[Section 220 Income Tax Act] Cannot Escape Payment Of Interest Merely Due To Wrong PAN Number In Order: Madras High Court

Justice N Seshasayee observed that when the penalty itself was paid, the petitioner could not escape payment of interest which was merely incidental to the penalty, by claiming that the order had wrong PAN particulars.

“The PAN particulars are, but one of the mode to identify an individual, and merely because a wrong PAN number is given, it does change the individual, more so when the petitioner had paid the penalty without demur,” the court said.

The court was hearing a plea by one G Moorthy against a notice issued by the Recovery Officer, SEBI attaching his two bank accounts and freezing its operation. The Adjudicating Officer of SEBI had initially imposed a penalty of Rs.25,52,781 on Moorthy. Though the PAN number in the order was incorrect, Moorthy ignored the same and preferred an appeal to the Securities Appellate Tribunal which was dismissed. Following this, the Recovery Officer issued notice attaching his bank accounts.

Challenging the claim of interest, Moorthy submitted that the interest claimed as per Explanation 4 of Section 28A of the SEBI Act is required to be as per Section 220 of the Income Tax Act. It was submitted that as per Section 220 of the Income Tax Act, the amount specified as payable in the notice of demand shall be paid within 30 days of service of notice at the place and to the person mentioned in the notice.

Moorthy claimed that the Recovery officer could not claim any interest since the order imposing penalty by SEBI carried a wrong PAN number and that the payment should be fastened on the person satisfying all the features that goes to identify the person conclusively.

The authorities however challenged the maintainability of the plea contending that if aggrieved by the order of the Appellate Tribunal, Moorthy ought to have approached the Supreme Court under Section 15-Z and any other orders of the Board or the Adjudicating officer had to be challenged before the SEBI Appellate Tribunal under Section 15T. it was also submitted that when Moorthy already knew that the order of penalty was passed against him when he approached the appellate tribunal, it was too late for him to now plead innocence.

The court agreed with the submission of the authorities. Noting that the order should have been challenged in the manner provided under the Act, the court dismissed the petition.

Counsel for the Petitioner: Mr.K.Senguttuvan

Counsel for the Respondents: Mr.C.Prasanna Venkatesh for R1 Mr.S.L.Rajesh for R2 Mr.K.Newlin Frederick for R3

Citation: 2023 LiveLaw (Mad) 306

Case Title: G Moorthi v The Recovery Officer

Case No: W.P.No.10710 of 2023