Mahavir Rolling Mill Pvt.Ltd., Ahmedabad V. The Income tax Officer,Ward-4(4), Ahmedabad

ITSSA 52/AHD/2009

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8331 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 15-06-2011
• Assessment Year: misc
• Appeal Filed On: 07-09-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G S SOURYAVANSHI
• Keywords: Rectification of order; Opportunity of being heard; Principle of natural justice; Block assessment
• Section: 234B; 6; 132; 154; 15

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE S/SHRI D.K. TYAGI, JM AND D.C.AGRAWAL, AM MAHAVIR ROLLING MILL (P) LTD., 2410, PHASE-IV, GIDC, VATVA, AHMEDABAD. VS. INCOME-TAX OFFICER, WARD -4(4), AHMEDABAD. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI ASEEM THAKKAR, AR RESPONDENT BY:- SHRI G. S. SOURYAVANSHI, SR.DR O R D E R PER D.C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A) RAISING FOLLOWING GROUNDS:- (1) THE LD. AO HAS ERRED IN PASSING AN ORDER U/S 15 4 OF THE INCOME-TAX ACT, 1961 WITHOUT GIVING STATUTORY NOTICE AS PRESCR IBED U/S 154(3) OF THE INCOME-TAX ACT, 1961 HENCE THE ORDER PASSED BY HIM IS ILLEGAL AND VOID. (2) THE LD. AO HAS ERRED IN PASSING AN ORDER U/S 15 4 OF THE INCOME-TAX ACT, 1961 WITHOUT GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE APPELLANT HENCE THE ORDER PASSED BY HIM BEING A GAINST THE PRINCIPLES OF NATURAL JUSTICE IS BAD IN LAW AND REQ UIRES TO BE CANCELLED. (3) THE LD. AO HAS ERRED IN NOT ISSUING THE DEMAND NOTICE U/S 156 OF THE INCOME-TAX ACT, 1961 AS PRESCRIBED U/S 154(6) O F THE INCOME- IT(SS)A NO.52/AHD/2009 BLOCK PERIOD 20.8.92 TO 20.9.95 IT(SS)A NO.52/AHD/2009 BLOCK PERIOD 20.08.92 TO 20.09.95 2 TAX ACT, 1961. HENCE THE ORDER PASSED BY HIM IS NUL L AND VOID IN THE EYES OF LAW. (4) WITHOUT PREJUDICE TO THE ABOVE AND IN THE ALTER NATIVE THE APPELLANT SUBMITS THAT THE LD. AO HAS ERRED IN CALCULATING TH E INTEREST U/S 220(2) OF THE ACT AT RS.1,23,11,469/- FROM THE DATE OF THE DEMAND NOTICE ISSUED WITH THE BLOCK ASSESSMENT ORDER. THE APPELLANT FURTHER SUBMITS THAT THE INTEREST U/S 220(2) CAN BE CHARGED ONLY AFTER THE EXPIRY OF STIPULATED TIME PERIOD FROM THE SERVICE OF NOTICE OF DEMAND. THE NOTICE OF DEMAND DTD.05.03.2007 ALON G WITH THE ORDER GIVING EFFECT TO THE ORDER PASSED BY THE INCO ME-TAX SETTLEMENT COMMISSION U/S 245D(4) OF THE ACT, HAS B EEN RECEIVED BY THE APPELLANT CO. ON 14.03.2007. (5) THE APPELLANT DENIES ITS LIABILITY TO INTEREST CHARGED BY THE AO FOR THE PERIOD BEFORE 14.04.2004 WHICH IS CONTRARY TO T HE PROVISIONS OF THE ACT. 2. THUS THE ASSESSEE IS AGGRIEVED AGAINST THE ORDER OF LD. CIT(A) DIRECTING THE AO TO CHARGE INTEREST U/S 220(2) UPTO THE DATE OF ORDER U/S 245D(4). 3. THE FACTS OF THE CASE ARE THAT ASSESSEE IS A PRI VATE LTD. COMPANY ENGAGED IN THE BUSINESS OF TRADING AND MANUFACTURIN G OF HOT ROLLED STEEL PRODUCTS. A SEARCH WAS CARRIED OUT AT THE ASSESSEE S PREMISES U/S 132 OF THE ACT ON 29.9.1995. SUBSEQUENTLY THE ASSESSEE FIL ED BLOCK RETURN ON AN INCOME OF RS.44,40,922/-. THE BLOCK ASSESSMENT ORDE R U/158BC WAS PASSED ON 30.9.96 ON AN INCOME OF RS.2,24,38,039/-. JUST PRIOR TO THIS DATE THE ASSESSEE FILED AN APPLICATION U/S 245C(1) BEFORE HON. SETTLEMENT COMMISSION ON 27.9.96 FOR SETTLING HIS TAX DISPUTE. ORDER U/S 245D(1) OF THE ACT, ADMITTING ASSESSEES APPLICATION, WAS PASS ED ON 26.5.98. IT(SS)A NO.52/AHD/2009 BLOCK