TaxTMI 
TaxTMI 
2016 (5) TMI 1255
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....income to the tune of Rs. 21,91,030/- for A.Y.1991-92 and Rs. 21,19,492/- for A.Y.1992-93. Thereafter, the department filed Writ against this order of the Settlement Commission to the Hon'ble Bombay High Court and Hon'ble Bombay High Court set aside the order of Settlement Commission by virtue of order dated 28.07.2000. Subsequently, the appellant as well as department filed an appeal before the Hon'ble Supreme Court of India and the Hon'ble Supreme Court of India passed the order dated 11.07.2006 and set aside the order of Hon'ble Bombay High Court and restored the applications to the Hon'ble Bombay High Court. Thereafter, the Hon'ble Bombay High Court in its second order dated 08.07.2009 again set aside the order of the Settlement Commission with the direction to decide the application of the appellant afresh. The appellant further filed an appeal before Hon'ble Supreme Court and the Hon'ble Supreme Court again send the matter back to the Settlement Commission to decide the application afresh. A fresh order u/s.245D(4) of the Act was passed on 03.05.2011 assessing income to the tune of Rs. 81,92,574/- for A.Y.1991-92 and Rs. 79,21,543/- for A.Y.1992-93. Thereafter, giving effect ....
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....0(2). This issue has been raised by the assessee before learned CIT(A) and the learned CIT(A) accepted the contention of the assessee and arrived at this conclusion that interest is liable to be payable on the above mentioned assessment year i.e. 1991-92 and 1992-93 for the period w.e.f. raising the demand by the Assessing Officer after the issuance of demand notice in pursuance of the fresh order passed by the Settlement Commission in pursuance of the direction of Hon'ble Bombay High Court and Hon'ble Supreme Court of India. The learned departmental representative has argued that the learned CIT(A) has passed the order wrongly and illegally because the demand of the interest is relevant to the A.Y.1991-92 and 1992-93. Therefore, in the said circumstances the interest is liable to be calculated and payable from the passing relevant assessment order. 4.1 On the other hand, the learned representative of the assessee has argued that the learned CIT(A) has passed the order judiciously and correctly which is not required to be interfere with at this appellate stage and also placed reliance on the law settled in [2012] 209 taxman 456 / 23 Hon'ble High Court of Bombay in case of Commis....
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....ontention regarding wrong charging of interest was forwarded to the Ld. A.O. for his report. Ld. A.O. vide letter No.ACIT/CC-10/ Remand Report / Ajmera Hsg. Corpn./2012-12 dt.08.10.2012 submitted the remand report which was received in this office on 12.10.2012 through the Addl. CIT, Central Rg.2, Mumbai and a copy thereof was forwarded to the appellant for his rejoinder, if any. In his remand report, Ld. A.O. has referred to the CBDT's Circular No.334 [F.No.400/3/81-ITCC] dated 03.04.1982. The operative part of the remand report reads as under:- "I have carefully gone through the submissions made by the assessee before your goodself in its letter dated 30th April, 2012, Order of the Hon'ble Settlement Commission, High Court, Supreme Court and other relevant facts of the case. Here, it is significant to read point no.2 of para 2 of the Board's aforesaid circular, which states that Where the assessment made originally by the Income-tax Officer is either varied or even set aside by one appellant authority but on further appeal, the original order of the Income Tax Officer is restored either in part or wholly, the interest payable under section 220(2) will be compute....
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....e issue of chargeability of interest u/s.220(2) may be decided on merits keeping in view the legislative intent behind the legislation in this regard and above factual proposition". 2.5.3 On the other hand, Ld. A.R. has stated that Hon'ble Supreme Court has merely confirmed the Bombay High Court's order dated 08.07.2009 where it was held that all the proceedings were remanded back to the Settlement Commission for hearing afresh. Emphasis has been made by him on para 17 of the order of the Hon'ble Bombay High Court which reads as under:- "For the aforesaid reasons, writ petitions are allowed. Impugned orders dated 29.1.1999 passed by the Settlement Commission are hereby set aside and all the proceedings are hereby remanded back to the Settlement Commission for hearing afresh after giving due opportunity to the Revenue in the light of the observations made above. Parties shall appear before the Settlement Commission at Mumbai on 3rd August, 2009 and the Settlement Commission shall dispose off the proceedings within six months thereafter."(Emphasis supplied) 2.5.4 It would be appropriate at this stage to go into the history of this case. Pursuant to a search....
