JUDGMENT : B.N. Mahapatra, J. - The grievance of the petitioner in this writ petition is refusal by the Chief Commissioner of Income Tax, Orissa, Bhubaneswar (hereinafter referred to as 'the Chief CIT) to waive interest levied under Sections 234B and 234C of the IT Act, 1961 (hereinafter referred to as the Act'). The ground for making such grievance is that though benefit of waiver was permitted under Notification F.No. 400/234/95 IT(B), dt. 23rd May, 2006, the said benefit was not made available to the petitioner by subsequent order F. No. 400/29/2002 IT(B) dt. 26th June 2006(2006) 205 CTR (St) 81, which the Chief CIT wrongly relied on. The petitioner also challenges the legality of levy of interest u/s 220(2) of the Act. 2. The facts which give rise to the present writ petition are set out below: The petitioner, in the present case, is the 'Karta' of an HUF and was an assessee under the Act during the relevant asst. yr. 1993-94. There was a search and seizure operation u/s 132 of the Act on 12th Nov., 1992, 13th Nov., 1992 and 14th Nov., 1992 in the residence and business premises of the petitioner and other assessees of the group. Subsequent to the search, the petitioner filed its return of income for the asst. yr. 1993-94 on 29th March, 1995 showing total income of Rs. 3,62,640. without making full payment of tax due on such total income. The Department processed the return u/s 143(1)(a) on 29th Nov., 1995 and accepted the income returned by the petitioner. While processing the return, the AO computed the aggregate of tax and surcharge at Rs. 1,45,516. The aggregate of interest charged under Sections 234A, 234B and 234C was Rs. 1,54,302. The tax, surcharge and interest together came to Rs. 2,99,818. After giving credit to the tax of Rs. 81,880 paid before furnishing the return of income, the net amount of tax payable by the petitioner was determined at Rs. 2,17,938. Subsequently, scrutiny assessment u/s 143(3) was completed on 29th March, 1996 on total income of Rs. 3,77,640 for that assessment year. Against the order of assessment, appeal was preferred by the petitioner. The CIT(A) allowed the appeal, set aside the assessment order and directed for reassessment. Pursuant to said order, reassessment was completed on 25th Feb., 2002. 2,17,938. Subsequently, scrutiny assessment u/s 143(3) was completed on 29th March, 1996 on total income of Rs. 3,77,640 for that assessment year. Against the order of assessment, appeal was preferred by the petitioner. The CIT(A) allowed the appeal, set aside the assessment order and directed for reassessment. Pursuant to said order, reassessment was completed on 25th Feb., 2002. On further appeal carried by assessee petitioner, the learned Income Tax Appellate Tribunal (hereinafter called Tribunal] vide order dt. 31st March, 2004 held that the assessment order was passed beyond the time-limit prescribed u/s 153 of the Act and therefore declared such order null and void having no force in law. In the aforesaid background facts, the total income disclosed by the assessee petitioner in its return was accepted by the Department as income of the petitioner for that assessment year. On this total income, the AO computed the Income Tax due and levied interest under Sections 234A, 234B and 234C of the Act for delay in furnishing return of income, for delay in payment of advance tax and for deferment of advance tax, respectively vide appeal effect order dt. 2nd Aug., 2004. Subsequently, vide order dt. 31st March, 2006 passed u/s 154 of the Act, at the instance of the petitioner, the amount of interest charged under Sections 234A, 234B and 234C was reduced. In the said order, interest amounting to Rs. 67,950 was levied u/s 220(2) of the Act, for the first time. On 24th July, 2006, the petitioner moved a petition before the Chief CIT for waiver of interest levied under Sections 234A, 234B, 234C and 220(2). Before the learned Chief CIT, the petitioner contended that the default in furnishing the return was due to seizure and impounding of books of account and documents pertaining to relevant assessment year during search operation in the relevant previous year and post-search period by the Department on the basis of which he had to file its return of income. Due to seizure of cash of Rs. 2.20 lakhs besides valuables during search the petitioner was not left with adequate funds to make payment of advance tax due in the relevant financial year in accordance with provisions of the Act for which interest under Sections 