PERIOD 20.08.92 TO 20.09.95 3 SUBSEQUENTLY ON 24.1.2007 ORDER U/S 245D(4) WAS PAS SED BY THE HON. SETTLEMENT COMMISSION ON AN INCOME OF RS.1,63,82,51 7/-. THE AO GAVE EFFECT TO THE ORDER OF HON. SETTLEMENT COMMISSION A ND ISSUED NOTICE OF DEMAND TO THE ASSESSEE WHICH WAS SERVED ON IT ON 14 .3.2007 WHEREIN HE CHARGED INTEREST U/S 220(2) FROM THE DATE OF BLOCK ASSESSMENT ORDER. THE HON. SETTLEMENT COMMISSION PASSED AN ORDER REGARDIN G CHARGING OF INTEREST AS UNDER :- INTEREST ARE TO BE CHARGED U/S 215/217, 139(8) AS PER THE NET INTEREST CHARGEABLE UNDER SECTION 220(2), 234A, 234B AND 234 C WILL BE CHARGED UPTO THE DATE OF 245D(4) ORDER AS PER SUPREME COURT JUDGMENT IN THE CASE OF M/S HINDUSTAN BULK CARRIERS DAMANI BROTHERS AND ANJUMAN MOHAMMED HUSSEM GHASWALA & OTHERS. ON THE ABOVE BASIS THE AO ISSUED DEMAND NOTICE ON 1 4.3.2007 FOR FOLLOWING DEMANDS :- TAX RS.98,29,510 SURCHARGE RS.14,74,426 TOTAL RS.1,13,03,936 INTEREST U/S 220(2) RS.1,22,11,234 RS.2,35,15,170 LESS CREDIT FOR TAX PAID RS.36,74,274 TOTAL DEMAND PAYABLE RS.1,98,40,896 THUS IT INCLUDED INTEREST U/S 220(2) AT RS.1,22,11, 234/-. THEREAFTER ASSESSEE MOVED AN APPLICATION U/S 154 OF THE I.T. A CT, BEFORE THE AO ON 11-2-2008 ON THE ISSUE OF CHARGING OF INTEREST U/S 220(2) REQUESTING HIM TO EXCLUDE INTEREST U/S 220(2) FROM THE PERIOD WHEN HON. I.T. SETTLEMENT IT(SS)A NO.52/AHD/2009 BLOCK PERIOD 20.08.92 TO 20.09.95 4 COMMISSION WAS SEIZED WITH THE MATTER. HOWEVER, THE AO REJECTED THIS APPLICATION ON THE BASIS OF ORDER OF SETTLEMENT COM MISSION U/S 154/245D(4) PASSED ON 2.1.2008 WHEREIN THE MISC. AP PLICATION WAS DISMISSED BY SETTLEMENT COMMISSION BY OBSERVING AS UNDER :- 5.4 WE HAVE PERUSED THE ORDER U/S 245D(4) DATED 24 .01.07 AND WE FIND THAT PARA 7 OF THE SAID ORDER CONTAINS THE COMMISSI ONS DECISION REGARDING LEVY OF INTEREST UNDER VARIOUS PROVISIONS OF THE I.T.ACT INCLUDING THAT U/S 220(2). IN OUR VIEW THERE IS NO MISTAKE IN THE ORDER U/S 245D(4) DATED 24.01.2007 ON THE MATTER OF LEVY OF I NTEREST U/S 220(2) OF THE I.T. ACT AND, CLEARLY, THE APPLICANT, VIDE ITS MISCELLANEOUS PETITION, IS SEEKING A REVISION/REVIEW OF THE COMMISSIONS DECIS ION ON THAT MATTER. ACCORDINGLY, THE APPLICANTS REQUEST FOR RECTIFICAT ION ON THE MATTER OF LEVY OF INTEREST U/S 220(2) CANNOT BE ENTERTAINED. 5.5 IF THE APPLICANT IS OF THE OPINION THAT THERE I S COMPUTATIONAL ERROR IN DETERMINATION OF THE QUANTUM OF INTEREST U/S 220 (2) LEVIABLE IN ITS CASE APPROPRIATE REMEDY MAY HAVE TO BE SOUGHT BY WAY OF RECTIFICATION/REVISION/APPELLATE PROCEEDING BEFORE THE INCOME-TAX AUTHORITIES. 4. THE ASSESSEE FILED AN APPEAL AGAINST THIS ORDER OF AO PASSED U/S 154 PASSED ON 28.8.2008. THE LD. CIT(A) VIDE HIS OR DER DATED 18.5.2009 UPHELD THE WORKING OF THE PERIOD OF COMPUTATION OF INTEREST U/S 220(2) UPTO THE DATE OF ORDER U/S 245D(4) AS PER DIRECTION S OF SETTLEMENT COMMISSION. THE ASSESSEE IS IN APPEAL BEFORE US AGA INST THIS ORDER OF LD. CIT(A). 5. