Holding

The Court held that the Income Tax Settlement Commission may waive or reduce interest under Section 220(2A) when conditions are met, that assessment orders issued before the Commission decides to proceed with a settlement application continue to operate and are not automatically set aside, and that interest under different statutory provisions constitutes separate levies, not a prohibited double levy.

Summary

The Revenue appealed against an order of the Income Tax Settlement Commission concerning Daman! Brothers' settlement application. The Supreme Court examined whether the Commission could waive or reduce interest under Section 220(2) while exercising powers under Section 245(4), whether assessment orders issued before the Commission decides to proceed with a settlement application remain in force, and whether the Commission’s determination automatically sets aside lower‑authority orders. The Court held that the Commission may waive or reduce interest under Section 220(2A) when statutory conditions are satisfied, that pre‑petition assessment orders continue to operate and are not automatically nullified, and that interest levied under different provisions constitutes separate charges, not a prohibited double levy. It also clarified that the Commission must consider both disclosed and undisclosed income but cannot act on disclosed income before deciding to proceed with the petition. Consequently, the appeal was allowed.

Issues considered

Whether the Settlement Commission is empowered to waive or reduce interest under Section 234A read with Section 220(2) while exercising its jurisdiction under Section 245(4).
Whether an assessment order passed by the Assessing Officer prior to the admission of a settlement application under Section 245C subsists and recovery proceedings continue.
Whether, after the Settlement Commission determines liability, the orders of lower authorities automatically stand set aside.

Legislation cited

Income Tax Act, 1961s. 153(3), s. 154, s. 155, s. 156, s. 220(2), s. 220(2A), s. 234A, s. 234B, s. 234C, s. 2450, s. 245C, s. 245D, s. 250, s. 254, s. 260, s. 262, s. 263, s. 264
Taxation Laws (Amendment) Act, 1975

Subjects

Income Tax SettlementWaiver of interestDouble levy of interestAssessment orderUndisclosed incomeSettlement Commission powersChapter XIX-ATax assessmentSection 220(2)Section 234ASection 245C

Judgment

A COMMISSIONER OF INCOME TAX, MUMBAI
v.
M/S. DAMAN! BROTHERS

DECEMBER 17, 2002

B [M.B. SHAH, ARIJIT PASAYA T AND D.M. DHARMADHIKARI, JJ.)

Income Tax Act, 1961:

Chapter XIX-A introduced by Taxation Laws (Amendment) Act, 1975;
C Sections 220(2), 234 A, B, C, 245(c) and ~45 D:

Petition for Settlement filed by assessee-Assessment order by Income
Tax authority during pendency of petition-Validity of-Held, as per
provisions of law, income-tax authorities could proceed in the matter till
Commission decides to proceed with the petition.
D
Chapter XIX-A-Settlement Commission's power ofsettlement-Exercise
of-Commission could exercise its power ofsettlement only after allowing the
petition to be proceeded with-It must take notice of both the disclosed and
undisclosed income to determine total income for the same assessment year.

E Waiver/Reduction of interest-Power ofCommission-Held, Commission
in appropriate cases, on fulfilment of stipulated conditions by the assessee ·
aslper provisions of the Act, could direct waiver or reduction of interest.

Levy of interest for non-payment of advance Tax and for delay in
payment of interest-Held, Double levy of interest is not permissible for same
F set of infractions-However, levying of interest in terms of Section 234A, B
and C and 245(D) amounted to levy of interest for distinct infractions-
Hence separate 1evy of interest and does not amount to double levy.

Revenue filed the present appeal against the order of Settlement
Co_mmission. The appeal was earlier placed before a two-Judge Bench and it
G was considered appropriate to place it before three-Judge Bench. The basic
issue which arose in the appeal is whether the Settlement Commission could
get itself substituted to income-tax authorities under the Income Tax Act, and
if so, the purpose and extent of such substitution.

It was contended for the Revenue that the power of waiver of interest is
H
424
C.l.T. v. DAMAN! BROTHERS 425
not conferred on the Commission for the interest charged under Section A
220(2) of the Income Tax Act.

