PITAMBARDAS DULICHAND Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioners by this writ petition have prayed that no interest can be levied under Section 220(2) of the Income-tax Act, 1961. It is also prayed that the computation of interest from the date of the original assessment may be held illegal and without jurisdiction. It is also prayed that the orders passed under Section 154 of the Income-tax Act, i.e., annexures P-25 and P-26 may be quashed.

(2.) PETITIONER No. 1 is carrying on the business of gold and silver ornaments and money-lending at Jurhanpur, District-Khandwa. He was assessed to income-tax by respondent No. 4. PETITIONERs Nos. 2, 3, 4 and 5 are partners in the said firm. There were search and seizure operations in the business premises of petitioner No. 1 and residential premises of petitioners Nos. 2 to 5 from August 3, 1987 to August 8, 1987. Consequent to that, assessments were made for the assessment years 1985-86, 1986-87, 1987-88, 1988-89 and 1989-90. The assessment in the case of the firm was originally made for the assessment year 1985-86 on March 28, 1988, determining the total tax, inclusive of interest under Sections 139(8) and 217 of the Income-tax Act, 1961 (hereinafter referred to as the "Act" in short), at Rs. 8,55,830. It is alleged that the said demand was reduced to Rs. 1,61,374. It is also alleged that prior to creation of demand by order dated January 30, 1996, petitioner No. 1 had paid tax amounting to Rs. 1,63,489. Interest was calculated at Rs. 83,213 counting the period from the original order dated March 28, 1988, to January 30, 1996. It is alleged that since the demand was created only on January 30, 1996, interest under Section 220(2) of the Act could be charged from the date provided the demand is not paid. A detailed chart has been placed on record showing the order for the assessment year 1985-86, date of the notice of demand, date of its service, total income assessed and the amount payable according to the orders together with interest and the net amount payable. Similar details are also given in respect of petitioner No. 1-firm for the assessment years 1986-87, 1987-88, 1988-89 and 1989-90 in annexures P-2 to P-5, respectively. Respondent No. 4 charged interest under Section 220(2) of the Act.

(3.) SHRI B.L. Nema, learned counsel for the assessee, submits that the amount should be due from the date of demand, i.e., in case the demand is set aside or stayed when on issuing a fresh demand alone, the Revenue is entitled to interest. Learned counsel further submits that in case, the demand is set aside and if it is restored back by an appellate order, then it shall relate from the date of fresh order and it shall not relate back to the original demand raised by the Revenue. We are of the opinion that the contention of learned counsel appears to be not well founded.