9911796707
TMI Blog2009 (3) TMI 899X X X X Extracts X X X X X X X X Extracts X X X X ..... in case of a searched person. The assessment was made on January 30, 2002, determining the undisclosed income at Rs. 1,40,02,500. The assessee in the meantime had filed application before the Settlement Commission on May 11, 2001 and the application was admitted by the Commission under section 245D(1) on September 16, 2002. The Settlement Commission passed the final order disposing of the application under section 245D(4) on September 30, 2005 reducing the undisclosed income to Rs. 32,20,000. The assessee had paid the demand within 30 days of the date of receipt of the order of the Settlement Commission dated September 30, 2005. The Assessing Officer while giving effect to the order of the Settlement Commission, charged interest under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission. The Commissioner of Income-tax (Appeals) accordingly directed the Assessing Officer to withdraw the levy of interest. Aggrieved by the said decision the Revenue is in appeal. Before us, the learned authorised representative for the assessee reiterated the submissions made before the Commissioner of Income-tax (Appeals) and argued that deletion of interest by the Commissioner of Income-tax (Appeals) was justified. He placed reliance on the judgment of hon'ble Supreme Court in the case of Damani Brothers [2003] 259 ITR 475. He also referred to the judgment of the hon'ble High Court of Delhi in the case of L. N. Gadodia and Sons P. Ltd. v. Deputy CIT [2007] 207 CTR (Delhi) 669 in support of the case. The learned Departmental represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 220(2) as the demand itself stood vacated after admission of the application. The Commissioner of Income-tax (Appeals) has accepted the reasoning given by the assessee and has deleted the interest charged by the Assessing Officer under section 220(2) from the date of the assessment order to the date of passing of the order by the Settlement Commission under section 245D(4) on September 30, 2002. Before we proceed to deal with the issue raised, we will have to first deal with the technical objection raised by the learned Departmental representative that the appeal filed by the assessee in relation to the charge of interest under section 220(2) is not maintainable as there is no provision for appeal against levy of interest. The t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h or part of a month comprised in the period commencing from the day immediately following the end of the period mentioned in sub-section (1) and ending with the day on which the amount is paid : Provided that, where as a result of an order under section 154, or section 155, or section 250, or section 254, or section 260, or section 262, or section 264 or an order of the Settlement Commission under sub-section (4) of section 245D the amount on which interest was payable under this section had been reduced, the interest shall be reduced accordingly and the excess interest paid, if any, shall be refunded." There are also the provisions for charge of interest in the scheme of Chapter XIX-A of the Income-tax Act relating to the settlement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e application is admitted under section 245D(1) and therefore from the said date the Assessing Officer has no jurisdiction and he cannot pass an assessment order. However, in case the assessment order has been passed before the date of admission of the application, it will be a valid order and the Assessing Officer will be entitled to recover the demand and charge interest under section 220(2) in pursuance of the said order till the date he has jurisdiction over the case, i.e., till the admission of the case by the Settlement Commission under section 245D(1). This has been clearly laid down by the hon'ble Supreme Court in case of Damani Brothers [2003] 259 ITR 475. The interpretation of the said judgment adopted by the Commissioner of Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry proceedings will continue. The hon'ble Supreme Court further observed that the assessment did not get automatically set aside on the admission of the application for settlement. It is thus clear that in respect of demand raised in the assessment made before the admission of application for settlement under section 245D(1), the Assessing Officer is entitled to levy the interest under section 220(2) till the date of admission under section 245D(1). However, in case, in pursuance of the order of the Settlement Commission, the demand raised in assessment is reduced, the interest would have to be revised accordingly. This has been made clear in the proviso to section 220(2) as per which where as a result of an order under sections 154, 155, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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