On behalf of the assessee, it was submitted that on receipt of a petition
for settlement, the Commission gets jurisdiction to deal with the matter and
it assumes powers of income-tax authorities till admission of the petition; that
after admission of such petitions it functions as a Settlement Commission B
exercising additional powers un~er the· provisions of the Income Tax Act; and
that there could not be double levy of interest.

Allowing the appeal, the Court

HELD: 1.1. Settlement Commi~sion exercises power in respect of income C
which was not disclosed before the authorities in any proceeding, but are
disclosed in the petition under Section 245C of the Income Tax Act. It is not
that any amount of undisclosed income can be brought to the notice of the
Commission in the said petition. Commission exercises jurisdiction if the
additional amount of tax on such undisclosed income is more than a particular D
figure. The assessee must have in addition furnished the return of income
which he is or was required to furnish under any of the provisions of the Act.
(434-F,GI

1.2. A new Chapter XIX-A was introduced by the Taxation Laws
(Amendment) Act, 1975. The Commission is constituted by the Central E
Government for the settlement of cases under Chapter XIX-A. Scheme of
Chapter XIX-A shows that the filing of application by the assessee is a
unilateral act, and the department may not be aware of the same. If an
application for settlement is filed under Section 245C, it is not automatically
admitted. Section 245D deals with procedure on receipt of an application under
Section 245C. Under sub-section (I) thereof, the Commission after following F
the prescribed procedure can allow the application to be proceeded with or
rejected. Only after the Commission allows the petition to be proceeded with,
it exercises the power of settlement. (434-H; 435-A, C, DJ

1.3. Before the CommiSsion decides to proceed with the petition, it cannot G
complete assessment in respect of a return which is pending before the
assessing officer or even cannot act as an appellate or revisional authority.
The return filed is in respect of disclosed income. Similar is the position vis-
a-vis the appellate and the revisional authority. The petition before the
,. Commission is in respect of undisclosed income, therefore, the situation is
different till the Commission decides to proceed with the matter. The income- H
426 SUPREME COURT REPORTS [2002) SUPP. S S.C.R.

A tax authorities are free to proceed in the prescribed manner till the
Commission decides to proceed with the petition. (435-E-Gl

Commissioner of Income Tax v. Express Newspapers Ltd., (1994) 206
ITR 443, referred to.

B 1.4. Commission has to take note of both the disclosed income and the
undisclosed income to determine total income. This is logical because there
cannot be two different total incomes for the same assessment year i.e.
disclosed total income and undisclosed total income. Aggregation of both the
disclosed and undisclosed income is also necessary because in several years
C different rates of tax for various slabs of income are provided. But that does
not empower the Commission to deal with the disclosed income before
deciding to proceed with the petition. (435-H; 436-A-C)

1.5. Wherever the Act provides for waiver of interest, the Commission
can, in appropriate cases, direct waiver or reduction of the interest. It has to
D be noted that waiver or reduction of interest under Section 220(2A) and other
provisions is hedged with certain conditions. If these conditions are satisfied,
the Commission has the power to direct waiver or reduction. The Commission
has to examine whether the assessee has made out a case for waiver or
reduction. (436-El

E Commissioner ofIncome Tax v. Anjum MH. Ghaswala and Ors., (2001 I
252 ITR 1, followed.

1.6. Double levy of interest is not permissible. But this principle is
applicable only when the interest is chargeable more than once for same set
of infractions. If the provisions under which interests are charged operate in
F different fields, there is no statutory bar on levying the interest, because in
essence it does not amount to double levy of interest but levy of interest
separately for different infractions. Section 234B, Section 245D(2C) and
Section 245D(6A) operate in different field&. When interest is charged in
respect of the said provisions it does not amount to double levy of interest, as
G the infractions are different. The interests charged in terms of Sections 234A,
Band C become payable on the income already disclosed in the returns filed,
together ,with the income disclosed before the Commission. The concerned
, interest shall be charged on the consolidated amount of income, i.e., both
disclosed and undisclosed. Such interests shall be charged till the
Commission acts in terms of Section 245D. Thereafter, the prescription
H relating to charging of interest etc. becomes operative, after the Commission
C.l.T. v. DAMAN! BROTHERS 427
allows the application for settlement to be proceeded with. In such event, there A
is no further charge of interest in terms of Sections 234A, B and C. The
interest charged in terms of Section 2450 is a separate levy and not in terms
of interest chargeable under Sections 234A, Band C. (436-F-H; 437-B-D)

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 7428 of 1999.
B
From the Judgment and Order .dated 15.4.1999 of the Income Tax
Settlement Commission, Addi. Bench Mumbai in Settlement Appeal No. 51
IV/053/92-93/TT.

