2015 (6) TMI 142

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.... the assessing officer determined the assessee's liability at Rs. 95,59,525/-. It is not in dispute that a sum of Rs. 40,000/- was adjusted from the seized cash of Rs. 77 lacs on 29th December, 2005. The assessee not being satisfied with the block assessment order, filed an appeal before the Commissioner of Income Tax (Appeals), Allahabad. The appeal was finally allowed vide order dated 18.8.2006 and the demand was reduced to Rs. 3,15,430/- under Section 158BC/251/154 of the Income Tax Act. The balance amount of Rs. 37 lacs seized on 4.9.2002 was released in favour of the assessee petitioner under order of Commissioner of Income Tax (Appeal), Kanpur on 2.2.2007. The assessee made an application for payment of interest both in respect of the pre-assessment period as well as in respect of the subsequent period after the block assessment. The application of the petitioner for payment of interest for the pre-assessment period was disposed of vide order dated 31.5.2007 and it was held that the assessee was not entitled to interest under Section 132B (A) read with sub-section (B) of the Act. The application in that regard was rejected. So far as the period subsequent t....

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....tral) and another (2013) volume 355 ITR 114 (All) specifically paragraph Nos. 8,18 and 25 of the said judgment. He lastly contended that there has been an inordinate delay in the matter of payment of interest to the assessee on the aforesaid amount, for which the assessee must be compensated in view of the law laid down by the Apex Court in the case of Sandvik Asia Ltd Vs. Commissioner of Income Tax-I, Pune and others SCC 2006 Volume 2 page 508. It is explained to the Court that in the subsequent judgment of the Apex Court in the Case of Commissioner of Income Tax Vs. Gujarat Flouro Chemicals (2013) 358 ITR 291 (SC) the Apex Court has considered the judgment of Sandvik Asia Ltd. (supra) and it has clarified that compensation over and above the rate of interest provided for under the Income Tax Act can be provided for only if there has been inordinate delay in payment of the money to the assessee. Sri Govind Krishna, learned counsel for the department submits that no interest is payable on any amount for the pre assessment period and that the interest as paid as per the document dated 29th April, 2015 (Annexure SCA-2 to the supplementary affidavit) filed on 4.5.2015 at the fla....

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....ting out that although Section 132B (5) of the Act has been deleted by Finance Act No.2 of 2002 w.e.f. 1.6.2002 and on the same date Section 132B (4) has been introduced. The principal of law as laid down in the case of Chironji Lal Sharma HUF (supra) is not diluted in any manner because of the said amendment. We, therefore, hold that the assessee is entitled to interest at the rates applicable on the sum of Rs. 37 lacs for the pre-assessment period in accordance with Section 132B (4) (b) at the rates applicable from time to time after expiry of 120 days from the date of the seizure till the date of the assessment. So far as the prayer for interest under Section 243/244A of the Act is concerned, we find that two Division Benches of this Court in the case of Vijay Prakash Agarwal (supra) and in the case of Prayag Udyog P.Ltd. Vs. Union of India and others (2012) Volume 348 ITR Page 217 have laid down that the assessee would be entitled interest at the rate's which were applicable from time to time on the amount due from the date of block assessment till the date of actual payment which aspect of the matter has been ignored by the authorities while making payment of interes....

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....issue whether an assessee who is made to wait for refund of interest for decades be compensated for the great prejudice caused to it due to the delay in its payment after the lapse of statutory period. In the facts of that case, this court had come to the conclusion that there was an inordinate delay on the part of the Revenue in refunding certain amount which included the statutory interest and, therefore, directed the Revenue to pay compensation for the same not an interest on interest. In view of above, we are of the opinion that this Court has to examine as to whether there has been unexplained inordinate delay in the matter of payment of interest within the statutory period by the department or not. From the facts which have been noticed hereinabove, it is apparent that the assessee became entitled to payment of interest at least for the pre-assessment period from the date his appeal by CIT was allowed and the liability was reduced to 3,15,415/- only. This payment of interest has been denied to the assessee without any justifiable cause even after expiry of 9 years from the date interest was payable. Similarly, we find that for the post-assessment period, the assessee sh....