1982 (7) TMI 78 - HC - Income Tax

Court rules interest payable from date of demand in favor of petitioner, quashes unsustainable levy.

The court allowed the Original Petition (O.P.) in favor of the petitioner, ruling that the petitioner's liability to pay interest only arises from the ... Revision Issues involved: Assessment of tax for the year 1976-77, reduction obtained on appeal, reversal of order by Tribunal, liability to pay interest.Assessment and Appeal: The petitioner was assessed for the year 1976-77 by Ex. P-1 dated March 31, 1977. A considerable reduction was obtained by the petitioner under Ex. P-2 order of the AAC dated November 4, 1977. However, on further appeal by the department, the Tribunal by Ex. P-4 order dated 3rd January, 1980, reversed the order of the AAC, thereby restoring Ex. P-1 order.Liability to pay interest: The question at hand was whether the petitioner is liable to pay interest between 30th November 1977, when the amounts were refunded to him by the department, and 26th February, 1980, when a fresh notice of demand was served on him (Ex. P-5) subsequent to the Tribunal's order. The petitioner's liability to pay interest arises only on 26th February, 1980, the date of the demand, as he had paid the amount at the right time and received the refund as per the AAC's order. The court declared that the levy of interest under s. 220(2) from 30th November, 1977, to 26th February, 1980, as per Ex. P-5, is unsustainable and quashed to that extent.Conclusion: The court allowed the Original Petition (O.P.) in favor of the petitioner, stating that the petitioner's liability to pay interest arises only from the date of the demand, i.e., 26th February, 1980. The judgment specified that the levy of interest u/s 220(2) from the date of refund to the date of the demand is unsustainable and quashed. No costs were awarded in this matter.