Soli J. Sorabjee, Attorney General, S. Ganesh, Ranbir Chandra, Ms.
A Subhashini, K.C. Kaushik, Rajiv Tyagi, Ms. Vibha Dutta Makhija, Sanjiv C
Sen, Rajiv Nanda, Ms. Meera Gupta, B.V. Bairam Dass and Sushma Suri,
for the Department.

P. Chidambaram, Bhaskar V. Desai, Ms. Sobha Jagtiani, Ms. Vanta
Mehta, Vijay Kakwani, Vishwajit Singh (N.P.), Arun Sathe and Bhaskar Y. D
Kulkarni, for Assessee.

The Judgment of the Court was delivered by

ARIJIT PASAYAT,J. The basic issue involved in this appeal is whether
the Settlement Commission (hereinafter referred to as 'the Commission') gets
a complete role in total substitution of other authorities under the Income Tax E
Act, 1961 (in short 'the Acf) and if so, for what purpose and to what extent.
When this appeal was placed before a Bench of two learned Judges, it was
considered appropriate to list the appeal before a larger bench than merely
bench of two Judges.
F
That is how the matter was placed before us.

Factual backdrop in nutshell is as follows:

Respondent-Damani Brothers (hereinafter referred to as the 'assessee')
filed an application for settlement before the Mumbai Bench of the Commission. G
Chairman of the Commission exercising power under Section 245 (BA)(5A) of
the Act constituted a Special Bench vide order dated 18.9.1998 for adjudicating
following three issues.

"I. Was the Special Bench of the Settlement Commission right in
holding in the case of Om Metals and Mineral Pvt. Ltd., (193 !TR 57 H
428 SUPREME COURT REPORTS (2002] SUPP. 5 S.C.R.

A ITSC) that the assessment order passed by the assessing officer
before the admission of the settlement application subsisted and
recovery proceedings continued, even after the admission of the said
application, especially after the judgment of the Supreme Court in the
case of CIT v. Express Newspaper Ltd., (206 !TR 443)?

B 2. If the answer to question No. I is in the affirmative would it be
correct to say that once the Settlement Commission determines a
liability of the applicant for tax, penalty and interest under section
2450(4), the orders of the lower authorities would automatically stand
set aside and consequently there will be no liability under section
220(2) of the Act?
c
3. If the answer to question No. I is in the affirmative, or not the
question No.2 in the negative, has the Settlement Commission powers
to waive interest u/s 220(2) of the Act?"

The Special Bench by majority view in its judgment dated I5.4.1999
D came to hold that the orders of the lower authorities are not automatically set
aside by the Commission's order under Section 2450(4); but are modified to
give effect to such order. By the theory of merger, the liability of interest
under Section 220(2) if any, will be up to the date of the order under Section
2450(1 ). Thereafter, there will be no liability for interest under Section 220(2);
E the Commission has power to waive or reduce interest under Section 220(2)
of the Act. The Vice Chairman did not agree with a reply to question No.3
and held that recovery proceedings based on the order of the assessments
passed before the date of filing an application under Section 245C can be
continued even after the admission of the application and where the assessment
order is passed after the date of filing an application under Section 245C, the
F question of liability of interest under Section 220(2) does not arise.

Civil Appeal has been filed raising the following questions:

"I Whether the Settlement Commission is empowered to waive or
reduce the interest u/s. 234-A read with Section 220 [2] of the Income
G Tax Act while exercising its jurisdiction under Section 245-0[4] of the
said Act?

II. Whether the Assessment Order passed by the Assessing Officer
prior to the admission of Settlement Application under Section 245-
C of the Act, will subsist and the recovery proceedings will continue
H or not? On this issue, the petitioner is relying on the decision, reported
C.l.T. v. DAMAN! BROTHERS [ARIJIT PASAYAT, J.] 429
in 206 ITR 443 [S.C.]; C/Tv. Expr'ess Newspaper Ltd A
Ill. Whether after· determination of liability by the Settlement
Commission, the orders of the lower authorities under the Act would
automatically stand set aside?"

