M.B.SHAH, J. - (1.) THE Petitioner has challenged the order (Exhibit J) dt. 5th Jan., 1983, passed under s. 220(2) of the IT Act, 1961 (hereinafter referred to as 'the IT Act') passed by the ITO, Companies Circle VII, Ahmedabad. THE said order reads as under : "Order under s. 220(2) of the IT Act. THE assessment for the year 1974-75 was finalised on 28th Aug., 1977 determining the tax payable at Rs. 10,83,746. THE notice of demand under s. 156 of the Act was issued and served on 27th Sept., 1977. THE CIT(A) vide his order No. CIP(A) IV/VII-119/77-78 dt. 31st Oct., 1979 reduced the total income of Rs. 2,04,40,553 and it resulted in refund of Rs. 18,05,379. THE Tribunal Ahmedabad Bench "A"vide its order No. ITA Nos. 54 and 56 Ahd/1950 dt. 1st April, 1982 redetermined the total income at Rs. 2,18,58,538 and tax payable at Rs. 5,65,045. Simple interest at 12% per annum is levied in terms of s. 220(2) r/w. r. 118(1). THE interest payable under s. 220(2) is computed with reference to the due date reckoned from the original demand notice (i.e., 1st Nov., 1977) and with reference to the tax finally determined (8,66,048). Interest chargeable comes to Rs. 5,10,378 Issue notice of demand and challan."
(2.) IT is the contention of the learned counsel for the petitioner that the aforesaid order is on the face illegal because at no point of time the petitioner has failed to comply with the notice of demand issued under s. 156 of the IT Act. For the aforesaid purpose, he relied upon the following facts : For the asst. yr. 1974-75 the petitioner was required to pay tax of Rs. 1,35,89,562. IT had paid in all Rs. 1,26,05,916. An assessment order was passed on 20th Sept., 1977. Therefore, a notice of demand for the balance of tax payable of Rs. 10,83,745 was issued on 27th Sept., 1977. The petitioner had complied with the said notice of demand and paid the amount as per the said notice of demand. Thereafter, an order (Exhibit B) under s. 154 of the IT Act was passed on 22nd March, 1979. Additional tax of Rs. 14,483 was demanded for which a notice of demand was issued and the petitioner paid it in time. Finally, as per the Tribunal's directions, revised assessment order (Exhibit G) dt. 12th Oct., 1952 was passed. As per the revised assessment order, the petitioner was required to pay Rs. 8,05,048 and interest of Rs. 2,07,680 under s. 244(1A) of the IT Act. That means the petitioner was required to pay Rs. 10,72,648. For the aforesaid amount, a notice of demand (Exhibit H) dt. 12th Oct., 1982 was issued. The petitioner paid the said amount also within time. The aforesaid facts are not denied by the respondent. In view of the undenied facts, it is apparent that at no point of time the petitioner has failed to comply with the notice of demand issued under s. 156 of the IT Act. In spite of the aforesaid facts, the respondent passed the impugned order (Exhibit J) dt. 5th Jan., 1986 under s. 220(2) of the IT Act demanding interest of Rs. 5,10,373 on Rs. 6,55,048 at the rate of 12-1/2% per annum. The learned counsel for the petitioner submitted that the aforesaid impugned order is, on the face of it, illegal and requires to be quashed and set aside. Considering the provisions of s. 220, sub-s. (2) of the IT Act, it is apparent that if the assessee fails to comply with the notice of demand under s. 156 of the IT Act within 35 days of service of notice, the assessee is liable to pay simple interest at the rate of 12-1/2% per annum (at present ) for the period after 35 days till the date on which the amount is paid. The relevant part of sub-s. (2) of s. 220 of IT Act reads as under : "(2) If the amount specified in any notice of demand under s. 156 is not paid within the period limited under sub-s. (1), the assessee shall be liable to pay simple interest at one and one- half per cent for every month or part of a month comprised in the period commencing from the day immediately following the end of the period mentioned in sub-s. (1) and ending with the day on which the amount is paid." From the aforesaid provisions, it is apparent that interest can be recovered only if the assessee fails to comply with the notice of demand issued under s. 156 of the IT Act. It is also apparent, as stated above, that the petitioner had complied with the notice of demand issued under s. 156 of the IT Act and, therefore, there is no question of applying the provisions of sub-s. (2) of s. 220 of the IT Act.
(3.) AS the provisions are absolutely unambiguous and clear, in our view, it is not necessary to refer to the decision of the Kerala High Court in the case of ITO vs. A.V. Thomas and Co. (1985) 44 CTR (Ker) 77 : (1986) 160 ITR 818 (Ker) and the decision of the Delhi High Court in the case of Bharat Commerce and Industries Ltd. vs. Union of India and Ors. (1990) 88 CTR (Del) 113 : (1991) 188 ITR 277 (Del). In the result, the Special Civil Application is allowed. The order (Exhibit J) dt. 6th Jan., 1983 under s. 220(2) of the IT Act passed by the ITO, Companies Circle VII, Ahmedabad, demanding interest of Rs. 5,10,378 from the petitioner is quashed and set aside. Rule is made absolute with no order as to costs.;