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT SIMIL AR ISSUE HAD COME UP BEFORE ITAT, AHMEDABAD IN THE CASE OF ITO VS. MA LHOTRA STEEL IT(SS)A NO.52/AHD/2009 BLOCK PERIOD 20.08.92 TO 20.09.95 5 INDUSTRIES LTD. (NOW KNOWN AS KARNAVATI STEEL INDUS . LTD.) FOR ASST. YEAR 1986-87 AND 1988-89 IN ITA NO.3020-3021/AHD/2003 DE CIDED BY THE TRIBUNAL B BENCH ON 30.4.2008 WHEREIN THE TRIBUNA L HAD TAKEN THE VIEW THAT THE PERIOD FROM ADMISSION OF ASSESSEES A PPLICATION U/S 245D(1) TO THE DATE OF FINAL ORDER PASSED BY THE SETTLEMENT COMMISSION U/S 245D(4) SHOULD BE EXCLUDED. THE TRIBUNAL IN THAT CA SE OBSERVED AS UNDER:- 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE ASSESSING OFFICER W HILE GIVING EFFECT TO THE ORDER PASSED BY THE SETTLEMENT COMMISSION ON MISCELLANEOU S APPLICATION FILED BY THE ASSESSEE ON THE ORDER OF COMMISSION U/S.245D R.W.S. SECTION 154 OF THE ACT, INTEREST U/S.220(2) WAS CHARGED FOR ASSESSMENT YEAR 1986-87 AND 1988-89 AMOUNTING TO RS.10,20,575/- AND RS.33,67,055/- FOR THE PERIOD OF 1-1-1993 TO 21-05-1996. WE HAVE NOTICED FROM THE RECORDS THAT IN THE ORDER PAS SED U/S.245D(4) OR IN THE ORDER PASSED U/S. 154 R.W.S. TO 245D(4) OF THE SETTLEMENT COMMISSION, THERE IS NO MENTION OF CHARGING OF INTEREST U/S.220(2) OF THE ACT AND T HE ASSESSING OFFICER HAS CHARGED INTEREST U/S.220(2) OF THE ACT FROM THE MONTH IN WH ICH MISCELLANEOUS APPLICATION WAS FILED WITH THE SETTLEMENT COMMISSION I.E., FROM 1-1 0-1993 AND UP TO EFFECT GIVING ORDER PASSED BY THE ASSESSING OFFICER ON 21-05-1996 . THERE WAS NO OUTSTANDING DEMAND AT THE TIME OF FILING OF APPLICATION BEFORE THE SETTLEMENT COMMISSION BY THE ASSESSEE U/S.245C OF THE ACT. THAT MEANS THERE IS NO OUTSTANDING DEMAND AT THE TIME OF FILING OF APPLICATION, THE ASSESSING OFFICER HAS CHARGED INTEREST ON THE DEMAND RAISED BY THE SETTLEMENT COMMISSION WHILE ACTING U/ S.220(2) OF THE ACT. FOR THIS THE LD. COUNSEL FOR THE ASSESSEE HAS TAKEN US TO PROVIS ION OF SECTION 245D AND RELEVANT PROVISION OF SUB-SECTION 6 OF SECTION 245D READS AS UNDER:- (6) EVERY ORDER PASSED UNDER SUB-SECTION (4) SHALL PROVIDE FOR THE TERMS OF SETTLEMENT INCLUDING ANY DEMAND BY WAY OF [TAX, PEN ALTY OR INTEREST], THE MANNER IN WHICH ANY SUM DUE UNDER THE SETTLEMENT SH ALL BE PAID AND ALL OTHER MATTERS TO MAKE THE SETTLEMENT EFFECTIVE AND SHALL ALSO PROVIDE THAT THE SETTLEMENT SHALL BE VOID IF IT IS SUBSEQUENTLY FOUN D BY THE SETTLEMENT COMMISSION THAT IT HAS BEEN OBTAINED BY FRAUD OR MI SREPRESENTATION OF FACTS . [(6A) WHERE ANY TAX PAYABLE IN PURSUANCE OF AN ORDE R UNDER SUB-SECTION(4) IS NOT PAID BY THE ASSESSEE WITHIN THIRTY-FIVE DAYS OF THE RECEIPT OF A COPY OF THE ORDER BY HIM, THEN, WHETHER OR NOT THE SETTLEMENT C OMMISSION HAS EXTENDED THE TIME FOR PAYMENT OF SUCH TAX OR HAS ALLOWED PAY MENT THEREOF BY INSTALMENTS, THE ASSESSEE SHALL BE LIABLE TO PAY SI MPLE INTEREST AT [FIFTEEN PER CENT PER ANNUM] IT(SS)A NO.52/AHD/2009 BLOCK PERIOD 20.08.92 TO 20.09.95 6 AS PER THE NEWLY INSERTED (WITH EFFECT FROM 1 ST OCTOBER, 1984) SECTION 245D(6A) BY THE TAXATION LAW (AMENDMENT) ACT, 1984, WHICH PROVI DES THAT, WHERE THE TAX PAYABLE IN PURSUANCE OF AN ORDER UNDER SECTION 245D (4) PASSED BY THE SETTLEMENT COMMISSION IS NOT PAID BY THE ASSESSEE WITHIN 35 DA YS OF THE RECEIPT OF A COPY OF THE ORDER BY HIM, THEN, WHETHER OR NOT THE SETTLEMENT C OMMISSION HAS ALLOWED TIME FOR PAYMENT OF SUCH TAX OR ALLOWED PAYMENT THEREOF BY I NSTALMENTS, THE ASSESSEE IS LIABLE TO PAY SIMPLE INTEREST AT 15 PER CENT, PER ANNUM ON THE OUTSTANDING AMOUNT FROM THE DATE OF THE EXPIRY OF THE SAID PERIOD OF 35 DAYS. IT MEANS THE INTEREST ON THE OUTSTANDING SUM CAN BE CHARGED U/S. 245D(6A) IN CAS E THE DEMAND HAS BEEN RAISED BY THE SETTLEMENT COMMISSION U/S. 245D(4) AND THE SAME HAS NOT BEEN PAID WITHIN THE PERIOD OF 35 DAYS. WHETHER THE PROVISION OF U/S.22 0 WILL APPLY IN CASE WHERE THE SETTLEMENT COMMISSION HAS PASSED ORDER U/S.245D(4) AND RAISED DEMAND THEREAFTER. NOW, WE HAVE TO GO TO THE FIRST PROVISO OF SUB-SECT ION 2 OF SECTION 220 AND THE SAME READS AS UNDER:- WHEN TAX PAYABLE AND WHEN ASSESSEE DEEMED IN DEFAUL T. 220.