II. Recent Updates:
1. GIRNAR INVESTMENT LTD Vs. CIT, WP(C) NO. 5750/2010, DATE OF DECISION: 5TH JANUARY 2012, DELHI HIGH COURT
S. 220(2): If original demand not fully paid, interest payable even for period when demand was not in existence
The AO passed an assessment order and raised a demand of Rs. 21.24 lakhs of which Rs. 10.50 lakhs was paid by the assessee and the balance of Rs. 10.94 was stayed.
On 20.5.1998, the CIT (A) allowed the appeal of the assessee and no demand remained payable by the assessee. The AO refunded the taxes paid by the assessee.
Subsequently, the Tribunal reversed the CIT (A). The AO gave effect to the Tribunal’s order on 30.7.2004 and charged interest u/s 220(2) for the entire period.
S. 220(2) provides for levy of interest if the demand is not paid within 30 days of the service of notice u/s 156.
HC, held that- The assessee has not paid up the entire tax within the specified period, it is liable to pay interest u/s 220(2) from that date on the unpaid amount and any variation in the amount of the demand favorable to the assessee which was directed by any of the appellate authorities in the interregnum has no effect on the liability of the assessee to pay the interest.
(Please click here for judgment)
2. CIT Vs. SPL’S SIDDHARTHA LTD, ITA NO. 836 OF 2011, DECISION DELIVERED ON 14TH SEPTEMBER 2011, DELHI HIGH COURT
Section 147: Sanction of CIT instead of JCIT renders reopening invalid.
The AO issued a notice u/s 148 to reopen an assessment. As Section 143 (3) order had not been passed & 4 years had elapsed, the AO ought to have obtained the sanction of the Joint/Additional CIT u/s 151(2). Instead, he routed the file through the Additional CIT and obtained the sanction of the CIT.
(i) Section. 151(2) require the sanction to be accorded by the Joint/Additional CIT. The AO sought the sanction of the CIT. Though the file was routed through the Addl. CIT, the latter only made an endorsement “CIT may kindly accord sanction”. This showed that the Addl. CIT did not apply his mind or gave any sanction. Instead, he requested the CIT to accord approval. This is not an irregularity curable u/s 292B;
(ii) The different authorities specified in s. 116 have to exercise their powers in accordance with law. If powers conferred on a particular authority are arrogated by other authority without mandate of law, it will create chaos in the administration of law and hierarchy of administration will mean nothing. Satisfaction of one authority cannot be substituted by the satisfaction of the other authority. If the statute requires a thing to be done in a certain manner it has to be done in that manner alone. Also, the designated authority should apply his independent mind to record his satisfaction and it should not be at the behest of a superior authority.
(Please click here for judgment)
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