234B and 234C was charged. Due to seizure of cash of Rs. 2.20 lakhs besides valuables during search the petitioner was not left with adequate funds to make payment of advance tax due in the relevant financial year in accordance with provisions of the Act for which interest under Sections 234B and 234C was charged. It was also contended by the learned Counsel that levy of interest under Sections 234B and 234C should be waived in terms of Notification F.No. 400/234/95 IT(B), dt. 23rd May, 2006 issued by Central Board of Direct Taxes (hereinafter referred to as 'CBDT). Interest u/s 220(2) of the Act could be waived as per Sub-section (2A) of Section 220 on the ground of genuine hardship and circumstances beyond the control of the assessee. The learned Chief CIT considered the petitioner's prayer for waiver of interest in accordance with CBDT order issued u/s 119(2)(a) of the Act, dt. 26th June, 2006 in F. No. 400/29/2002 IT(B) which was in force on the date of filing of waiver petition and not in terms of earlier Notification No. 400/234/95 IT(B), dt. 23rd May, 2006. The learned Chief CIT vide his order dt. 13th Dec, 2006 directed levy of interest u/s 234A for the period from 1st April, 1994 to 31st March, 1995 only and rejected the petitioner's prayer for waiver of interest charged under Sections 234B, 234C and 220(2). 3. Learned Counsel appearing on behalf of the petitioner strenuously argued that the petitioner was eligible for waiver of interest under Sections 234B and 234C on the basis of Notification dt. 23rd May, 2006 which was applicable to asst. yr. 1989-1990 and subsequent assessment years till the said right was taken away by a later order dt. 26th June, 2006. Only after the tax and interest amount payable by the petitioner was finally determined by the AO, the petitioner applied to the learned Chief CIT for waiver of interest under Sections 234A, 234B, 234C and Section 220(2) on 24th July, 2006. By the time he made the petition for waiver of interest on 24th July, 2006, the CBDT issued the order dt. 26th June, 2006, which took away or abrogated the right of the petitioner for waiver of interest under Sections 234B and 234C available in earlier Notification dt. 23rd May, 2006. His further case was that the learned Chief CIT in his order considered paras 2B and 2C of the later order dt. 26th June, 2006, which took away or abrogated the right of the petitioner for waiver of interest under Sections 234B and 234C available in earlier Notification dt. 23rd May, 2006. His further case was that the learned Chief CIT in his order considered paras 2B and 2C of the later order dt. 26th June, 2006 without making any reference to the earlier Notification dt. 23rd May, 2006. He emphatically argued that the order dt. 26th June, 2006 does not contain any clarification about its retrospective application but the learned Chief CIT made the order retrospectively applicable for asst. yr. 1993-94 illegally. In support of his contention he cited judgments of Hon'ble Supreme Court and different High Courts. He strongly argued that because of the Department's delay in disposing of its rectification petition, the petitioner was not able to move the petition for waiver of interest before the learned Chief CIT earlier when the Notification dt. 23rd May, 2006 was in force. He emphasized that the opposite parties cannot be allowed to take advantage of the delay caused by them. The further case of the petitioner is that during relevant period, the petitioner was a jeweller and a registered stock broker of the stock exchange. Cash of Rs. 2.20 lakhs, gold of Rs. 14.41 lakhs and shares of Rs. 10.71 lakhs were seized in November, 1992 when the share market was at peak due to the Harshad Mehta's scam. The assessee's request to release the shares promptly, or else it would loose value was not heeded to and they were released only in March, 1994, when the market had crashed and they were not even worth the paper it was printed on. Though the Department cannot pay any compensation, at least it can waive the interest levied under various provisions of the Act. It was further submitted that interest u/s 220(2) has been levied for the period from 29th Dec, 1996 [30 days after the intimation u/s 143(1)] till 5th Jan., 1998 when the entire dues were cleared up. This interest was levied for the first time in an order passed at the instance of the petitioner, u/s 154 of the Act on 31st March, 2006. Before such levy, no opportunity of being heard was afforded to the petitioner. No