(1) (2) 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 ] PER CENT FO R EVERY MONTH OR PAT OF A MONTH COMPRISED IN THE PERIOD COMMENCING FROM THE DAY IMM EDIATELY FOLLOWING THE END OF THE PERIOD MENTIONED IN SUB-SECTION (1) AND ENDING WITH THE DAY ON WHICH THE AMOUNT IS PAID:] PROVIDED THAT, WHERE AS A RESULT OF AN ORDER UNDER SECTION 154, OR SECTION 155, OR SECTION 250, OR SECTION 254, OR SECTION 260, OR SECTION 262, OR SECTION 264 [OR AN ORDER OF THE SETTLEMENT COMMISSION UNDER SUB-SECTIO N (4) OF SECTION 245D] THE AMOUNT ON WHICH INTEREST WAS PAYABLE UNDER THIS SEC TION HAD BEEN REDUCED, THE INTEREST SHALL BE REDUCED ACCORDINGLY AND THE EXCES S INTEREST PAID, IF ANY, SHALL BE REFUNDED;] FROM THE BARE READING OF THE PROVISION OF SECTION 2 45(6A) OF THE ACT, IT COMES OUT THAT IN CASES WHERE ASSESSMENT ORDERS WERE PASSED B EFORE FILING OF SETTLEMENT APPLICATION BEFORE THE SETTLEMENT COMMISSION, THE L IABILITY OF INTEREST U/S. 220(2) OF THE ACT, IF ANY, WILL BE UP TO THE DATE OF ORDER U/ S.245D (I) OF THE ACT, ALLOWING THE APPLICATION TO BE PROCEEDED WITH. THERE WILL BE NO LIABILITY FOR INTEREST U/S.220(2) THEREAFTER. IN THE CASE, WHERE ASSESSMENT ORDERS W ERE PASSED AFTER FILING OF SETTLEMENT APPLICATION, THERE WILL BE NO LIABILITY OF INTEREST U/S.220(2) OF THE ACT BUT FOR THIS PROPOSITION NOW WE HAVE TO GO THE CASE LAW OF THE SPECIAL BENCH OF THE INCOME-TAX SETTLEMENT COMMISSION IN THE CASE OF DAMANI BROTHERS REPORTED IN [1999] 238 IT (AT) 36 AND FINAL FINDING AT 65 PAGE, WHEREIN THE M AJORITY VIEW HAS BEEN EXPRESSED AS UNDER:- THE TOTAL EFFECT OF THE VIEW TAKEN BY US WILL BE TH AT THE ASSESSMENT ORDERS PASSED BEFORE THE DATE OF APPLICATION SUBSIST AFTER THE OR DER OF ADMISSION BUT SUCH ORDERS REMAIN INOPERATIVE. THE DEMAND ARISING ON THE BASI S OF SUCH ORDERS REMAINS UNENFORCEABLE, TILL AN ORDER OF FINAL SETTLEMENT UN DER SECTION 245D(4) IS PASSED BY THE COMMISSION. THE ORDER OF ASSESSMENT WHICH IS MODIF IED TO GIVE EFFECT TO THE COMMISSIONERS ORDER THEN MERGES WITH THE LATTER. SO FAR AS THE CHARGEABILITY OF IT(SS)A NO.52/AHD/2009 BLOCK PERIOD 20.08.92 TO 20.09.95 7 INTEREST UNDER SECTION 220(2) IS CONCERNED, THE SAM E REMAINS CHARGEABLE UP TO THE DATE OF ADMISSION IN ACCORDANCE WITH THE PROVISO TO SECTION 220(2) AFTER WHICH THE INTEREST CEASES TO BE CHARGEABLE. AFTER THE COMMIS SIONS ORDER UNDER SECTION 245D(4), INTEREST FOR LATE PAYMENT IS CHARGEABLE NO T UNDER SECTION 220(2) BUT IN TERMS OF THE SPECIFIC PROVISIONS CONTAINED IN SUB-SECTION (6A) OF SECTION 245D. AFTER GOING THROUGH THE CASE LAW OF SPECIAL BENCH O F SETTLEMENT COMMISSION IN THE CASE OF DAMANI BROTHERS (SUPRA) WE HOLD THAT THE DEMAND RAISED BY THE ASSE SSING OFFICER IN CONSONANCE WITH THE ORDER PASSED PRIOR T O THE SUBMISSION OF THE APPLICATION IS NOT TO BE ENFORCED REASON BEING THAT THE ORDER T HOUGH SUBSTITUTING IN LAW BUT IS NOT TO BE GIVEN EFFECT TO TILL THE ORDER OF THE SETTLEM ENT COMMISSION IS PASSED U/S. 245D(4), WHEN THE SAME BECOMES EFFECTIVE IN THE MAN NER DISCUSSED IN THAT ORDER. THE ADDITIONAL