THE COMMISSIONER OF INCOME TAX- 18 MUMBAI vs. LEONIE M. ALMEIDA

1 ITXA-4794-10-J.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY  ORIGINAL  CIVIL JURISDICTION INCOME TAX APPEAL No. 4794 of 2010. The Commissioner of Income­Tax XVIII Piramal Chambers, Parel, Mumbai­400 012. ..Appellant. Versus Smt. Leonie M.Almeida, Ganesh Niwas, V.S. Marg, Prabhadevi, Mumbai­400 025. ..Respondent. Mr A.R.Malhotra a/with Mr N.A. Kazi for the appellant. Mr Satish Mody a/with Aasifa K.Khan for the respondent. CORAM  :   S.C. DHARMADHIKARI & S.P. DESHMUKH, JJ. RESERVED ON   :­   9th JANUARY, 2015. PRONOUNCED ON:­24th FEBRUARY,2015. JUDGMENT (PER : S.P. DESHMUKH, J)

1) The appellant purports to pose question of law referred to herein below:- “Whether on the facts and circumstances of the case and in law, the Tribunal was right in holding that the interest under Section 220(2) will be legally leviable LADDA R.S. 1 of 7 Ladda CNR No : HCBM020227392009 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 04:12:30

2 ITXA-4794-10-J.doc from the date of default in payment of demand by the assessee till the date of admission of application by the assessee by settlement Commission under section 245D(1) and not till the final order of settlement commission under section 245D (4)?” 2) The relevant facts can be briefly narrated as under : The case of the respondent/assessee was taken up for assessement within the framework of Section 158BD of the Income-Tax Act, 1961. The assessment was made on 30.1.2002 determining undisclosed income @ Rs.1,40,02,500/-. In the course of said proceeding, the assessee had filed application before Settlement Commission on 11.5.2001. The application was admitted by the Settlement Commission under section 245D (1) on 16th September, 2002. Final order was passed by the Settlement Commission on 30th September, 2002 disposing of the application. The undisclosed income under the same decreased to Rs.32,20,000/-. The Assessee had paid the demand within 30 days. 3) On 14th December, 2005 the Assistant Commissioner, Income-tax, Circle XVIII, Mumbai issued a demand purporting to LADDA R.S. 2 of 7 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 04:12:30

3 ITXA-4794-10-J.doc give effect to the order under section 245D (4) charging and levying interest under Section 220 (2) of Income-Tax Act, 1961 from the date of assessment order - 30th January, 2002 to 30th September, 2005 - the date of order passed by the Settlement Commission. As such the matter before the Income-Tax Appeals XVIII, Mumbai ensued at the instance of the assessee. 4) The Commissioner of Income­Tax (Appeals) concurred with the submissions on behalf of the assessee that order of the Assessing Officer does not survive after application under Section 254 D(1) is admitted.  The Commissioner further held that the Assessing Officer was not justified in levying interest under section 220 (2) from the date of his assessment order to the date of final order passed by the Settlement Commission, in view of decision of the Hon'ble Supreme Court in the case of  CIT   vs.   Damani   Brothers  reported   in  259   ITR   478. Consequently, he allowed the appeal. 5) The   revenue   against   aforesaid   order   dated   5.7.2006 passed by the CIT (Appeals) XVIII, Mumbai was in appeal before the Appellate Tribunal purporting to dispute the order LADDA R.S. 3 of 7 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 04:12:30

4 ITXA-4794-10-J.doc passed by the Commissioner (Appeals). 6) The   Tribunal   on   perusal   of   record   and  on   elaborate consideration   of   the   matter,   taking   into   account   relevant provisions   of   Income­Tax   Act,   particularly   provisions   of Section 220 and 245D and the legal position as emerging from the decision referred to above namely,  CIT vs Damani Brothers reported in 259 ITR 478,   held that interest under Section 220 (2) would be legally leviable from the date of demand raised in assessment before admission of application for   settlement   under   section   245D   (1).   However,   if   the demand   stands   reduced   under   order   of   Settlement Commission, interest would undergo revision correspondingly, Accordingly   under   its   order   dated   26th  March,   2009     the Tribunal purported to correct the order of the Commissioner of Income Tax (Appeals) and considered that it would not be proper to say that order of the Assessing Officer would not survive after application under section 245 D (1) is decided to be proceeded with, observing thus, “It   was   accordingly   held   that LADDA R.S. 4 of 7 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 04:12:30

5 ITXA-4794-10-J.doc Income­tax   authorities   were   free   to proceed in the prescribed manner till the   Commission   decided   to   proceed with   the   application   under   section 245D (1). The assessment order passed by   the   Assessing   Officer   prior   to   the admission   of   the   application   for settlement   will   subsist   and   recovery proceedings   will   continue.   Hon'ble Supreme   Court   further   observed   that the   assessment   did   not   get automatically   set   aside   on   the admission   of   the   application   for settlement.” The present appeal is against said order proposing to pose the question referred to hereinabove. 7) As can be seen, the dates which have been referred to hereinabove viz; the date of assessment order, date of making application before the Settlement Commission as well as the date on which the order passed by the Settlement Commission are not in dispute. 8) The position as far as charging interest under Section 220 (2) is concerned is no longer  res integra.   It has been made   clear   under     the   decision   in   the   case   of  Damani Brothers  (supra)   as   also   in   the   decision   of   the   Hon'ble LADDA R.S. 5 of 7 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 04:12:30

6 ITXA-4794-10-J.doc Supreme   Court   in   the   case   of  Brij   Lal   and   Ors   v. Commissioner of Income­tax   reported in [2010] 328 ITR 477 (SC) which is a case relating to levy of interest under section 234B of the Income Tax Act, 1961, relied upon by the assessee, observing; “As   stated,   till   the   Settlement Commission   decides   to   admit   the   case under section 245D (1) the proceedings under   the   normal   provisions   remain open. But, once the Commission admits the   case   after   being   satisfied   that   the disclosure   is   full   and   true   then   the proceedings   commence   with   the Settlement   Commission.   In   the meantime, the applicant has to pay the additional amount of tax with interest without   which   the   application   for settlement   would   not   be   maintainable. Thus, interest under section 234B would be   payable   up   to   the   stage   of   section 245D (1)”. 9) The position that interest can be charged pursuant to proceedings in normal course up to the date of decision under Section 245 D (I) of the Income Tax Act to proceed  with the application appears to be prevailing. 10) In view of the aforesaid, no decision from this LADDA R.S. 6 of 7 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 04:12:30

7 ITXA-4794-10-J.doc Court is required in respect of the question of law sought to be raised.   The case is covered by the decisions referred to hereinabove   of   the   Hon'ble   Supreme   Court.     As   such   the question as sought to be raised stands decided accordingly. Thus, appeal is dismissed.  No order as to costs. (S.P. DESHMUKH, J.)     ( S.C. DHARMADHIKARI,J ) LADDA R.S. 7 of 7 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 04:12:30 Powered by TCPDF (www.tcpdf.org)