2004 (9) TMI 328 - AT - Income Tax

Tribunal rules for assessee on interest calculation under section 132B(4) for assessment years 1989-90 and 1990-91.

The Tribunal ruled in favor of the assessee, allowing the appeals and directing the Assessing Officer to calculate interest under section 132B(4) up to ... Search And Seizure Issues:Calculation of interest under section 132B(4) for assessment years 1989-90 and 1990-91 based on the date of the consequential order passed by the Assessing Officer.Analysis:The case involved appeals against the order passed by the CIT (Appeals) concerning the calculation of interest payable under section 132B(4) for the assessment years 1989-90 and 1990-91. The dispute arose due to the Assessing Officer passing consequential orders after search and seizure proceedings, leading to a disagreement on the period for which interest should be calculated. The assessee contended that interest should be payable up to March 2003, the date of the consequential order, relying on the decision of the Hon'ble A.P. High Court in Bakelite Hylam Ltd. v. CIT. However, the CIT (A) disagreed, citing the Supreme Court's decision in Modi Industries Ltd. v. CIT, which defined 'regular assessment' as the first order of assessment under section 143 or 144. The CIT (A) concluded that interest is payable only up to the date of the first assessment order.The assessee, further appealing the decision, argued that the consequential order should be considered an assessment order, citing the Supreme Court's decision in S. Sankappa v. ITO. The assessee emphasized that section 132B(4)(b) of the Act mandates interest payment up to the date of the last assessment, including consequential orders. The departmental representative, however, maintained that 'regular assessment' refers to the first order of assessment, limiting interest payment up to March 1998.Upon careful consideration, the Tribunal noted that section 132B(4)(b) provides alternative modes of interest computation, indicating payment from the date of the order to the date of the regular assessment or the last assessment. The use of 'assessment' in contradiction to 'regular assessment' suggests that interest is payable until the last assessment if multiple orders are issued. Consequently, the Tribunal accepted the assessee's claim, directing the Assessing Officer accordingly.In conclusion, the appeals filed by the assessee were allowed, and the Tribunal ruled in favor of calculating interest under section 132B(4) up to the date of the last assessment order, as per the legislative provisions and interpretation of relevant judicial precedents.