Continuing demand notice for restored tax liability sustains interest charge where final demand stays below the original assessment.

Where the demand ultimately determined after appellate restoration did not exceed the original demand raised by the Assessing Officer, the original demand notice continued to operate for recovery and no fresh notice of demand was required for the restored amount. Applying the Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964, the Tribunal treated restoration of part of the assessment as reviving or continuing enforceability only to the extent the original demand survived. Interest under section 220(2) was therefore validly charged on the unpaid amount, and the contention that a fresh notice was mandatory was rejected.

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Issues: Whether interest under section 220(2) of the Income-tax Act, 1961 was chargeable on the amount of demand restored by the Tribunal without issuing a fresh notice of demand, where the original demand created by the Assessing Officer remained the highest demand.

Analysis: The demand raised by the Assessing Officer was initially the highest demand. The assessee obtained partial relief before the first appellate authority, but the Tribunal later restored part of the original assessment, leaving the final demand still below the demand originally raised by the Assessing Officer. On this scheme, the original demand notice did not cease to operate, and the later appellate restoration only revived or continued the enforceability of the earlier demand to the extent it survived. The Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964 was applied to hold that a fresh notice of demand was necessary only where the demand already created stood enhanced beyond the original demand, not where the original demand remained the ceiling. The cited authorities were treated as supporting this distinction, and the contrary reliance was rejected as inapposite on facts.

Conclusion: Interest under section 220(2) was validly charged, and no fresh notice of demand for the restored amount was required; the issue was decided against the assessee.

Final Conclusion: The original demand notice remained operative for recovery purposes, and the interest levied on the unpaid amount consequent to restoration of the assessment was sustained.

Ratio Decidendi: Where the demand ultimately determined does not exceed the original demand raised by the Assessing Officer, restoration by a higher appellate authority does not require a fresh notice of demand, and interest under section 220(2) remains chargeable on the unpaid amount under the continuing recovery scheme.

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