Stand of the revenue as highlighted is that the Commission's approach B
is not correct and is not sustainable. Reference is made to the Constitution
Bench decision of this Court in Commissioner of Income Tax v. Anjum M. H.
Ghaswala and Ors., [2001] 252 ITRI. Reference was made to various provisions
of Chapter XIX-A in this regard. It is further submitted that there is no power
of waiver conferred on the Commission to waive the interest charged under
Section 220(2) of the Act. C
In response, learned counsel for the assessee submitted that an artificial
distinction is sought to be made between the date of filing of petition under
Section 245C and the date of decision to proceed with the petition under
Section 2450. With reference to definition of the expression "case" as appearing D
under Section 245A, it is submitted that the proceedings may be pending
before the concerned authority i.e. the Assessing Authority, the Appellate
Authority or the Revisional Authority; and Explanation (l)(v) to Section
153(3) makes it clear that extension is granted for completing the pending
proceedings in case the petition under Section 245C is rejected. Therefore,
Commission gets jurisdiction to deal with the matter, as soon as an application E
is made under Section 245C. Commission till admission of the petition exercises
powers of .the income-tax authorities and after admission it functions as a
Settlement Commission in addition to powers exercisable by the income-tax
authorities. With reference to Anjum 's case (supra) it was submitted that
specific power of waiver is given to the concerned authority and, therefore,
interest charged can be waived. There cannot be double levy of interest and F
when interest is charged under Section 245D(2C)/6A interest under Section
2348 cannot be charged.

In order to appreciate the rival submissions, it is necessary to take note
of few provisions so far as relevant:
G
"Section 153(3): The provisions of sub-sections (I) and (2) shall not
apply to the following classes of assessments, reassessments, and
recomputations which may, subject to the provisions of sub-section
(2A ), be completed at any time
(i) xxx xxx xxx H
430 SUPREME COURT REPORTS [2002) SUPP. 5 S.C.R.

A [Explanation I. In computing the period off imitation for the purposes
of this section

xxx xxx xxx

(v) in a case where an application made before the Income-tax
B Settlement Commission under section 245C is rejected by it
or is not allowed to be proceeded with by it, the period
commencing from the date on which such application is
made and ending with the date on which the order under
sub-section (I) of section 2450 is received by the
Commissioner under sub-section (2) of that section,
c shall be excluded :

xxx xxx xxx

Section 220(2) If the amount specified in any notice of demand under
section 156 is not paid within the period limited under sub-section (I),
D 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-section (I) and ending with the day on which the
amount is paid:
E Provided that, where as a result of an order under section 154, or
section 155, or section 250, or section 254, or section 260, or section
262, or section 264 or an order of the Settlement Commission under
sub-section (4) of section 2450, the amount on which interest was
payable under this section had been reduced, the interest shall be
F reduced accordingly and the excess interest paid, if any, shall be
refunded.

xxx xxx xxx
(2A) Notwithstanding anything contained in sub-section (2), the Chief
Commissioner or Commissioner may reduce or waive the amount of
G interest paid or payable by an assessee under the said sub-section if
he is satisfied that
(i) payment of such amount has caused or would cause genuine
hardship to the assessee;
H (ii) default in the payment of the amount on which interest has
C.l.T. v. DAMAN! BROTHERS (ARIJIT PASAY AT, J.] 431

been paid or was payable under the said sub-section was A
due to circumstances beyond the control of the assessee;
and

(iiO the assessee has co-operated in any inquiry relating to the
assessment or any proceeding for the recovery of any amount
due from him. B
Interest for defaults in payment of advance tax.

234B. (1) Subject to the other provisions of this section, where, in any
financial year, an assessee who is liable to pay advance tax under
section 208 has failed to pay such tax or, where the advance tax paid C
by such assessee under the provisions of section 210 is less than
ninety per cent of the assessed tax, the assessee shall be liable to pay
simple interest at the rate of one and one-half per cent for every
month or part of a month comprised in the period from the !st day
of April next following such financial year to the date of determination
of total income under sub-section ( 1) of section 143 and where a D
regular assessment is made, to the date of such regular assessment,
on an amount equal to the assessed tax or, as the case may be, on
the amount by which the advance tax paid as aforesaid falls short of
the assessed tax.

