Court affirms authority's power to add interest on tax declarations under Kar Vivad Samadhan Scheme

The court upheld the designated authority's power to add interest under Section 220(2) of the Income Tax Act during processing of declarations under the Kar Vivad Samadhan Scheme. It found the inclusion of interest for specific years justified, as penalties were imposed and demand notices issued. The court confirmed the legality of adding interest up to a certain date for computation purposes, with no legal infirmity in the authority's orders. The petitioner's challenge was dismissed, and the court allowed for appropriate proceedings for years where demands were not considered, concluding the case without costs.

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Issues:
1. Challenge to orders passed under the Kar Vivad Samadhan Scheme for adding interest under Section 220(2) of the Income Tax Act.
2. Questioning the addition of interest for certain assessment years despite demands being paid.
3. Dispute over the determination of interest payable and the legality of adding interest under Section 220(2) of the Act.
4. Interpretation of the statutory scheme regarding the authority's power to add interest during processing of the declaration under the Scheme.
5. Whether the orders of the designated authority in including interest for specific years were justified.
6. Clarification on the treatment of demands for certain assessment years and the authority's discretion to take appropriate proceedings.

Analysis:
1. The petitioner challenged the orders passed under the Kar Vivad Samadhan Scheme for adding interest under Section 220(2) of the Income Tax Act. The petitioner contended that there were no tax arrears for certain assessment years as the demands were already paid. The petitioner specifically requested the designated authority to ignore the application for those years. The principal contention was the lack of determination of interest payable and the unjust addition of interest under Section 220(2) of the Act during processing of the declaration under the Scheme.

2. The department argued that penalties were imposed for specific assessment years, and demand notices with challans were issued, satisfying the requirements under Section 156 read with Section 220 of the Act. Therefore, the addition of interest during the processing of the declaration under the Scheme was deemed appropriate.

3. The court, after considering the submissions, found that the designated authority was within their powers to add interest, especially since the levy of interest is terminable to the date of payment under the statutory scheme. The court observed that the interest was added only up to a specific date for computation purposes. The court also noted that the petitioner's assertion regarding the payment of penalty amounts for certain years was not specifically denied.

4. The court concluded that there was no legal infirmity in the order passed by the designated authority. The court upheld the inclusion of interest for certain years while processing the declaration under the Scheme. The order was confined to those specific years, and the demands for other years were treated as not considered, leaving open the possibility for appropriate proceedings in accordance with the Act.

5. In light of the respective submissions, the court found no reason to interfere with the demands issued and upheld the inclusion of interest for the specified years. The court clarified the treatment of demands for certain assessment years and affirmed the designated authority's discretion to take appropriate proceedings within the limitations and provisions of the Act.

6. With the above observations, the writ petition was disposed of, with no order as to costs.

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