Case Law Details

Case Name : Narad Investments & Trading Pvt. Ltd. Vs. DCIT (ITAT Mumbai)
Appeal Number : I.T.A. No. 3360/Mum/2010
Date of Judgement/Order : 19/10/2011
Related Assessment Year : 1996- 97
Courts : All ITAT (4622) ITAT Mumbai (1505)

Narad Investments & Trading Pvt. Ltd. Vs. DCIT (ITAT Mumbai)

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.

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One response to “Interest payable U/s. 220(2) to be computed from the date of fresh assessment order if original been set aside”

  1. Vijay Kumar says:

    This decision,
    Narad Investments & Trading Pvt. Ltd. Vs. DCIT (ITAT Mumbai)
    I.T.A. No.3360/Mum/2010, dtd. 19.10.2011,
     involves action by three fact finding authorities viz. AO, CIT(A), and ITAT.  It is clear that being embroiled in legalities, they have lost sight of the larger picture.  IF the original assessment order and demand notice do not survice in this case, it has implication on two counts:-
    (1) Interest u/s 234A, 234B, and 234C would be leviable till date of fresh assessment, and action under section 154 has to be invoked.  The three authorities have omitted to comment on this aspect of chrgeabilitiy of interest under the other sections.
    (2) Automatic corrollory of (1) above is that the date from which interest u/s 220(2) can be charged gets shifted to from 35 days from the date of serviceof fresh notice of demand.

    There cannot be a situation where interest u/s 220(2) and u/s 234A, 234B, 234C are either not charged or not charged in aggregation on any amount of tax.

    Clearly, now the AO has to take action u/s 154 in respect of (1) above.

  2. Vijay Kumar says:

    This decision,
    Narad Investments & Trading Pvt. Ltd. Vs. DCIT (ITAT Mumbai)
    I.T.A. No.3360/Mum/2010, dtd. 19.10.2011,
     involves action by three fact finding authorities viz. AO, CIT(A), and ITAT.  It is clear that being embroiled in legalities, they have lost sight of the larger picture.  IF the original assessment order and demand notice do not survice in this case, it has implication on two counts:-
    (1) Interest u/s 234A, 234B, and 234C would be leviable till date of fresh assessment, and action under section 154 has to be invoked.  The three authorities have omitted to comment on this aspect of chrgeabilitiy of interest under the other sections.
    (2) Automatic corrollory of (1) above is that the date from which interest u/s 220(2) can be charged gets shifted to from 35 days from the date of serviceof fresh notice of demand.

    There cannot be a situation where interest u/s 220(2) and u/s 234A, 234B, 234C are either not charged or not charged in aggregation on any amount of tax.

    Clearly, now the AO has to take action u/s 154 in respect of (1) above.

  3. Vijay Kumar says:

    This decision,
    Narad Investments & Trading Pvt. Ltd. Vs. DCIT (ITAT Mumbai)
    I.T.A. No.3360/Mum/2010, dtd. 19.10.2011,
     involves action by three fact finding authorities viz. AO, CIT(A), and ITAT.  It is clear that being embroiled in legalities, they have lost sight of the larger picture.  IF the original assessment order and demand notice do not survice in this case, it has implication on two counts:-
    (1) Interest u/s 234A, 234B, and 234C would be leviable till date of fresh assessment, and action under section 154 has to be invoked.  The three authorities have omitted to comment on this aspect of chrgeabilitiy of interest under the other sections.
    (2) Automatic corrollory of (1) above is that the date from which interest u/s 220(2) can be charged gets shifted to from 35 days from the date of serviceof fresh notice of demand.

    There cannot be a situation where interest u/s 220(2) and u/s 234A, 234B, 234C are either not charged or not charged in aggregation on any amount of tax.

    Clearly, now the AO has to take action u/s 154 in respect of (1) above.

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