INCOME AND TAX THEREON ARE COMPUTED IN T ERM OF SUB-SECTION (IB) AND (IC) OF SECTION 245C OF THE ACT AND TAX THEREON, SAME IN COME MADE, IN A LARGE NUMBER OF CASES TO BE INCLUDED IN THE ASSESSED INCOME AS WELL AS THE ADDITIONAL INCOME. IN SUCH CASE, IF THE DEMAND AS PER THE ASSESSMENT ORDER IS ALSO ENFORCED, IT WILL TANTAMOUNT TO REALIZATION OF TAX ON THE SAME INCOME TWICE, IN VIE W OF THESE, WE ARE OF THE VIEW THAT SINCE THE DEMAND AS PER THE ASSESSMENT ORDER IS NOT TO BE ENFORCED AND SEPARATE SECTION FOR CHARGING OF INTEREST UNDER CHAPTER XIII A IS PROVIDED, NO INTEREST U/S. 220(2) CAN BE CHARGED IN RESPECT OF DEMANDS ARISING OUT OF THE ASSESSMENT ORDER AND FOR THE PERIOD DURING WHICH THE ASSESSMENT ORDER RE MAINS INOPERATIVE AND THE DEMAND IS UNENFORCEABLE. A READING OF THE ABOVE, TWO SECTI ONS WILL LEAD TO THE CONCLUSION THAT THE ORDER OF THE ASSESSING OFFICER GETS MODIFY BY T HE SETTLEMENT COMMISSION ORDER U/S.245D OF THE ACT. THE SETTLEMENT COMMISSION IS UNDOUBTEDLY A HIGHER FORUM EXERCISING MUCH HIGHER POWER AND THERE IS NOTHING U NLAWFUL, IF, AS IN THE CASE OF AN ORDER OF ANY OTHER HIGHER AUTHORITY, THE ORDER OF T HE ASSESSING OFFICER DEALING WITH THE SAME SUBJECT-MATTER EMERGES INTO ITS FINAL ORDER U/ S.245D(4) OF THE ACT. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, AS IN THE PRESENT CA SE NO REGULAR ASSESSMENT WAS MADE BY THE ASSESSING OFFICER FOR BOTH THE ASSESSMENT YE ARS AND INTEREST WAS CHARGED U/S/220(2) OF THE ACT, AFTER THE ORDER WAS PASSED U /S.245D(4) OF THE ACT AND EVEN AFTER THE MISCELLANEOUS APPLICATION ORDER OF SETTLEMENT C OMMISSION PASSED U/S.245D(4) R.W.S. 154 OF THE ACT. IN THAT SITUATION, THE LIAB ILITY OF INTEREST U/S.220(2) OF THE ACT WILL NOT BE THERE. THE LIABILITY OF INTEREST U/S.2 20(2), IF ANY, WILL BE UP TO THE DATE OF ORDER U/S.245D(1) IN CASE THE ORIGINAL ASSESSMENT I S FRAMED AFTER THE SETTLEMENT COMMISSION ORDER U/S./245D(4), INTEREST FOR LATE PA YMENT IF CHARGEABLE NOT U/S.220(2) OF THE ACT BUT IN TERMS OF SPECIFIC PROVISION AS CO NTAINED IN SUB-SECTION 6A OF SECTION 245D OF THE ACT. 7. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED V IEW THAT IN THE PRESENT CASE, NO SITUATION HAS ARISEN WHERE INTEREST IS TO BE CHARGE D U/S.220(2) OF THE ACT. ACCORDINGLY, WE UPHELD THE ORDER OF THE CIT(A) DELE TING THE CHARGING OF INTEREST. THE LD. AR ALSO POINTED OUT THAT IN THE CASE OF SIS TER CONCERN OF THE ASSESSEE NAMELY MAHAVIR INDUCTOMELT (P) LTD. SIMIL AR SITUATION HAD ARISEN AND THE SETTLEMENT COMMISSION HAD PASSED SIM ILAR ORDER. IN THAT IT(SS)A NO.52/AHD/2009 BLOCK PERIOD 20.08.92 TO 20.09.95 8 CASE ALSO THE AO HAD PASSED AN ORDER UNDER SECTION 154 WHEREIN HE EXCLUDED THE PERIOD FROM THE DATE OF ORDER U/S 245D (1) TO THE DATE OF ORDER U/S 245D(4) FOR CALCULATING INTEREST U/S 220( 2). THE AO HAD PASSED IN THAT CASE FOLLOWING ORDER :- NAME OF THE ASSESSEE: MAHAVIR INDUCTOMELT (P) LTD . 7604,PHASE-IV, GIDC ESTATE, VATVA, AHMEDABAD P.A.NO. AABCM 8848 G ASST. YEAR BLOCK PERIOD F ROM 1.4.85 TO 20.9.95 DATE OF ORDER 6.9.2010 ORDER U/S 154 OF THE I.T. ACT., 1961 THE ASSESSEE COMPANY HAS FILED AN RECTIFICATION AP PLICATION DATED 27.08.2010 REGARDING MISTAKE IN THE PERIOD CONSIDER ED FOR CALCULATING THE INTEREST U/S 220(2) OF THE IT ACT. THE ASSESSEE HAS STATED THAT AS REGARDS TO CHARGING OF INTEREST U/S 220(2). THE HON . ITSC VIDE PARA 7 OF PAGE 16 OF THE ORDER HAS HELD AS UNDER :- INTEREST ARE TO BE CHARGED U/S 215/217, 139(8) AS PER THE NET INTEREST CHARGEABLE UNDER SECTION 220(2), 234A, 234B AND 234C WILL BE C HARGED UPTO THE DATE OF 245D(4) ORDER AS PER SUPREME COURT JUDGMENT IN THE CASE OF M/S HINDUSTAN BULK CARRIERS DAMANI BROTHERS AND ANJUMAN MOHAMMED HUSSEM GHASWAL A & OTHERS. 