notice of demand as provided u/s 156 of the Act has also been served on the petitioner pursuant to such order. Before such levy, no opportunity of being heard was afforded to the petitioner. No notice of demand as provided u/s 156 of the Act has also been served on the petitioner pursuant to such order. According to him, normally, AO exercising his discretion does not levy interest under this section. In the case of the petitioner by exercising such discretion he has not levied interest u/s 220(2) of the Act in three different orders passed earlier. Those orders were order dt. 19th Dec, 1997 passed u/s 154 of the Act, reassessment order dt. 25th Feb., 2002 passed u/s 143(3)/251 and order dt. 2nd Aug., 2004 giving effect to the order of the Tribunal, explaining the reason for levy of interest u/s 220(2) of the Act. He submitted that it was due to the vindictive attitude of a tax assistant who wanted illegal gratification for the refund of Rs. 3 lakhs for three other assessment years. The assistant was delaying disposal of the claim of refund because he was not paid the illegal gratification. Complaint to this effect was made by the petitioner before the CIT. The petitioner had also complained about this to the Central Vigilance Commr., as it yielded no result,'a separate writ petition was filed before this Court. Relying on the decision of the Calcutta High Court in Birla Cotton Spg. and Wvg. Mills Ltd. Vs. Income Tax Officer and Others, learned Counsel submitted that levy of interest u/s 220(2) in an order of rectification passed u/s 154 of the Act was illegal and unjustified. The learned Counsel submitted that the interest u/s 220(2) has been levied for the period from 29th Dec, 1996 to 5th Jan., 1998, when the petitioner was suffering from chronic kidney failure and was under extensive medical supervision and his kidney was transplanted in 1999. However, he has paid all the taxes subsequently. 4. Per contra, the learned Counsel appearing on behalf of the opposite parties submitted that the CBDT is empowered u/s 119(2)(a) to issue general or special orders, in respect of any class of income or class of cases, laying down directions or instructions, as to the guidelines, principles or procedure to be followed by IT authorities in the work relating to assessment, etc., by way of relaxation of provisions, inter alia, of Sections 234A, 234B and 234C of the IT Act, 1961. The CBDT, vide order u/s 119(2)(a) of IT Act, 1961 dt. 26th June, 2006 in F. No. 400/29/2002 IT(B), directed the Chief CITs and Director Generals of IT that they might reduce or waive interest u/s 234A or 234B or 234C of IT Act, 1961, in the classes of income or classes of cases specified in the said order. Since the petitioner filed the petition for waiver of interest on 24th July, 2006, it was to be disposed of in terms of CBDT order u/s 119(2)(a) of the Act, dt. 26th June, 2006 which was in force at that time and not in terms of earlier order dt. 23rd May, 2006. According to learned Counsel, the due date for filing return for the asst. yr. 1993-94 was 31st Oct., 1993 and the assessee filed the return for said assessment year on 29th March, 1995 and by the time of filing of the return the petitioner was well aware that interest shall be charged under Sections 234A, 234B and 234C. Hence, he should have filed the petition for waiver of interest before the Chief CIT much earlier than 24th July, 2006. He further submitted that the documents seized on 14th Nov., 1992 in the hands of the petitioner do not apparently show any relevance for filing of the return for the asst yr. 1993-94. He also submitted that as per Panchnama dt. 14th Nov., 1992 there were no seizure of any valuables but as per Panchnama dt. 13th Nov., 1992 there was seizure of 2,001.710 grams of jewellery and seizure of cash of Rs. 2,20,000 and some share certificates. The assessee received back shares certificates on 25th April, 1994. The entire assets seized were retained u/s 132(5) vide order dt. 11th March, 1993. The petitioner was only to adduce evidence whatsoever to prove that because of seizure of valuables he was unable to discharge his responsibility of paying self-assessed tax before filing of the return. Concluding his arguments, learned Counsel submitted that there was no illegality or infermity in the order passed by the learned Chief CIT disposing of the petitioner's case in the light of the circular dt. 26th June, 2006. 