WP(C)2237/1985

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IN THE HIGH COURT OF DELHI AT NEW DELHI

+

W.P.(C) 2237/1985

#

PRAKASH TUBES LTD. ..... Petitioner

Through: Mr. C.S. Aggarwal, Sr.

Adv.

with

Mr.

Prakash

Kumar, Adv.

versus

$

UNION OF INDIA & ORS. ...... Respondent

^

Through: Mr. R.D. Jolly, Sr.

Standing Counsel with

Ms. Rani Kiyala, Adv.

Date of Hearing : April 27, 2009

%

Date of Decision : May 01, 2009

CORAM:

*

HON'BLE MR. JUSTICE VIKRAMAJIT SEN

HON'BLE MR. JUSTICE RAJIV SHAKDHER

1. Whether reporters of local papers may be

allowed to see the Judgment?

Yes

2. To be referred to the Reporter or not?

Yes

3. Whether the Judgment should be reported

in the Digest?

Yes

VIKRAMAJIT SEN, J.

1. This Petition under Article 226 of the Constitution of

India seeks the issuance of a writ to waive the interest

levied under Section 220 (2) of the Income Tax Act, 1961

(IT Act for short) pertaining to three consecutive years in

respect of which the original Demand had already been

paid. The Petitioner has contended that for the

2009:DHC:1827-DB

WP(C)2237/1985

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Assessment Years 1980-81, 1981-82 and 1982-83, the

Revenue has raised a demand of Rupees 2,84,546/-,

Rupees 6,95,479/- and Rupees 15,23,079/- respectively in

regard

whereof

Demand

Notices

were

served

on

30.03.1983, 27.04.1983 and 27.04.1983 respectively. The

Petitioner was under a bonafide belief that he was entitled

to some additional relief under the unamended provisions

of Section 80-J of the IT Act. As a consequence it had

moved the Hon’ble Supreme Court of India through a writ

petition in the course of the hearing of which the operation

and effect of the amended provisions of Section 80-J of the

IT Act had been stayed. The Petitioner had also moved

applications dated 08.04.1983 and 25.05.1983 for the stay

of the aforesaid Demand; and the same was stayed by the

Inspecting Assistant Commissioner vide his letters dated

12.04.1983 and 01.06.1983 for a period of six months.

These interim orders were further extended till 31.03.1985

vide orders dated 11.01.1985. However, on 25.01.1985 the

Hon’ble Supreme Court was pleased to dismiss the Writ

Petitions, upholding the validity of the retrospective

amendment of Section 80-J of the IT Act. Mr. C.S.

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WP(C)2237/1985

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Aggarwal, learned Senior Counsel for the Petitioner,

contends that the pending demands were thereupon paid

on 4.3.1985. Subsequently, the Revenue issued a notice

under Section 221(1) claiming amounts of Rupees 31,330/-,

Rupees

1,06,761/-

and

Rupees

2,58,362/-

ostensibly

towards penalty although in the body of the notice Section

220 has been mentioned. Eventually, these demands were

further raised to Rupees 46,889/, Rupees 1,19,410/- and

Rupees 2,80,425/- chargeable under Section 220(2A) vide

its Order dated 2.09.1985, indicating that the claim was

towards interest.

2. The question posed before us is whether the

Petitioner is entitled to waiver of the said interest under

Section 220(2A) in light of the above mentioned facts; and

whether interest can be levied without the service of a

specific order raising the demand under Section 220(2A) of

the Act together with a separate demand notice under

Section 156 of the Act; and whether the impugned Order is

liable to be set aside since the Assessee was not afforded

any opportunity of personal hearing.

2009:DHC:1827-DB

WP(C)2237/1985

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3. It has been contended on behalf of the Petitioner that

inasmuch as interest has been charged for the period prior

to 25.1.1985, till which date the interim Orders of the

Supreme Court were effective, the demand is palpably

illegal. The following Table will clarify the position:-

Assessment

Year

Amount

Demanded

Paid on

Interest

charged from

Amount(Rs.)

1980-81

2,84,546

4.3.1985

1.4.1983

46,887

1981-82

6,95,479

4.3.1985

26.5.1983

1,19,410