2. FURTHER THE ASSESSEE HAS STATED THAT IN THE CASE LAW OF THE SPECIAL BENCH OF THE INCOME-TAX SETTLEMENT COMMISSION IN TH E CASE OF DAMANI BROTHERS REPORTED IN (1999) 238 IT(AT) 36 WHEREIN T HE MAJORITY VIEW HAS BEEN EXPRESSED AS UNDER :- THE TOTAL EFFECT OF THE VIEW TAKEN BY US WILL BE T HAT THE ASSESSMENT ORDERS PASSED BEFORE THE DATE OF APPLICATION SUBSIST AFTER THE OR DER OF ADMISSION BUT SUCH ORDERS REMAIN INOPERATIVE. THE DEMAND ARISING OUT ON THE B ASIS OF SUCH ORDERS REMAINS UNENFORCEABLE TILL AN ORDER OF FINAL SETTLEMENT UND ER SECTION 245D(4) IS PASSED BY THE COMMISSION. THE ORDER OF ASSESSMENT WHICH IS MODIFI ED TO GIVE EFFECT TO THE COMMISSIONS ORDER THEN MERGES WITH THE LATTER. SO FAR AS THE CHARGEABILITY OF INTEREST UNDER SECTION 220(2) IS CONCERNED, THE SAME REMAINS CHARGEABLE UPTO THE DATE OF IT(SS)A NO.52/AHD/2009 BLOCK PERIOD 20.08.92 TO 20.09.95 9 ADMISSION IN ACCORDANCE WITH THE PROVISO TO SECTION 220(2) AFTER WHICH THE INTEREST CEASES TO BE CHARGEABLE. AFTER THE COMMISSIONS ORD ER UNDER SECTION 245D(4) INTEREST FOR LATE PAYMENT IS CHARGEABLE NOT UNDER SECTION 22 0(2) BUT IN TERMS OF THE SPECIFIC PROVISIONS CONTAINED IN SUB-SECTION (6A) OF SECTION 245D 3. THE ASSESSEE HAS REQUESTED THAT AS THERE IS A MI STAKE IN THE PERIOD CONSIDERED FOR CALCULATING THE INTEREST U/S 220(2) A RECTIFICATION ORDER MAY BE PASSED. ON GOING THROUGH THE CONTENTIONS OF THE ASSESSEE, IT IS FOUND THAT LIABILITY OF INTEREST U/S 220(2) IF ANY WILL BE UPTO THE DATE OF ADMISSION U/S 245D(1) AND AFTER THAT 220(2) WOULD B E CHARGED IN TERMS OF SPECIFIC PROVISIONS AS CONTAINED IN SUB-SECTION 6A OF SECTION 245D OF THE ACT. THE RECTIFICATION ORDER IS PASSED ACCORDINGLY. TOTAL UNDISCLOSED INCOME DETERMINED BY THE HON. SETTLEMENT COMMISSION VIDE ITS ORDER U/S 154 R.W.S. 245D(4) DATED 9/1/2008 REMAINS UNCHANGED AT RS.64,00,769/. CHARGE INTEREST U/S 220(2) AS STATED ABOVE. ISSUE D EMAND NOTICE & CHALLAN ACCORDINGLY. SD/- (MEENAKSHI DOHARE) ASSISTANT COMMISSIONER OF INCOME- TAX (OSD) RANGE-4, AHMEDABAD. THE LD. AR, THEREFORE, SUBMITTED THAT ON THE BASIS OF ABOVE TWO PRECEDENTS THIS BENCH SHOULD ALSO DIRECT THE AO TO EXCLUDE THE PERIOD FROM THE DATE OF ORDER U/S 245D(1) TO THE DATE OF O RDER U/S 245D(4) FOR THE PURPOSES OF CHARGING INTEREST U/S 220(2). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW, WE DO NOT FIND A NY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A). WE ARE OF THE VIEW THAT THE INSTITUTION OF INCOME-TAX SETTLEMENT COMMISSION IS AN INDEPENDENT BODY CONSTITUTED UNDER CHAPTER XIX-A OF I.T. ACT, 1961. AS PER SECTI ON 245-I, EVERY ORDER OF SETTLEMENT PASSED UNDER SECTION 245D(4) SHALL BE CONCLUSIVE AS THE MATTERS STATED THEREIN AND NO MATTER COVERED BY SUC H ORDER SHALL SAVE AS IT(SS)A NO.52/AHD/2009 BLOCK PERIOD 20.08.92 TO 20.09.95 10 OTHERWISE PROVIDED IN THIS CHAPTER BE REOPENED IN A NY PROCEEDINGS UNDER THIS ACT OR UNDER ANY OTHER LAW FOR THE TIME BEING IN FORCE. IN OUR CONSIDERED VIEW THE ISSUE OF CHARGING OF INTEREST U /S 220(2) AS ORDERED BY