5. On the above backdrop, the following questions fall for consideration by this Court: (i) Whether the petitioner's case is covered under Notification dt. 26th June, 2006. 5. On the above backdrop, the following questions fall for consideration by this Court: (i) Whether the petitioner's case is covered under Notification dt. 23rd May, 2006 issued by CBDT for the purpose of waiver of interest charged under Sections 234B and 234C of the Act? (ii) Whether the learned Chief CIT is justified in considering the petitioner's case in terms of a subsequent order dt. 26th June, 2006 issued u/s 119(2) of the Act which took away or abrogated the benefit available to the petitioner in earlier Notification dt. 23rd May, 2006 for waiver of interest under Sections 234B and 234C and in refusing to waive interest levied under the said sections? (iii) Whether levy of interest u/s 220(2) of the Act in an order passed u/s 154 of the Act at the instance of the assessee is legally permissible? 6. The first question which falls for consideration before this Court is whether the petitioner's case is covered under Notification dt. 23rd May, 2006 issued by CBDT for the propose of waiver of interest charged under Sections 234B and 234C of the Act. According to the petitioner, the interest charged under Sections 234B and 234C can be waived in terms of Notification F. No. 400/234/95 IT(B), dt. 23rd May, 2006 issued by CBDT. The said notification provides that in course of search and seizure operation if there was seizure of cash and the same was not allowed to be utilized for payment of advance tax and disabled the assessee from paying advance tax, the reduction or waiver of interest under Sections 234B and 234C can be considered by Chief CIT or Director General. The Chief CIT has not considered the petitioner's case for waiver of interest in terms of Notification dt. 23rd May, 2006, but considered the same under a later Notification dt. 26th June, 2006. 7. In this context, it is necessary to know what is contemplated in the Notification dt. 23rd May, 2006. The relevant portion of the said notification is quoted below: 2. The class of incomes or class of cases in which the reduction or waiver of interest u/s 234A or Section 234B or, as the case may be, Section 234C can be considered, are as follows: .... 23rd May, 2006. The relevant portion of the said notification is quoted below: 2. The class of incomes or class of cases in which the reduction or waiver of interest u/s 234A or Section 234B or, as the case may be, Section 234C can be considered, are as follows: .... (b) Where during the course of search and seizure operation u/s 132 of the IT Act, cash is seized which is not allowed to be utilized for payment of advance tax instalment or instalments as they fall due after the seizure of cash and the assessee has not paid fully or partly advance tax on the current income and the Chief CIT or the Director General is satisfied that the assessee is unable to pay the advance tax. .... 3. The Chief CIT/Director General of IT may order the waiver or reduction of interest under Sections 234A, 234B and 234C under this order with reference to the asst. yr. 1989-90 or any subsequent assessment year but shall not so reduce or waive penal interest in those cases where waiver or reduction of such interest has been rejected in the past on the merits of the case. If any petition in the past has been rejected because the Board had not issued this direction earlier, these may be reconsidered and decided in accordance with this order. A plain reading of the above Notification dt. 23rd May, 2006 shows that the petitioner's case is not covered by the said notification for the simple reason that no cash belonging to the petitioner was seized in course of search during the financial year 1992-93 which disabled the petitioner to pay advance tax. Since no cash belonging to the petitioner was seized in course of search, the question of allowing seized cash to be utilized for payment of advance tax instalment does not arise. Cash of Rs. 2.20 lakhs seized during search had been treated by the Department to be adjusted against assessee's individual tax liability vide order dt. 11th March, 1993 passed u/s 132(5) of the Act (Annex. 16). To this, the petitioner who was assessed to Income Tax under the status of "HUF has never raised any objection by way of making application to the Chief CIT or CIT as provided under Sub-section (11) of Section 132 of the Act. 11th March, 1993 passed u/s 132(5) of the Act (Annex. 