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TMI Blog2014 (11) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) of the Act for the delayed payment of tax works out to Rs. 73,43,132/- and this demand may be paid immediately. 3. The assessment relates to the year 2001-02. The respondent passed an order of assessment dated 31.03.2006 under Section 143(3) read with Section 147 of the Income Tax Act and quantified the tax, surcharge and interest under Sections 234A(3), 234B(3) and 234C being a total amount of Rs. 23,16,31,123/-. The petitioner filed an application before the Settlement Commission on 15.05.2006. The Settlement Commission by order dated 15.05.2006, accepted the revised offer of additional undisclosed income of Rs. 3,34,28,41,978/-, vide letter dated 05.03.2008, with reference to the assessment years 1989-99 to 2003-04 as per the annexure to the said order. The Settlement Commission further directed, the Commissioner of Income Tax to compute the total income, income tax, interest and penalty, if any, payable as per the order of the Settlement Commission and communicate to the petitioner immediately along with demand notice and challan. The petitioner was directed to pay the taxes within thirty five days of the receipt of the demand notice. On a prayer made by the petitioner, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts, the respondent raised demand notice under Section 220 of the Income Tax Act dated 12.06.2012, (impugned order in this writ petition) and the petitioner was forced to once again clarify all points repeatedly and inspite of the same, the respondent has not acted as per the directions of the Settlement Commission, whose orders are final and binding and no refund has been granted and therefore, the petitioner has approached this Court for the said relief. 4. In the counter affidavit filed by the respondent in the said Writ Petition, it was submitted that the business loss eligible to be carried forward for the preceding eight assessment years has been arrived at and duly set off in accordance with the provisions of the Income Tax Act. Petitioner's petitions for rectifications in various years hav ebeen considered and after giving effect to the order of the Hon'ble ITSC, refunds in respect of Assessment years 2000-2001 and 2001-02 amounting to Rs. 22,52,311'/- has been adjusted against the demand payable by the petitioner. Further, the refunds due to the petitioner for the assessment years 2008-09 and 2011-12 for a sum of Rs. 49,53,180/- have also been adjusted agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding and stayed by this Court. By subsequent communication dated 27.02.2013, the respondent furnished the details with regards to the amount payable/refundable to the petitioner for the assessment years 1998-99 to 2010-11 and the said communication contained two annexures giving the details. Thereafter, the petitioner submitted a representation dated 04.03.2013, stating that the order passed under Section 220 is clearly in contravention of the provisions of the Income Tax Act and derides the power of the Settlement Commission by reopening matters already settled by it and the order under Section 220, is attempted to bye-pass the settlement order and the subsequent order of the Commissioner and therefore, does not confirm to law. This was followed by another representation dated 08.03.2013. In the present Writ Petition, the challenge is to the demand of interest under Section 220(2) of the Income Tax Act. 6. The learned counsel for the petitioner after elaborately referring to the factual position and referring to the relevant portion of the order passed by the Settlement Commission submitted that the provision of Section 220(2) of the Income Tax Act, would not stand attracted to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07 and not for any subsequent period or anterior period. Further, it is submitted that in terms of the direction issued by this Court in the earlier Writ Petition, a speaking order was passed by the respondent dated 06.02.2013 and all the details were furnished in the form of annexures, which was also once again communicated by order dated 27.02.2013 and the details in respect of each of the assessment years were furnished in the form of an annexure and in a tabulated statement, the details for each assessment year was furnished, namely, the total demand before the order of Settlement Commission; demand or refund after giving effect to order of Settlement Commission; demand or refund arising out of subsequent modification orders; and remarks in respect of each assessment year. Further, it is submitted that if the petitioner is aggrieved by the impugned order, the petitioner ought to have availed the remedy under Section 264 of the Income Tax Act and without availing the same, the Writ Petition is not maintainable. On the above submissions, the learned counsel seeks to sustain the impugned proceedings. 8. In reply, the learned counsel appearing for the petitioner submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment. Therefore, the date of intimation under Section 143(1) of the Act would be relevant for the purpose of interest under Section 220 of the Act. It has been held that the rationale behind the provisions of Section 220 of the Act to levy interest on delayed payment of tax is not to penalise the party but to make a provision for compensation for the department on the failure of the assessee to make payment on the first notice of demand [Vikrant Tyres Ltd., vs. ITO reported in (2001) 247 ITR 821(SC)]. Therefore, unless there is a default in payment of outstanding tax, the question of levy of interest would not arise. 