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TMI Blog2014 (12) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... r as it is extension of the assessment order - the moment there is finality of the proceedings, the original notice of demand comes to the surface and for any default on the part of the assessee, the claim of interest can be revived from inception - the scope of proviso to Sec. 220(2) of the Act, the notice of demand, relates back to the original notice of demand - The revenue was well justified in charging interest u/s 220(2) of the IT Act - the intention of the legislature contemplated a situation, where the interest, being compensatory in nature, though tax having become due, still if the assessee does not pay, then the revenue has to be compensated by charging interest as prescribed u/s 220(2) of the IT Act - thus, the assessee is liable for interest u/s 220(2) as also interest u/s 139(8) and 215 – Decided in favour of assesse. - DB Income Tax Reference No.32/1995 - - - Dated:- 12-11-2014 - MR. AJAY RASTOGI AND MR. J.K. RANKA, JJ. For the Appellant : Mr. Anuroop Singhi For the Respondent : Mr. TC Jain JUDGEMENT Per: J K Ranka: 1. This reference u/s 256(2) of the Income Tax Act, 1961 (for short, 'IT Act') is directed against the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... falls in such parameters as the effect in the instant case is less than Rs.One Lac and thus the reference application at the instance of the revenue deserves to be dismissed. 6. He also contended that u/s 268A which was inserted by the Finance Act, 2008 with retrospective effect from 01/04/1999 specifically lays down that the CBDT can fix such monetary limits as it may deem fit for the purpose of regulating in filing appeal or application for reference by the Revenue and in support relied on the judgment rendered of the Bombay High Court in the case of CIT vs Pithwa Engg. Works: (2005) 276 ITR 519 (Bom); CIT vs Smt. Vijaya V. Kavekar: (2013) 350 ITR 237 (Bom) and CIT Vs Digvijay Singh:(2007) 292 ITR 314 (MP) and contended that the courts have repeatedly held that even in the case of reference applications, which are pending at the time of disposal of the reference are covered by the circulars of the CBDT and on account of minimal tax effect, references does not deserve consideration on merits. 7. Per-contra, ld. counsel for the revenue contended that when reference application was filed and at the instance of this Court on 27/08/1992 reference application was allowed, no suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endered by Kerala High Court in the case of K. Nachimuthu Vs. Sales Tax Officer, II Circle, Trivandrum, reported in 95 STC 539 (Kerala), placing reliance on a judgment of the Apex Court, held that once the demand of tax has been set aside in appeal but restored in subsequent proceedings, penal interest is not payable during interregnum period. He also relied upon judgment rendered by the Andhra Pradesh High Court in the case of SMS Schloemann Siemag, A.G vs DCIT:(2001) 250 ITR 97 (AP). 11. We have considered the arguments advanced by ld. counsel for the parties and have gone through the judgments relied upon by counsel for the parties. 12. We would first deal with the preliminary objection of the ld. counsel for the assessee as to whether the tax effect being minimal the reference at the instance of this Court deserve consideration. Although the judgments cited by counsel for the assessee has observed that it is applicable not only to the appeals but the old pending references as well, but the other view is that the position has to be seen and has to be governed at the time when the reference application was moved/filed and is thus in-applicable for the old pending references ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pex Court, in the case of Commissioner of Income-Tax Vs. Surya Herbal Ltd.: (2013) 350 ITR 300 (SC) has expressed that the circular dt. 09/02/2011 issued by the Board should not be applied ipso-facto, though it also observed that when the matter has a cascading effect in which a common principle may be involved in a subsequent group of matters or a large number of matters. In such cases if the attention of the High Court is drawn, the High Court will not apply the circular ipso-facto for the purpose. 17. Thus, we are of the view that once reference has been admitted by this Court u/s256(1) or 256(2), then the matter cannot be disposed off merely because the tax effect is minimal. We dissent with the view expressed by the Bombay High Court and M.P. High Court, relied upon by counsel for the assessee as the judgment rendered by this Court in Rajasthan Patrika Ltd. (supra) and Registhan (P) Ltd. (supra) is binding on us on the self same issue and we would choose to follow the view rendered by this court. In our view, once a reference application of the Revenue had been allowed by this Court and reference was called at the instance of this Court, the question of law framed has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is distinguishable on the facts of the instant case. In the case of SMS Schloemann Siemag, A.G. Vs. Dy. Commissioner of Income Tax Anr.: (2001) 250 ITR 97 (AP), the assessee also paid entire tax demanded from him pursuant to the assessment order, thus is also distinguishable. The other judgment is also distinguishable. However, as we have noticed herein above, in the instant case, admittedly, the assessee did not deposit any amount. 23. It would also be appropriate to deal with the submission of counsel for the assessee that the second proviso, which was inserted by the Finance No.2 Act, 2014 w.e.f. 01/10/2014 clarifies the situation envisaged in the present case and is not applicable earlier but in our view, it is curative and clarificatory. Therefore, we hold that the intention of the legislature, in our view, contemplated a situation, which we have envisaged in the instant case that the interest, being compensatory in nature, though tax having become due, still if the assessee does not pay, then the revenue has to be compensated by charging interest as prescribed u/s 220(2) of the IT Act. 24. Accordingly, the question is answered in favour of the revenue and against the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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