16). To this, the petitioner who was assessed to Income Tax under the status of "HUF has never raised any objection by way of making application to the Chief CIT or CIT as provided under Sub-section (11) of Section 132 of the Act. At no point of time, the petitioner made application for release of the seized cash of Rs. 2.20 lakhs or to treat the said amount towards payment of advance tax, and/or assessed tax against its tax liability. It is relevant to clarify here that Epari Sadasiva Rao was assessed to Income Tax during the assessment in question separately both under 'individual' and 'HUF' status. On the other hand, vide an application dt. 4th April, 1993 (Annex. 20), the petitioner requested the CIT to release the seized gold to enable him to carry out his business smoothly and ultimately to meet the tax liability. In that petition dt. 4th Feb., 1993 he did not ask for release of seized cash. In its petition dt. 27th March, 1993, which was received by the Department on 29th March, 1993 (Annex. 21), the petitioner has accepted the action of the Department in treating the cash of Rs. 2.20 lakhs seized during the search against the tax liability of the assessee as an individual in order dt. 11th March, 1993 passed u/s 132(5) of the Act. Apart from the above, it is further noticed that even though the due date for payment of advance tax towards first instalment expired on 15th Sept., 1992, i.e., prior to the date of search operation, the assessee had not paid any advance tax. Thus, in absence of seizure of any cash belonging to 'HUF during the search operation, the petitioner's case is not covered under Notification dt. 23rd May, 2006 for the purpose of waiver of interest charged under Sections 234B and 234C of the Act. Therefore, levy of interest under Sections 234B and 234C in the present case is justified. Now the second question- that arises for consideration is whether the learned Chief CIT is justified in considering the petitioner's case in terms of later notification dt. 26th June, 2006 issued u/s 119(2) of the Act which took away or abrogated the benefit available to the petitioner in earlier Notification dt. Now the second question- that arises for consideration is whether the learned Chief CIT is justified in considering the petitioner's case in terms of later notification dt. 26th June, 2006 issued u/s 119(2) of the Act which took away or abrogated the benefit available to the petitioner in earlier Notification dt. 23rd May, 2006 for waiver of interest under Sections 234B and 234C and in refusing to waive interest levied under the said sections. In view of the answer to the first question that the petitioner's case is not covered under Notification dt. 23rd May, 2006 issued by CBDT for the purpose of waiver of interest charged under Sections 234B and 234C of the 1 Act, the second question is of academic interest and needs no answer. 8. The third question that falls for consideration is whether the levy of interest amounting to Rs. 67,950 u/s 220(2) of the Act is justified? The petitioner's grievance is that generally interest u/s 220(2) is not levied by the Department. In its case, the same is levied illegally for the first time in an order dt. 31st March, 2006 passed u/s 154 of the Act at the instance of the petitioner because of the vindictive attitude of the functionaries of the Department. He emphasized that the illegal and mala fide intention of the Department is proved from the materials on record in respect of which he made specific averments in the writ petition. 9. In the writ petition, the petitioner stated with supporting annexures the manner in which the IT Department caused delay in finally determining its tax liability and interest under Sections 234A, 234B and 234C. In para 25 of the written submissions, the learned Counsel for the petitioner has also furnished a date chart showing the sequence of events with reference to the delay and negligence caused by the AO in dealing with the matter. According to those, even though the Tribunal passed the order quashing the order of assessment u/s 143(3) on 31st March, 2004, the appeal effect order dt. 2nd Aug., 2004 was served on the petitioner on 7th Dec, 2004. The said appeal effect order was not correctly passed. Since rebate u/s 88 amounting to Rs. According to those, even though the Tribunal passed the order quashing the order of assessment u/s 143(3) on 31st March, 2004, the appeal effect order dt. 2nd Aug., 2004 was served on the petitioner on 7th Dec, 2004. The said appeal effect order was not correctly passed. Since