WAHAB S A Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THE petitioner is an "assessee" under the Income-tax Act, 1961 (for short "the Act"). THE question raised in this writ petition relates to the correctness and legality of an order passed by the Commissioner of Income-tax under Section 264 of the Act.

(2.) THE facts involved in this case are briefly summarised thus ; For the assessment year 1980-81, the first respondent passed exhibit P-1 order of assessment fixing the total income of the assessee as Rs. 1,31,810 and the total tax payable as Rs. 70,483. As against it, the assessee filed an appeal and by exhibit P-2 dated December 12, 1983, the Appellate Assistant Commissioner rejected the appeal. THE petitioner filed a further appeal before the Income-tax Appellate Tribunal as I. T. A. No. 231 (Coch) of 1984. It was allowed as per exhibit P-3. Consequently, the application of the assessee for rectification under Section 154 was allowed, as a result of which the depreciation in respect of buses had been fixed at the rate of 40 per cent. Subsequently, the first respondent issued exhibit P-4 order giving effect to exhibit P-3 order thereby allowing refund of the total amount of Rs. 11,554 being the excess amount paid. As against exhibit P-3 order of the Tribunal, the Commissioner of Income-tax came before this court in Income-tax Reference No. 548 of 1985. This court by exhibit P-5 judgment answered the questions referred in the negative, i.e., in favour of the Revenue and against the assessee. In other words exhibit P-3 order of the Tribunal was set aside by this court. Subsequently by exhibit P-6, the Income-tax Officer demanded an amount of Rs. 36,649 towards interest under Section 220(2) of the Act. THE petitioner thereafter filed a revision petition against the said order before the Commissioner of Income-tax under Section 264 of the Act. It was dismissed by exhibit P-9 order which is challenged in this writ petition. '

(3.) UNDER this provision, the Commissioner has power to reduce or waive the amount of interest paid or payable by an assessee in case he is satisfied with all the three requirements provided therein. The satisfaction of one of the conditions alone will not be sufficient inasmuch as the three requirements are conjunctive and not alternative. ' Sub-section (2) of Section 220 provides that if the amount specified in any notice of demand under Section 156 is not paid within the period limited under Sub-section (1), the assessee shall be liable to pay simple interest at one and one-half per cent. for every month or part of a month. Therefore, the amount contemplated under Sub-section (2A) is an amount specified in any notice of demand under Section 156. In the present case it was pointed out that by exhibit P-3 order of the Tribunal, the appeal preferred by the assessee had been allowed and consequently refund was ordered. Therefore, the contention of the assessee is that the respondents are not entitled to recover interest under Section 220(2) of the Act. In support of this, the assessee has relied on the decision of the Supreme Court in ITO v. Seghu Buchiak Setty [1964] 52 ITR 538 wherein it was held that the amount of tax assessed having been reduced as a result of the orders of the Appellate Assistant Commissioner a fresh demand notice had to be served on the assessee before he could be treated as a defaulter under the Act. Senior standing counsel for the Department has vehemently attacked this plea. Further, he has brought to my notice a decision of Kochu Thommen J. (as he then was of this court) in New Woodlands v. CIT [1982] 138 ITR 795 (Ker). There the learned judge took notice of Section 3 of the Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964, and then observed (page 800) :