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Judgment
We have heard Sri Shubham Agrawal, learned counsel for the Income Tax Department and Sri R.S. Agarwal, learned counsel for the assessee.
For the Assessment year 1989-90 the Assessment Order was passed on 26.3.1992 and a notice of demand was issued. The assessee moved an application under Section 154 of the Income Tax Act (hereinafter referred to as the Act) claiming that the Assessing Officer committed a mistake which is apparent on the face of the record and that the Assessment Order requires rectification. The application of the assessee was allowed and the Assessing Officer passed a Revised Assessment Order dated 15.9.1994, as a result, the Assessment was revised at nil and the Assessing Officer issued a refund voucher of Rs. 2,48,33,266/- and another refund voucher of Rs. 76,04,798.
Subsequently, the Department issued a notice under Section 154 of the Act on 16.10.1995 pursuant to which another rectification order dated 1.12.1995 under Section 154 of the Act was passed pursuant to which a fresh revised notice of demand and Challan was issued. Pursuant to the order under Section 154 interest under Section 220(2) of the Act was charged from the date of the original Assessment Order dated 26.3.1992.
The applicant being aggrieved by this part of the order charging interest from 1992 filed an appeal which was dismissed and, thereafter, preferred a Second Appeal before the Tribunal which was allowed. The Department being aggrieved by the order of the Tribunal has filed the present appeal under Section 260(A) of the Income Tax Act contending that a substantial question of law arises for consideration, namely, that interest under Section 220(2) was chargeable from the date of the Original Assessment Order dated 26.3.1992 and not from the date of the revised order under Section 154 dated 1.12.1995.
Having heard the learned counsel for the parties, we are of the opinion that the controversy involved in the present appeal squarely covered by a decision of the Supreme Court in Vikrant Tyres Ltd. Vs. First Income Tax Officer, . The Supreme Court held that on a literal reading of Section 220(2) the revenue was entitled to collect interest on that part of the tax which was due to it and retained by the assessee.
In the instant case, the original demand pursuant to the first Assessment Order dated 26.3.1992 was duly satisfied and the amount was refunded pursuant to the first rectification order passed under Section 154 on 15.9.1994. In similar circumstances, the Supreme Court in the case of Vikrant Tyres Limited (supra) the Supreme Court held that where the original demand was satisfied and the amount was paid by the assessee interest could not be payable from the original date of demand if levied subsequently. The Supreme Court found that the condition precedent for invoking the said Section was only if there was a default in payment of the amount demanded under a notice by the revenue within the stipulated period therein and if such a demand was not satisfied then Section 220(2) could be invoked.
In the light of the aforesaid decision, we find that the original demand pursuant to the Assessment Order dated 26.3.1992 was paid by the assessee and the demand was satisfied. Subsequently when a fresh order was passed by the Assessing Officer on 1.12.1995 imposing a fresh demand interest could only be levied, if any, after 30 days from 1.12.1995, if it was not paid within the said period.
In the light of the aforesaid, we do not find any substantial question of law arising for consideration.
The appeal fails and is dismissed.