RAJAM PICTURES CIRCUIT Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question involved in the batch of writ petitions is whether the demand of interest under s. 220(2) of the IT Act, 1961 (hereinafter referred to as "the Act") in the certificate of intimation issued under s. 90(1) of the Kar Vivad Samadhan Scheme, 1998 (hereinafter to be referred to as "Samadhan Scheme") is proper, justified and valid in law.

(2.) SINCE the issues involved in all the writ petitions are similar, it is not necessary to notice the facts in each writ petition. In some cases, interest under s. 220 has been demanded on the interest and in some cases, the interest has been levied on the penalty amount in all the cases, the petitioners are not aggrieved with reference to the demand of interest under ss. 139(8), 217 or other demands made under other provisions of the IT Act and the petitioners are challenging only the demand of interest under s. 220(2) of the IT Act in the certificate of intimation on the ground that under the Samadhan Scheme, the respondent has no power to levy interest under s. 220(2) of the IT Act. According to the petitioners the Samadhan Scheme has been introduced to avoid litigation and what is contemplated under the Samadhan Scheme is to be given effect to and what is not contemplated under the Samadhan Scheme cannot be taken into consideration. In other words, it is stated that the designated authority under the Samadhan Scheme has no right to levy interest under the Samadhan Scheme and in all the cases, the petitioners are questioning the levy of interest under the Samadhan Scheme on the ground that the levy of interest under s. 220(2) of the IT Act cannot be a part of the order determining the amount payable under the Samadhan Scheme.

(3.) THE case of the respondent, as seen from the counter -affidavit, is that when the amount specified in the notice of demand is not paid within the prescribed time, under s. 220(2) of the IT Act, the assessee is liable to pay interest from the date on which the amount has to be paid and the liability to pay interest is absolute, mandatory and automatic and it arises by the operation of the law. It is stated that s. 220(2) of the IT Act determines the quantum of interest and the rate at which it is to be charged and no discretion is left to the assessing authority to relieve the defaulting assessee from the liability to pay interest under s. 220(2) of the IT Act. It is also stated that the respondent has not levied under s. 220(2), but demanded 50 per cent of such interest after granting waiver of 50 per cent as provided under s. 88(a)(iv) of the Samadhan Scheme.