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IN THE HIGH COURT OF DELHI AT NEW DELHI
Rajiv Shakdher, Tara Vitasta Ganju, JJ.
The Principal Commissioner of Income Tax-6 – Appellant
Versus
Modipon Ltd. – Respondent
ITA 196 of 2023
Decided On : 06-04-2023
Delay Condonation - Income Tax - ITA 196/2023 - The judgment concerns the condonation of delay in re-filing an appeal related to the assessment year 1987-88. The key legal provision discussed is Section 220(2) of the Income Tax Act, 1961, which deals with the levy of interest. The court found that the demand notice was issued only on 15.09.2014, and therefore, the attempt to levy interest for the period prior to that date was not sustainable. The decision of the CIT(A) and Tribunal was upheld, and no substantial question of law arose for consideration.
Fact of the Case:
The judgment concerns an application for condonation of delay in re-filing an appeal related to the assessment year 1987-88. The delay of 640 days was condoned, and the application was disposed of.
Finding of the Court:
The court found that the attempt to levy interest for the period prior to the issuance of the demand notice on 15.09.2014 was not sustainable. The decision of the CIT(A) and Tribunal was upheld, and no substantial question of law arose for consideration.
Issues: The key issue was whether interest under Section 220(2) of the Income Tax Act, 1961 was payable by the respondent/assessee for the demand raised via the order dated 29.03.1990.
Ratio Decidendi: The court held that the liability to pay interest would arise only with respect to the amount specified in the notice of demand issued under Section 156 of the Act, which was not paid within the prescribed time. Since the demand notice was issued only on 15.09.2014, the attempt to levy interest for the period prior to that date was not sustainable.
Final Decision: The appeal was closed, and no substantial question of law arose for consideration.
JUDGMENT
[Physical Hearing/Hybrid Hearing (as per request)]
Rajiv Shakdher, J. (Oral)
CM Appl.16017/2023 [Application filed on behalf of the appellant/revenue seeking condonation of delay of 640 days in re-filing the appeal.]
1. This is an application filed on behalf of the appellant/revenue, seeking condonation of delay in re-filing the appeal.
1.1. According to the appellant/revenue, there is a delay of 640 days.
2. Mr Shashwat Bajpai, who appears on behalf of the non-applicant/respondent/assessee, does not oppose the prayer made in the application.
3. The delay is condoned. The application is, accordingly, disposed of.
ITA 196/2023
4. This appeal concerns Assessment Year (AY) 1987-88. The appeal seeks to challenge the order dated 13.08.2018 passed by the Income Tax Appellate Tribunal [in short, the "Tribunal"].
5. The short issue which arose for consideration before the Tribunal was whether interest under Section 220(2) of the Income Tax Act, 1961 [in short, the "Act"] was payable by the respondent/assessee, in respect of the demand raised via the order dated 29.03.1990.
5.1. This assessment order was passed under Section 143(3) of the Act.
5.2. By virtue of this order, the respondent/assessee's income was assessed at Rs.11,40,79,686/-.
6. It is important to note that the appellant/revenue, being aggrieved by the aforesaid order, preferred an appeal with the Commissioner of Income Tax (Appeals) [in short, "CIT(A)"].
6.1. The CIT(A), via the order dated 30.06.1999, reduced the respondent/assessee's income to Rs.5,83,45,420/-.
7. The record shows that the Assessing Officer (AO), while giving effect to the order passed by the CIT(A), reduced the income to Rs.5,60,33,906/-.
7.1. It appears that since the respondent/assessee was dissatisfied with the order of the CIT(A) dated 30.06.1999 (which is referred to hereinabove), an appeal was preferred with the Tribunal.
7.2. Likewise, the appellant/revenue also preferred an appeal with the Tribunal.
8. The Tribunal, via order dated 22.07.1996, passed a common order. Resultantly, the assessed income of the respondent/assessee was got scaled down to Rs.92,49,259/-.
9. The AO gave effect to the said order passed by the Tribunal on 29.04.1997. The appeal effect order, i.e., the order dated 29.04.1997, pegged the respondent/assessee's assessed income at Rs.66,80,645/-.
10. What is not in dispute is that the CIT(A), with regard to the preceding assessment year, i.e., AY 1986-87, had passed the order on 07.06.2002, directing the AO to consider allowing deduction towards excise duty paid by the respondent/assessee amounting to Rs.88,80,941/- in the said AY, with a caveat that if the deduction was allowed for AY 1986-87, the AO should withdraw the equivalent claim which had already been allowed in the subsequent AY, i.e., AY 1987-88.
11. Pursuant to the order dated 07.06.2002, the AO on 15.09.2014 passed an order qua AY 1986-87, allowing the deduction of Rs.88,80,941 for AY 1986/87.
11.1. Consequently, via a separate order i.e., order dated 21.05.2014, the AO recomputed the taxable income of the respondent/assessee for AY 1987-88, by adding Rs.88,80,914/- to the respondent/assessee's income.
11.2. Furthermore, the AO also levied interest amounting to Rs.1,62,85,376 under Section 220(2) of the Act for the period spanning between 01.05.1990 and 15.09.2014.
12. It is against this order of the AO that the respondent/assessee preferred an appeal with the CIT(A). The CIT(A), via order dated 14.11.2014, concluded that as the demand under Section 156 of the Act was raised for the first time on 15.09.2014, and since there was no default, interest under the said provisions should not be levied.
13. This time around, the appellant/revenue, being aggrieved, preferred an appeal with the Tribunal. The Tribunal, via the impugned order, sustained the view taken by the CIT(A) as regards levy of interest under Section 220(2) of the Act.
13.1. In reaching this conclusion, the Tribunal has noted the foll
The liability to pay interest under Section 220(2) of the Income Tax Act, 1961 arises only with respect to the amount specified in the notice of demand issued under Section 156 of the Act, which was ....
The court's decision was based on the absence of a substantial question of law for consideration in the appeal.
Clarity in penalty notices and the debatable nature of issues at the relevant time can influence the imposition of penalties.
The court has the discretion to condone delay in re-filing appeals and may rely on previous decisions to close appeals.
The incriminating material found during the search must concern the assessment year in issue for the proceedings to be valid.
The absence of substantial question of law can lead to the closure of appeals.
The court's decision was based on the lack of substantial question of law arising for consideration and the coverage of the issue by a previous court decision.
The principle of condonation of delay and the requirement for a substantial question of law to arise for consideration in an appeal.
The court's decision was influenced by its previous ruling on a similar issue, indicating the importance of consistency in judicial decisions.
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