Settlement of cases – Interest – Section 245D(2C) – B. P. 01/04/1995 to 05/10/2001 – Assessee depositing tax on admitting additional income: Required amount deposited within time when application admitted – Further tax liability determined final order satisfied – Interest on further tax for the period during the pendency of application before Settlement Commission is unwarranted

The assessee and two others disclosed Rs. 10,00,000/- in the hands of each of the three assesses. The Settlement Commission directed to accept the offer of additional income of Rs. 1,48,16,160/- and rejected the waiver of interest. While computing the amount payable, the Assessing Officer made an addition of Rs. 13,03,211/- as interest recoverable for the period between 01/01/2004 and 26/03/2010 u/s. 245D(2C) of the Income-tax Act, 1961. The Commissioner (Appeals) held that section 245D(2C) could be invoked only if the assessee did not deposit the tax payable on income disclosed and admitted u/s. 245D(1). In the instant case, the assessee deposited Rs. 6,12,000/- within the time prescribed u/s. 245D(2C) on the income of Rs. 10,00,000/- in terms of order u/s. 245D(1) and deleted the addition. This was confirmed by the Tribunal.

On appeal by the Revenue, the Delhi High Court upheld the decision of the Tribunal and held as under:

“i) When the application was filed before the Settlement Commission, the assessee deposited the admitted tax liability. Soon, thereafter, when the application was admitted, the amount required was deposited within the time stipulated u/s. 245D(6A). The further tax liability determined was payable after the final decision. The records and the materials examined by the Commissioner (Appeals) and upheld by the Tribunal disclosed that even the tax liability finally determined was satisfied. In these circumstances, the addition of interest for the period during the pendency of the application before the Settlement was entirely unwarranted.

ii) We do not see any reason to disturb the concurrent findings of fact. The appeals do not raise any substantial question of law and are, consequently, dismissed.”