Law:

Section:

Section 220 of the Income-tax Act, 1961 - Collection and recovery of tax - When tax payable and when assessee deemed in default - Assessment year 1976-77 - Assessee-company was assessed to tax under Companies (Profits) Surtax Act, 1964 and a demand notice was issued for tax levied - Commissioner (Appeals) allowed assessee's appeal and consequential order was made by Assessing Officer with amount of tax as 'nil' - As a result of assessment under Income-tax Act, assessment under Companies (Profits) Surtax Act was rectified and a tax was held payable - No demand notice was served to assessee - Even though sum assessed under Surtax Act had been fully adjusted from refund which was then due to assessee, revised order stated of adjustment of interest levied under section 220 along with surtax against refund due - Whether rectification made to order in which tax payable was held to be 'nil', eight years later, could be regarded as having revived a dead notice of demand to extent of amount determined as tax payable - Held, no - Whether since amount determined by that order as tax payable was straightaway adjusted even at time of assessment against surtax refund due to assessee, no question of non-payment of any outstanding demand arose - Held, yes - Whether conditions precedent which could attract section 220(2) were absent as there was no notice of demand outstanding even as per revised order - Held, yes FACTS The assessee-company engaged in the manufacture of paper and boards was assessed under the Companies (Profits) Surtax Act, 1964. A demand notice was issued for the tax levied under the assessment. The assessee being aggrieved by the manner in which capital base had been computed in that assessment, appealed to the Commissioner (Appeals) who allowed the appeal and a consequential order was made by the Assessing Officer on 16-4-1980 in which the amount of tax payable was found to be nil. Subsequently, when the assessment under the Income-tax Act was under appeal, the Commissioner directed that benefit under section 80J was properly allowable only in the year 1975-76. Consequently, the taxable income of the assessee was revised upwards but the Assessing Officer…

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