11. An order of assessment was passed on 31.03.2006 for the assessment year 2001-02 under Section 143(3) read with Section 147 of the Income Tax Act. Against the said order of assessment, the petitioner preferred an application before the Settlement Commission for settlement of their case under Section 245C(1) of the Income Tax Act. The Settlement Commission by order dated 18.03.2008, settled the issue by accepting the revised offer of additional undisclosed income of Rs. 3,34,28,41,978/-, by letter dated 05.03.2008, with reference to the assessment years 1989-99 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be initiated and consequently, to direct the respondent to implement the order of the Settlement Commission. However, the copy of the order passed in W.P.No.27007 of 2012, has not been produced before this Court. 13. Be that as it may, though the petitioner in W.P.No.27071 of 2012, sought for a mandamus to implement the order of the Settlement Commission and grant refund, the petitioner restricted the prayer sought for in the Writ Petition and requested this Court to direct the respondents to pass a speaking order and communicate the same to the petitioner so as to enable them to work out their remedies in accordance with law. This Court recording the statement on behalf of the petitioner disposed of the Writ Petition by order dated 11.12.2012, which reads as follows:- The petitioner seeks a writ of Mandamus to direct the respondent to implement the order dated 24.3.2008 passed by the Income Tax Settlement Commissioner, Additional Bench in Settlement Application No.TN/CN 1/06-07/13/IT, dated 24.3.2008 and grant refund of tax as detailed in the representation dated 4.8.2009 filed by the petitioner. 2. On notice, Mr.Pramod Kumar Chopda, learned Senior Standing counsel for the resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner though fit to restrict the relief sought for in the Writ Petition and requested the respondent to communicate a speaking order to them so as to enable them to work out their remedies in accordance with law. 15. It is to be noted that even as on the date, when W.P.No.27071 of 2012, was filed before this Court on 28th September 2012, the impugned order in this Writ Petition dated 12.06.2012, demanding interest under Section 220 of the Income Tax Act was communicated to the petitioner and well within the knowledge of the petitioner, yet the petitioner did not choose to challenge the impugned order dated 12.06.2012, in the earlier Writ Petition. Though, it is contended by the learned counsel for the petitioner that the demand of interest was in fact contested by raising it as one of the grounds in the Writ Petition, the petitioner did not canvass the contention in the earlier writ petition and restricted the relief based on which the Writ Petition was disposed of by the aforementioned order. Pursuant to the direction issued by this Court in the earlier Writ Petition dated 11.12.2012, the respondent passed an order dated 06.02.2013, which reads as follows:- PAN.AAACW2681A/Co.Wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 27.02.2013. Along with the said letter, two annexures were appended as annexures A and B in which a tabulated statement was given mentioning the assessment year the total demand before the order of the Settlement Commission; demand or refund after giving effect to the order of the Settlement Commission; demand or refund arising out of subsequent modification orders and remarks in respect of each of the assessment years. Therefore, the necessary details have been communicated to the petitioner. If the petitioner is aggrieved then the petitioner has to work out the remedy in accordance with law. In fact, such liberty was reserved to the petitioner when the earlier Writ Petition was disposed of by order dated 11.12.2012. 18. It is submitted by the learned Standing Counsel for the Department that the interest, which is now demanded, is for the period from 01.04.2006 to July 2007. In fact, the Settlement Commission while passing the order dated 18.03.2008, settled the case of the petitioner and specifically directed the Commissioner of Income Tax to compute the total income, income tax, interest and penalty, if any payable. The contention of the petitioner is that the respondent have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers under Section 264 of the Act. Admittedly, the petitioner's case does not fall within any of the three clauses viz. clauses (a), (b) & (c) of Section 264 (4) of the Act. That apart, it has to be pointed out that the petitioner does not seek to challenge the order passed by the Settlement Commission, but the challenge is essentially to the demand of interest broadly on three grounds. 23.Firstly by contending that the respondents themselves having stated that from the verification of records though the tax due has been fully paid in July, 2007, interest under section 220 (2) of Act cannot be demanded. The second ground being that the demand under Section 156 of the Act, consequent upon the order of the Settlement Commission has been raised only on 31.03.2008 and remittance of the amount has been effected in advance and Section 220(2) of the Act would not be attracted. Thirdly, that the direction issued in the earlier Writ Petition in W.P.No.2709 of 2012 has not been complied with, wherein a direction was issued by this Court to the respondent to pass a speaking order and communicate the same to the petitioner so as to enable the petitioner to work out the remedy in accordance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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