Explanation I- In this section, "assessed tax" means, -
E

(a) for the purposes of computing the interest payable under section
l 40A, the tax on the total inco11Je as declared in the return
referred to in that section;
(b) in any other case, the tax on the total income determined under F
sub-section (1) of section 143 or on regular assessment,
as reduced by the amount of tax deducted or collected at source in
accordance with the provisions of Chapter XVII on any income which
is subject to such deduction or collection and which is taken into
account in computing such total income. G
Explanation 2. Where, in relation to an assessment year, an
assessment is made for the first time under section 147, the assessment
so made shall be regarded as a regular assessment for the purposes
of this section.
H
432 SUPREME COURT REPORTS [2002] SUPP. 5 S.C.R.

A Explanation 3. In Explanation I and in sub-section (3) "tax on the
total income detennined under sub-section (I) of section 143" shall
not include the additional income-tax, if any, payable under section
143.

xxx xxx xxx
B
(4) Where, as~ result of an order under section 154 or section 155 or
section 250 or section 254 or section 260 or section 262 or section 263
or section 264 or an order of the Settlement Commission under sub-
section (4) of section 2450, the amount on which interest was payable
under sub-section (I) or sub-section (3) has been increased or reduced,
C as the case may be, the interest shall be increased or reduced
accordingly, and

(i) in a case where the interest is increased, the Assessing
Officer shall serve on the assessee a notice of demand in the
prescribed form specifying the sum payable, and such notice
D of demand shall be deemed to be a notice under section 156
and the provisions of this Act shall apply accordingly;
(ii) in a case where the interest is reduced, the excess interest
paid, if any, shall be refunded.

E (5) The provisions of this section shall apply in respect of assessments
for the assessment year commencing on the Ist day of April, 1989 and
subsequent assessment years.

"2450. Procedure on receipt of an application under section 245C.

F (I) On receipt of an applicaiion under section 245C, the Settlement
Commission shall call for a report from the Commissioner and on the
basis of the materials contained in such report and having regard to
the nature and circumstances of the case or the complexity of the
investigation involved therein, the Settlement Commission may, by
order, allow the application to be proceeded with or reject the
G application :

Provided that an application shall not be rejected under this sub-
section unless an opportunity has been given to the applicant of
being heard:
H Provided further that the Commissioner shall furnish the report within
C.l.T. v. DAMANrBROTHERS [ARIJIT PASA YAT, J.] 433
a period of forty-five days of the receipt of communication from the A
Settlement Commission in case of all applications made under section
245C on or after the !st day of July, 1995 and ifthe Commissioner fails
to furnish the report within the said period, the Settlement Commission
may make the order without such report.

(IA) Omitted B
(2C) Where the additional amount of income-tax is _not paid within the
time specified under sub-section (2A), then, whether or not the
Settlement Commission has extended the time for payment of the
., amount which remains unpaid or has allowed payment thereof by
I
instalments. under sub-section (28), the assessee shall be liable to pay C
J simple interest at fifteen per cent per annum on the amount remaining
unpaid from the date of expiry of the period ofthirty~five days referred
to in sub-section (2A).

(4) After examination of the records and the report of the Commissioner,
received under sub-section (I), and the report, if any, of the D
Coml!Jissioner received under sub-section (3), and after giving an
opportunity to the applicant and to the Commissioner to be heard,
either in person or through a representative duly authorized in this
behalf, and after examining such further evidence as may be placed
before it or obtained by it, the Settlement Commission may, in E
accordance with the provisions of this Act, pass such order as it
thinks fit on the matters covered by the application and any other
matter relating to the case not covered by the application, but referred
to in the report of the Co.mmissioner under sub-section (I) or sub-
section (3 ).
F
(6) Every order passed under sub-section (4) shall provide for the
terms of settlement including any demand by way of tax, penalty or
interest, the manner in which any sum due under the settlement shall
be paid and all other matters to make the settlement effective and shall
also provide that the settlement shall be void if it is subsequently
found by the Settlement Commission that it has been obtained by G
fraud or misrepresentation of facts.

