1995 (7) TMI 121 - AT - Income Tax

Tribunal directs reassessment of interest amount under section 220(2)

The Tribunal partly allowed the appeal, directing the Assessing Officer to recalculate the interest amount charged under section 220(2) based on payments ... Assessing Officer, Assessment Order, Original Assessment, Rectification Proceedings, Tribunal's Order Issues:Interest charged under section 220(2) amounting to Rs. 4,68,046 by the Assessing Officer.Analysis:The appeal was directed against the interest charged under section 220(2) by the Assessing Officer, which was confirmed by the Commissioner of Income-tax (Appeals). The Tribunal considered the relevant dates and events in the case, including the completion of assessment, orders by various tax authorities, and the subsequent appeal effect. The Commissioner of Income-tax (Appeals) upheld the levy of interest based on the decision of the Hon'ble Kerala High Court and referred to CBDT Circular No. 334 dated 3rd April, 1982.The counsel for the assessee argued that interest under section 220(2) should only be payable if there was a failure to pay the demand within the stipulated period after the latest order passed by the Assessing Officer. The counsel highlighted that no interest had been charged in earlier orders and referred to relevant circulars and amendments. However, the Departmental Representative supported the tax authorities' orders, reiterating the reasons for rejecting the assessee's viewpoint.The Tribunal, after considering the submissions, held that interest under section 220(2) was chargeable as per the decision of the Hon'ble Kerala High Court and CBDT Circular No. 334. The circular clarified the computation of interest in cases where the assessment order is varied by appellate authorities. The Tribunal also cited a judgment of the Hon'ble Delhi High Court and other High Courts supporting the Revenue's stand. The Tribunal directed the Assessing Officer to recalculate the interest amount considering the payments made by the assessee during the relevant period.In conclusion, the Tribunal partly allowed the appeal for statistical purposes and restored the matter to the Assessing Officer for verification of payment details, based on the direction provided by the Tribunal.