MONTECARLO LTD. Vs. ASSISTANT COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) Heard learned counsel for final disposal of the petition.

(2.) Once again, on 12th January 2009, the petitioner wrote a letter to the Income Tax Officer and stated as under:

(3.) It is undisputed that the respondents did not act on the petitioner's request for adjustment of the refund for about five months. Ultimately, however, under an intimation dated 21st May 2009 under Section 143(1) of the Act for A.Y 2008-09, the Income-tax Officer while accepting the claim of the petitioner of refund of Rs. 2,42,98,887/-, adjusted the petitioner's tax liability of Rs. 44,78,867/- for the A.Y 2006-07 from the said amount. Since there was delay of about five months in the process, the Income-tax Officer issued a demand notice under Section 220(2) of the Act and sought interest @ 1% per month for a total duration of five months on the sum of Rs. 44,49,365/- for the period between January 2009 to May 2009. He calculated such interest at Rs. 2,22,468/-. Pursuant to such order, the Income-tax Officer also issued a demand notice for recovery of the said sum of Rs. 2,22,468/-. It is this demand of the Income-tax authorities of the interest on the principal tax payable by the petitioner for the Assessment Year 2006-07, that the petitioner has raised grievance in this petition.