SETTLEMENT COMMISSION AND REFERRED TO ABOVE HAS BEC OME CONCLUSIVE AND CANNOT BE REOPENED UNDER ANY PROCEEDINGS UNDER THIS ACT. THE SETTLEMENT COMMISSION HAS CLEARLY PROVIDED IN THE CASE OF THE ASSESSEE THAT - 7. INTERESTS ARE TO BE CHARGED U/S 215/217, 139(8) AS PER THE ACT. INTEREST CHARGEABLE UNDER SECTION 220(2), 234A, 234 B AND 234C WILL BE CHARGED UPTO THE DATE OF 245D(4) ORDER AS PER SUPRE ME COURTS JUDGMENT IN THE CASE OF M/S HINDUSTAN BULK CARRIERS DAMANI B ROTHERS AND ANJUMAN MOHAMMED HUSSEM GHASWALA & OTHERS. IT CLEARLY DIRECTED THE CHARGING OF INTEREST U/S 22 0(2) UPTO THE DATE OF ORDER U/S 245D(4). IT WAS NOT A CASE THAT AO HAS SU O MOTU CHARGED INTEREST UPTO THE DATE OF ORDER U/S 245D(4) WHICH W AS REQUIRED TO BE RECTIFIED AND, THEREFORE, ON REFUSAL TO RECTIFY THI S ORDER TRIBUNAL WOULD HOLD JURISDICTION OVER THE MATTER AS CONTAINED IN T HE ORDER PASSED U/S 154. THE AO HAS REJECTED THE APPLICATION ONLY ON THE SOL E GROUND THAT INTEREST HAS BEEN CHARGED AS PER ORDER OF THE SETTLEMENT COM MISSION. FURTHER IN ORDER TO REMOVE THE AMBIGUITY THE ASSESSEE HAS MOVE D AN APPLICATION UNDER SECTION 154 BEFORE THE SETTLEMENT COMMISSION WHICH HAD REJECTED THIS APPLICATION OF THE ASSESSEE BY AN ORDER REFERR ED TO ABOVE. THUS EVEN THE SETTLEMENT COMMISSION HAS NOT FOUND ANY MISTAKE IN THE ORDER U/S 245D(4) PASSED ON 24.1.2007 ON THE MATTER OF LEVY O F INTEREST U/S 220(2). IT(SS)A NO.52/AHD/2009 BLOCK PERIOD 20.08.92 TO 20.09.95 11 IT HAS BEEN HELD BY THE SETTLEMENT COMMISSION BY T HIS MISCELLANEOUS APPLICATION THE ASSESSEE IS SEEKING A REVIEW OR REV ISION OF THE COMMISSIONS DECISION ON THE MATTER. HOWEVER, THE C OMMISSION HAD GRANTED POWER TO THE AO TO RECTIFY ANY COMPUTATIONA L ERROR IN THE DETERMINATION OF QUANTUM OF INTEREST U/S 220(2). BU T ON THE ISSUE WHETHER PERIOD OF CHARGING OF INTEREST SHOULD BE CURTAILED, THE SETTLEMENT COMMISSION HAS CLEARLY DECIDED AGAINST THE ASSESSEE BY HOLDING THAT THERE IS NO MISTAKE IN THE ORDER OF SETTLEMENT COMMISSION PASSED U/S 245D(4). IN THIS CONTEXT WE MAY REFER TO THE SUBMISSIONS MAD E BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION :- 5.2 THE APPLICANTS SUBMISSION ON THE MATTER IS AS UNDER :- THE AO HAS ALSO LEVIED INTEREST UNDER SECTION 220( 2) AMOUNTING TO RS.1,22,11,234/- THOUGH THE PERIOD FOR WHICH THE IN TEREST HAS BEEN CHARGED HAS NOT BEEN MENTIONED BUT THE PRIMA FACIE IT SEEMS THAT THE SAME HAS BEEN CALCULATED FOR THE PERIOD COMMENCING FROM 01.10.1996. THE ORDER PASSED BY THE HON. COMMISSION IS DATED 24 .01.2007 AND THE EFFECT OF THE SAID ORDER AND THE DEMAND NOTICE WAS SERVED ON THE APPELLANT COMPANY WAS ON 14.03.2007. THEREFORE, THE TIME ACCORDED FOR MAKING PAYMENT OF THE TAXES WOULD BE 30 DAYS FROM T HE RECEIPT OF THE DEMAND NOTICE ACCOMPANYING THE ORDER. REFERENCE IS INVITED IN THE CASE OF DAMANI BROTHERS (1999) 238 ITR (AT) 26 (SB) WHER EIN IT WAS HELD THAT INTEREST UNDER SECTION 220(2), IF ANY IS CHARGEABLE UP TO THE DATE OF ADMISSION IN ACCORDANCE WITH THE PROVISO TO SECTION 220(2) AND CEASED TO BE CHARGED THEREAFTER. AFTER THE COMMISSIONS ORDER UNDER SECTION 245D(4) INTEREST FOR LATE PAYMENT IS SPECIFICALLY C HARGEABLE AS PER THE SPECIFIC PROVISIONS OF SECTION 245D(6)(A). THEREFORE, THE AO HAS WRONGLY INTERPRETED THE CHARG E OF INTEREST UNDER SECTION 220(2) WHEN THE PERIOD FOR THE PAYMENT OF T AXES THAT IS 30 DAYS ON RECEIPT OF THE NOTICE UNDER SECTION 156 HAS NOT CLA SPED. IT(SS)A NO.52/AHD/2009 BLOCK PERIOD 20.08.92 TO 20.09.95 12 ON THE BASIS OF THIS APPLICATION THE SETTLEMENT COM MISSION HAS PASSED AN ORDER AS PER PARA 5.4 & 5.5 THEREOF, REJECTING THE ASSESSEES APPLICATION AS ABOVE. 