- (1.) We are called upon by the Revenue in this appeal to decide whether the Appellate CIT (A/C for short) was justified in directing the Assessing Officer (AO) to compute the interest under s. 244(1A) in respect of the excess amount from the date on which such amount was collected by the AO by garnishee action under sub-s. (3) of s. 226 of the Act to the date on which the refund was granted and to pay the same to the assessee.
(2.) Before embarking upon adjudication, the facts, as emerge from the case records, require to be narrated briefly as under.
(3.) The original assessment resulted in a demand of Rs. 3,13,58,962 and notice of demand, as required under s. 156 of the Act, dt. 13th March, 1989, was served on the assessee-company on 12th April, 1989. In the said demand notice, the assessee was asked to pay the demand raised pursuant to the assessment within 30 days from the date of service of the said demand notice. The period of 30 days was to expire on 11th May, 1989. But before the assessee could pay up the demand within the said 30 days period, pursuant to the demand notice, the AO came to know that a sum of Rs. 1,74,90,378 was due and payable to it by the Chief CIT (Tech), West Bengal, Calcutta, towards consideration money for acquisition of the assessees immovable property under Chapter XX-C of the IT Act, 1961. The AO, therefore, by virtue of the powers vested in him under sub-s. (3) of s. 226 of the Act, demanded the said sum of Rs. 1,70,97,378 from the Chief CIT. The Chief CIT paid to the AO on 27th April, 1989, the said sum of Rs. 1,70,97,378 in obedience to his notice issued under sub-s. (3) of s. 226 of the Act. After receipt of the garnishee amount from the Chief CIT, West Bengal, the AO as per his Memo No. DC/SPL. R-12/89-90/16, dt. 27th April, 1989, to the assessee, confirmed that he had received an amount of Rs. 1,70,97,378 from the Chief CIT(Tech), West Bengal, Calcutta. In the said memo, the AO further informed the assessee that the said amount received was adjusted against the demand raised against the assessee for the asst. yr. 1985-86, which is the year under appeal.;