(6A) Where any tax payable in pursuance of an order under sub-
section (4) is not paid by the assessee within thirty-five days of the
receipt of a copy of the order by him, then, whether or not the
Settlement Commission has extended the time for payment of such tax H
434 SUPREME COURT REPORTS [2002) SUPP. 5 S.C.R.

A or has allowed payment thereof by instalments, the assessee shall be
liable to pay simple interest at fifteen per cent per annum on the
amount remaining unpaid from the date of expiry of the period of
thirty-five days aforesaid."

The conclusions in Anjum 's case (supra) can be summed up as follows.
B
(1) Commission in exercise of its power under Section 2450(4) and (6),
does not have the power to reduce or waive interest statutorily payable
under Sections 234A, 234B and 234C, except to the extent of granting
relief under the Circulars by Notification dated 23rd May, 1996 issued •
by the Board under Section 119 of the Act. While exercising the power
c derived under the Circulars of the Board, the Commission does not act
as a subordinate to the Board but will be enforcing the relaxed •
provisions of the circulars for the benefit of the assessee in the
process of settlement.

(2) Interest due under the mandatory provisions like Sections 234A,
D 234B and 234C has to be included in the settlement.
(3) Wherever the Act contemplated power to waive or reduction of
interest to be exercised by any particular authority in any particular
situation it has done so like in Sections 139(8), 215(4), 216 and Section
220(2A).
E
(4) Prior to Finance Act, 1987, the corresponding sections pertaining
to imposition of interest used the expression 'may' but the change
brought about in the Finance Act, 1987 is a clear indication that the
intention of the legislature was to· make the collection of statutory
interest mandatory. The expression 'shall' is used deliberately.
F
It has to be noted that the Commission exercises power in respect of
income which was not disclosed before the authorities in any proceeding, but
are disclosed in the petition under Section 245C. It ·is not that any amount
of undisclosed income can be brought to the notice of the Commission in the
G said petition. Commission exercises jurisdiction if the additional amount of tax
on such undisclosed income is more than a particular figure (which at different
points of time exceeded rupees fifty thousand or rupees one hundred thousand,
as the case may be). The assessee must have in addition furnished the return
of income which he is or was required to furnish under any of the provisions
of the Act. In essence the requirement is that there must be an income
H disclosed in a return furnished and undisclosed income disclosed to the
C.I.T. v. DAMANI BROTHERS [ARIJIT PASA YAT, J.] 435
Commission by a petition under. Section 245C. A new Chapter XIX-A was A
introduced by the Taxation Laws (Amendment) Act, 1975 (in short the
'Amendment Act') w.e.f. 1.4.1976. The Commission is constituted by the
Ceritral Government for the settlement of cases under Chapier XIX-A. The
expression "case" as appearing in Section 245A(b) refers to any proceeding
under the Act for the assessment or re-assessment of income of any person B
in respect of any year or years or by way of appeal or revision in connection
with such assessment or re-assessment which may be pending before any
income-tax authority on the date on which an the application under sub-
section (I) of Section 245C is made. It further provides that where any appeal
or application for revision has been preferred after the expiry of the specified
period and which has not been admitted then the same shall not be deemed C
to be a proceeding pending within the meaning of clause (b) of Section 245A.
Scheme of Chapter XIX-A shows that the filing of application by the assessee
is a unilateral act, and the department may not be aware of the same. It has
to be noted that· if an application for settlement is filed under Section 245C,
it is not automatically admitted. Section 2450 deals with procedure on receipt
of an applicatibn under Section 245C. Under sub-section (I) thereof, the D
Commission after following the prescribed procedure can allow the application
to be proceeded with or rejected. Only after the Commission allows the
petition to be proceeded with, it exercises the power of settlement.

