falls within the expression "the time allowed" in clause ( a ) sub-section (1) of section 271. Therefore, the Supreme Court concluded that penalty provision does not come into play at all. The facts of our case is entirely different one. The question before us is levy of interest under section 220(2) in respect of the amounts specified in the demand notice issued under section 156. Therefore, in our view, the judgment of the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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