7. NOW THE QUESTION ARISES WHETHER THE TRIBUNAL CA N ENTERTAIN THE MATTER AND EXPRESS ITS VIEW WHICH HAS BEEN DECIDED UPON BY THE SETTLEMENT COMMISSION AND HAS BEEN MADE CONCLUSIVE BY SECTION 245-I. IN OUR CONSIDERED VIEW THE TRIBUNAL CANNOT SIT OVER THE JUDGMENT OF THE SETTLEMENT COMMISSION ON THE QUESTION AS TO WHAT SH OULD BE THE PERIOD FOR CHARGING OF INTEREST U/S 220(2). MAY BE THE CON TENTION OF THE LD. AR THAT THE ISSUE IS COVERED BY THE ORDER OF CO-ORDINA TE BENCH IS A PRECEDENCE WHICH THIS BENCH IN ORDINARY CIRCUMSTANC ES SHOULD FOLLOW BUT CERTAINLY NOT IN A CASE WHERE THE ISSUE IS DECIDED BY THE SETTLEMENT COMMISSION AND HAS BEEN MADE CONCLUSIVE BY SECTION 245-I. WE ALSO RESTRAIN OURSELVES FROM EXPRESSING ANY OPINION AS T O WHETHER THE PERIOD FROM THE DATE OF ORDER U/S 245D(1) TO THE DATE OF ORDER BY THE SETTLEMENT COMMISSION U/S 245D(4) SHOULD BE EXCLUDED OR NOT EX CLUDED IN THE CASE OF THE ASSESSEE AS THE MATTER IS NOW BEYOND OUR JUR ISDICTION, ONCE CONCLUDED BY THE ORDER U/S 245D(4). UNDER THESE PEC ULIAR CIRCUMSTANCES WE ARE UNABLE TO FOLLOW THE DECISION OF CO-ORDINATE BENCH REFERRED TO ABOVE BY THE LD. AR. IT(SS)A NO.52/AHD/2009 BLOCK PERIOD 20.08.92 TO 20.09.95 13 8. SO FAR AS THE ORDER OF AO IN THE CASE OF MAHAVIR INDUCTOMELT (P) LTD. (SUPRA) REFERRED TO BY THE LD. AR IS CONCERNED , WE EXPRESS NO OPINION AS TO HOW AND UNDER WHAT CIRCUMSTANCES THE AO ASSUM ED JURISDICTION TO OVER-RIDE THE EXPRESS DIRECTION OF THE SETTLEMENT C OMMISSION TO CHARGE INTEREST U/S 220(2) UPTO THE DATE OF ORDER U/S 245D (4) AND RECTIFY HIS ORDER RESULTING INTO EXCLUDING THE PERIOD SPECIFICALLY DI RECTED BY THE SETTLEMENT COMMISSION TO BE INCLUDED IN CHARGING THE INTEREST. WE ACCORDINGLY, REJECT THIS CONTENTION OF THE LD. AR THAT IF THE DE PARTMENT HAS ALLOWED RECTIFICATION IN ONE CASE THE TRIBUNAL SHOULD ALSO FOLLOW THE SAME. SUCH ILLEGAL ORDER PASSED BY THE AO CANNOT HAVE ANY PERS UASIVE VALUE FOR US. WE MAY ALSO ADD THAT DURING THE COURSE OF HEARING B EFORE US THE LD. AR SIMPLY RELIED ON THE TWO ORDERS ONE BY THE TRIBUNAL IN THE CASE OF MALHOTRA STEEL INDUSTRIES LTD. (SUPRA) AND ANOTHER IN MAHAVIR INDUCTOMELT (P) LTD. WE EXPECTED THAT OUR ATTENTIO N SHOULD HAVE ALSO BEEN DRAWN TO SUCH VITAL FACTS LIKE ORDERS OF HONB LE I.T. SETTLEMENT COMMISSION ON THE ISSUE AGITATED BEFORE US BY THE A SSESSEE. IN ANY CASE, WE DO NOT CONSIDER IT LEGALLY PROPER TO ASSUME JURI SDICTION TO OVERRIDE THE DECISION OF HONBLE INCOME TAX SETTLEMENT COMMISSI ON WHICH IS MADE CONCLUSIVE BY SECTION 245-I. AS A RESULT, WE DO NOT FIND ANY FORCE IN THE APPEAL FILED BY THE ASSESSEE AND THE SAME IS DISMIS SED. IT(SS)A NO.52/AHD/2009 BLOCK PERIOD 20.08.92 TO 20.09.95 14 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 30/6/11. SD/- SD/- (D.K. TYAGI) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, DATED : 30/6/11. MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE 2. THE RESPONDENT 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 15/6/11. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER 21/6/11. /OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..