Court Orders Post-Decisional Hearing on Interest Payment

The court directed the Income-tax Officer to conduct a post-decisional hearing for determining interest payable under section 215 of the Income-tax Act, 1961, within two months. The petitioner's request for waiver of interest under Rule 40(1) of the Income-tax Rules, 1962, was considered, emphasizing the need for the hearing. The court stressed compliance with the directed procedures and set a timeline for completion, allowing income-tax authorities to proceed with payment steps excluding interest until the hearing's outcome. Failure to provide the petitioner's current address promptly would render the order inapplicable, with no order as to costs.

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Issues:
- Entitlement to waiver of interest under Rule 40(1) of the Income-tax Rules, 1962.
- Requirement of post-decisional hearing for determining interest payable under section 215 of the Income-tax Act, 1961.

Analysis:
The petitioner sought a mandate to set aside a part of the order related to interest, claiming entitlement to waiver of interest as the delay was not attributable to the petitioner-company. The petitioner did not challenge the other part of the order, and it was argued that interference was not warranted unless the entire order was challenged. The petitioner relied on Rule 40(1) of the Income-tax Rules, 1962, which allows for waiver of interest when the delay in assessment is not attributable to the assessee.

The court considered a previous decision and directed the concerned Income-tax Officer to provide the petitioner with a post-decisional hearing limited to the question of interest payable under section 215 of the Income-tax Act, 1961. Section 215 outlines the calculation and payment of interest by the assessee based on advance tax paid. The court emphasized the importance of the post-decisional hearing and set a timeline for its completion within two months. Until the determination of interest following the hearing, the income-tax authorities were permitted to take steps for payment excluding interest.

The court instructed the authority to consider Rule 40 of the Income-tax Rules, 1962, and section 215 of the Income-tax Act, 1961, while passing the order. It highlighted the acceptance of the post-decisional hearing principle by English Courts and the Supreme Court. The judgment vacated interim orders except for the interest part and directed the petitioner to engage with the income-tax authorities for the post-decisional hearing promptly. Failure to provide the petitioner's current address within two weeks would render the order inapplicable. The matter was concluded with no order as to costs, emphasizing the importance of compliance with the directed procedures.

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