I.T.A. No. 3360/Mum/2010, dated 19.10.2011
In the case of assessee the original assessment was confirmed by the CIT (A) but on further appeal, the Tribunal set aside the order of the CIT(A) and the issue was restored back to the AO. In the fresh assessment, the AO repeated the addition raising the same demand but interest u/s. 220(2) was levied from the date of demand notice issued as per the original assessment order. The assessee disputed the AO’s action relying on the Board circular No. 334, dtd. 03.04.1982, and contended that as the that as the original assessment has been set aside by the Tribunal, the interest under section 220 (2) could be charged only from the date when the demand become due as per the fresh assessment order and not from the date of original assessment order. ITAT Mumbai bench held that in terms of Board circular referred above, in case the assessment is set aside by the CIT(A) and setting aside become final, interest u/s. 220(2) has to be charged only after the expiry of 35 days from the date of service of demand notice pursuant to the fresh assessment order. In the case of the assessee, since the original order of assessment was confirmed by the CIT (A) but on further appeal, the Tribunal set aside the order of the CIT(A) and the issue restored to the AO, it was held that in terms of the circular, the interest u/s. 220(2) has to be charged only from the date of fresh assessment order.