Stand of the assessee is that before the Commission decides to proceed E
with the matter, it exercises the functions of the income-tax authority and after
deciding to proceed with the petition exercises dual function as the Commission
and the income-tax authority. The plea is untenable for more reasons than
one. Before the Commission decides to proceed with the petition, it cannot
complete assessment in respect of a return which is pending before the
assessing officer or even cannot act as an appellate or revisional authority. F
The return filed is in respect of disclosed income. Similar is the position vis-
a-vis the appellate. and the revisional authority. The petition before the
Commission is in respect of undisclosed income, therefore, the situation is
different till the Commission decides to proceed with the matter. That being
the position, the income-tax authorities are free to proceed in the prescribed G
manner till the Commission decides to proceed with the petition. Emphasis
was laid by the assessee on certain observations made by this Court in
Commissioner of Income Tax v. Express Newspapers Ltd., (1994) 206 ITR 443.
Observations to the effect that the proceedings before the Commission are
not confined to the income disclosed before it, does not mean that even
before the Commission decides to proceed with the case, it can deal with H
436 SUPREME COURT REPORTS [2002] SUPP. 5 S.C.R.

A disclosed income. While detennining the total income, the Commission has to
take note of both the disclosed income and the undisclosed income. This is
logical because there cannot be two different total incomes for the same
assessment year i.e. disclosed total income and undisclosed total income.
Aggregation of both the disclosed and undisclosed income is also necessary
because in several years different rates of tax for various slabs of income are
B provided. By way of an illustration, it may be said that supposing the disclosed
income is rupees two lakhs and the undisclosed income is five lakhs, the rate
of tax levied on rupees two lakhs may be one but may be different for an
income of rupees seven lakhs. For the purpose of computation of taxes, there
is a requirement to club both the disclosed and undisclosed income. But that
C does not empower the Commission to deal with the disclosed income before
deciding to proceed with the petition.

In view of the position indicated above, relating to the first question
considered by the Commission, the second question does not re~lly survive.
The position is indisputable that the liability exists and does not get
D automatically set aside.

Coming to the third question, the answer is provided in Anjum 's case
(supra). Wherever the Act provides for waiver of interest, the Commission
can in appropriate cases direct waiver or reduction of the interest. It has to
be noted that waiver or reduction of interest under Section 220(2A) and other
E provisions is hedged with certain conditions. If these conditions are satisfied,
the Commission has the power to direct waiver or reduction. In view of this
answer, the Commission has to examine whether the assessee has made out
a case for waiver or reduction.

F At this juncture, assessee's plea that there is no scope for double levy
of interest; (i) for non payment of advance tax for which interest is chargea_ble
under Section 234B of the Act and (ii) for delay in payment of the amount
of interest, if any, payable in terms of Section 245D(2C) or Section 246D(6A)
needs to be considered. There can be no dispute that double levy of interest
is not pennissible. But this principle is applicable only when the interest is
G chargeable more than once for same set of infractions. If the provisions under
which interests are charged operate in different fields, there is no statutory
bar on levying the interest, because in essence it does not amount to double
levy of interest but levy of interest separately for different infractions. Section
234B, Section 245D(2C) and Section 245D(6A) operate in different fields.
H Section 234B comes into operation when there is default in payment of
C.l.T. v. DAMAN! BROTHERS [ARIJIT PASA YAT, J.] 437
advance tax. Liability to pay interest under Section 2450(2C) arises when A
additional amount of income-tax is not paid within time specified under sub-
'
section (2A). Section 245D(6A) fastens liability to pay interest when tax
payable in pursuance of an order under sub-section (4) is not paid within the
specified time. Therefore, when interest is charged in respect of the said
provisions it does not amount to double levy of interest, as the infractions B
are different.

To put it differently, the interests charged in terms of Sections 234A,
B and C betome payable on the income already disclosed in the returns filed,
together with the income disclosed before the Commission. The concerned
interest as aforesaid shall be on the consolidated amount of income, i.e. both C
disclosed and undisclosed. As indicated above, such interests shall be charged
till the Commission acts in terms of Section 2450. Thereafter, the prescription
relating to charging of interests etc. becomes operative, after the Commission
allows the application for settlement to be proceeded with. Jn such event,
there is no further charge of interest in terms of Sections 234A, B and C. The
interest charged in terms of Section 2450 is a separate levy and not in terms D
of interest chargeable under Sections 234A, B and C. Therefore, the
'apprehension that there is scope for charging of interest on interest is without
any basis.

The appeal is allowed to the extent indicated above.
E
S.K.S. Appeal allowed.