Samsara Shipping Pvt. Ltd. Vs ITO (ITAT Mumbai)
The ITAT Mumbai held that levy of interest under Section 220(2) is impermissible in the absence of a valid demand notice under Section 156. Though the Assessing Officer determined total income at Rs. 204.90 crore, the demand notice issued along with the assessment order specified “zero” demand and even computed a refund. It is well settled that without a valid demand notice, no demand is enforceable and the assessee cannot be accused of violating Section 220(1). The subsequent rectification order under Section 154 created demand only at a later stage, and therefore interest cannot be charged for a period when no demand existed. The Tribunal observed that the assessee cannot be made to suffer for a mistake committed by the Assessing Officer. Accordingly, relying on Vodafone Mobile Service Ltd. v. Union of India, the interest of Rs. 32.54 crore levied under Section 220(2) was directed to be deleted.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This is an appeal by the assessee, against the order dated 27.08.2025 of Addl./JCIT(A), Panchkula, pertaining to the assessment year (A.Y.) 2021-22.
2. The sole grievance of the assessee in the appeal is concerning levy of interest u/s. 220(2) of the Income Tax Act, 1961 (‘the Act’ for short). Of course, vide letter dated 17.12.2025 the assessee has sought to raise an additional ground, challenging the validity of the order passed u/s. 154 of the Act on account of non-mentioning of document identification number (DIN). Be that as it may, we propose to deal the issue on merits.