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....5.1993 because Hon'ble Supreme Court had set aside the original order of Settlement Commission passed on 17.11.1994 by affirming the action of the Hon'ble Bombay High Court and directed the Settlement Commission to pass a fresh order. According to him, as the fresh assessment order (order giving effect to the order of Settlement Commission's order) was passed by the Ld. A.O. on 03.05.2011 because neither the Assessment order dt. 03.05.2011 nor the demand notice dt. 03.05.2011 require the appellant to pay interest after 30 days from the date of service of the original demand notice dt.17.11.1994. It was further argued that since the demand crystallized under the order giving effect to Settlement Commission's order 03.05.2011, question of levying of interest from the date of original order on 17.11.1994 does not arise. In support of the above stand, a reference was also made to the decision of Hon'ble Bombay High Court in CIT Vs. M/s. Chika Overseas P. Ltd. (Bom), ITA No. 3737 of 2010 dated 18.11.2011. It is profitable at this stage to refer to the above said decision of Hon'ble Bombay High Court which is squarely on the issue of charging of interest u/s.220(2) after setting aside of....
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....rest under section 220(2) of the Act from the end of the period mentioned in section 220(1) of the Act, i.e. thirty days after the service of notice of demand dated 24.12.2006 till the date on which the amount demanded was paid cannot be faulted. 8. In the result, we see no merit in the appeal and the same is hereby dismissed with no order as to costs." (Emphasis supplied). 2.5.7 On appreciation of the facts of the case which have been brought out in great detail (supra), it is seen that appellant's case falls under clause (1) of the Para 2 of circular No.334 dated 03.04.1982 and not under clause (2) of the said para as the original assessment order was set aside in toto by the Hon'ble Bombay High Court and which came to be confirmed by the Hon'ble Supreme Court. Admittedly, the original demand after passing of first order u/s.245D(4) was paid within the due date. This is a case where the assessment has been reframed afresh by the Ld. A.O. upon receipt of order passed by the Settlement Commission u/s.254D(4) on 03.05.2011. Secondly, it is not a case where the original order of the A.O. was varied or set aside by the Appellate authority as mentioned in circular No.....
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.... entitled to invoke section 220(2) for the purpose of demanding interest on such retention of money. The High Court was not correct in its view. It is a settled principle in law that the Courts while construing Revenue Acts, have to give a fair and reasonable construction to the language of a statue without leaning on one side or the other, meaning thereby that no tax or levy can be imposed on a subject by an Act of Parliament without the words of the statue clearly showing an intention to lay the burden on the subject. In this process, the courts must adhere to the words of the state and the socalled equitable construction of those words of the statue is not permissible. The task of the court is to construe the provision of the taxing enactments according to the ordinary and natural meaning of the language used and then to apply that meaning to the facts of the case and in that process if the taxpayer is brought within the net, he is caught, otherwise he has to go free. The condition precedent for invoking section 220 is that if there is a default in payment of amount demanded under a notice by the revenue within the time stipulated therein and if such a demand i....
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.... charged by the Ld. A.O. for the period prior to the passing of final order dated 03.05.2011 is not sustainable in the eyes of law. As it was a mistake apparent from record, the action of the Ld. A.O. in rejecting the application u/s. 154 cannot be upheld. Accordingly, these grounds are allowed." 5. In view of the above the learned CIT(A) has decided the issue in favour of the assessee and accordingly the interest u/s.220(2) of the Act would be chargeable from passing the order dated 03.05.2011 passed by the Settlement Commissioner and the interest prior thereto is not liable to be chargeable in the eyes of law. The learned CIT(A) took the date 03.05.2011 when the fresh order u/s.245D(4) was passed by the Settlement Commission assessing the income to the tune of Rs. 81,92,874/- for A.Y.1991-92 and Rs. 79,21,543/- for A.Y.1992-93. No doubt the earlier order passed by the Settlement Commissioner was under litigation. However the final order was passed by the Settlement Commissioner u/s. 245D(4) on 31.12.1998 determining the income to the tune of Rs. 21,91,030/- for the A.Y.1991-92 and Rs. 21,19,492/- for the A.Y.1992-93. It is not under dispute that the said tax had already been p....