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Judgment
The petitioner in this writ petition has inter alias prayed for the following reliefs :
(a) Writ in the nature of certiorari/mandamus quashing the notice of demand dt. 6th July, 1987, issued by the ITO, Central Circle XIX, New Delhi (Respondent No. 4), charging interest of Rs. 6,19,015 included in the sum of Rs. 15,68,669 and/or mandamus that the notice be suitably amended to exclude charge of interest from 3rd July, 1982, to 1st Aug., 1987.
(b) A writ in the nature of certiorari/mandamus quashing the Circular No. 334 dt. 3rd April, 1982, issued by the CBDT (Respondent No. 2) as/is ultra virus the provisions of Section 220(2) of the IT Act, 1961 and hence has to be ignored and not treated as binding in computation of interest u/s 220(2) of the Act.
The basic fact of the matter is not in dispute which can be seen from the following chronological events :
29th June, 1979--Return for the asst. yr. 1979-80 declaring income of Rs. 1,38,61,120 was filed.
3rd, June, 1982--Assessment was completed at the income of Rs. 2,37,67,440 and accordingly, demand of Rs. 1,58,45,621 was raised.
7th June, 1982--Appeal was filed against the assessment order dt. 3rd June, 1982.
16th June, 1982--CIT(A) disposed of the appeal allowing substantial relief.
23rd June, 1982--Appeal effect order was passed and thereby income was reduced from 2,37,67,440 to Rs. 1,78,04,947. Pursuant to appeal effect, demand of Rs. 20,18,995 was raised.
7th July, 1982--The entire demand of Rs. 20,18,895 raised pursuant to appeal effect order was paid (p. 5 para 7 r/w p. 95-96)
Against the order of CIT(A) both assessed and the Department filed appeals before the Tribunal.
26th March, 1987--The Tribunal disposed of both the appeals. The Tribunal partly allowed the Departmental appeal and thereby certain relief given by CIT(A) was reserved.
6th July, 1987--Appeal effect to the order of Tribunal was given. Pursuant to the appeal effect, the total income was determined at Rs. 1,87,99,984 [After the CIT(A) order income was determined at 1,78,04,947).
Pursuant to determination of income at Rs. 1,87,99,984 raised demand of Rs. 15,68,669 which comprised of following :
(a) Income Tax Rs. 9,03,706
(b) Interest u/s 220(2) : from 3rd July, 1982, to 3rd Oct., 1984 @ 12% Rs, 2,34,962 from 1st Oct., 1984, to 1st Aug., Rs. 6,19,015 1987 @ 15% Rs. 3,84,053 28th Aug., 1987--For the demand of Rs. 15,68,669, a fresh demand notice u/s 156 was issued. Interest u/s 220(2) were charged through no demand was outstanding and a fresh demand notice was issued on 28th Aug., 1987.
The point raised in this writ petition is covered by the judgment of Supreme Court in the case of Vikrant Tyres Ltd. Vs. First Income Tax Officer, and a decision of the Full Bench of Andhra Pradesh High Court in the case of SMS Schloemann Siemag, A.G. Vs. Dy. Commissioner of Income Tax and Another, .
In that view of the matter, the writ petition is allowed subject to orders of payment so far as interest under charge u/s 220(2) of the IT Act is concerned.