rebate u/s 88 amounting to Rs. 4,553 was not allowed and credit was not given towards the tax paid and refund created u/s 245 for other assessment years in the said appeal effect order, it led to overcharging of interest under Sections 234A, 234B and 234C. Hence, a rectification petition u/s 154 of the Act was filed on 5th Jan., 2005 before the AO. Even though Section 154(8) of the Act provides that petition filed under the said section for rectification is to be disposed of within six months from the date of application by allowing amendment or refusing to allow, the same was not disposed of by the Department within the statutory period. In the present case, a petition u/s 154 of the Act for rectification of the mistake apparent from the appeal effect order dt. 2nd Aug., 2004 (which was served on the assessee on 7th Dec, 2004) was made to AO on 5th Jan., 2005. The AO with utter disregard to the statutory provision contained in Section 154(8) disposed of the rectification petition on 31st March, 2006 only, i.e., after expiry of more than one year and two months from the date of receipt of the application for rectification. To get the aforesaid rectification petition dt. 5th Jan., 2005 disposed of, the petitioner had to file first reminder on 13th Sept., 2005 and second reminder on 24th Nov., 2005. When this yielded no result, on 19th Nov., 2006 the petitioner filed a grievance petition and complaint before the CIT. On 16th Feb., 2006, appeal effect order for the asst. yr. 1992-93 dt. 8th Dec, 2004 was served on the petitioner stating that refund of Rs. 29,123 has been adjusted against demand of Rs. 27,506 for the asst. yr. 1993-94. This also needed rectification to the appeal effect order to give credit to the tax adjusted. On 21st Feb., 2006 another rectification petition u/s 154 was filed to rectify the appeal effect order pursuant to the appeal effect order served on the petitioner on 16th Feb., 2006 for the asst. yr. 1992-93. Since the earlier petition dt. yr. 1993-94. This also needed rectification to the appeal effect order to give credit to the tax adjusted. On 21st Feb., 2006 another rectification petition u/s 154 was filed to rectify the appeal effect order pursuant to the appeal effect order served on the petitioner on 16th Feb., 2006 for the asst. yr. 1992-93. Since the earlier petition dt. 5th Jan., 2005 u/s 154 was not disposed of by that time, the petitioner requested the AO to treat the said earlier petition dt. 5th Jan., 2005 as part of its subsequent petition dt. 21st Feb., 2006. Finally, only on 22nd June, 2006 rectification order u/s 154 dt. 31st March, 2006 was served on the assessee allowing rebate of Rs. 4,553 u/s 88 and also giving credit to the tax not credited earlier, i.e., a total credit of Rs. 3,16,074 was given in place of Rs. 2,84,688 thereby reducing the amount of interest levied earlier under Sections 234A, 234B and 234C in intimation u/s 143(1) dt. 29th Nov., 1995 and appeal effect order dt. 2nd Aug., 2004. The opposite, parties have not objected to these facts either in their counter or in written submissions. This shows how the Department passes orders carelessly raising more demand than what is due to the Department which causes unnecessary inconvenience to the assessee. Further, in order to get the mistake rectified, committed by Department, the assessee runs to the Department time and again. This amounts to nothing but harassment. Again, even though order of rectification was passed after inordinate delay in disregard of the statutory provisions, there is no explanation from the AO for committing such delay in disposing of the rectification petition in violation of the mandate of Section 154(8). This delayed practice on the part of an statutory authority is certainly undesirable and should always be deprecated. Necessary steps should be taken to minimize such scope for arbitrary use of the power. It goes without saying that this type of attitude of the Department creates great discontentment in the minds of taxpayers. This is not a healthy practice on the part of authorities acting on behalf of the Revenue in the matter of collection of tax. Necessary steps should be taken to minimize such scope for arbitrary use of the power. It goes without saying that this type of attitude of the Department creates great discontentment in the minds of taxpayers. This is not a healthy practice on the part of authorities acting on behalf of the Revenue in the matter of collection of tax. In order to gain faith of the assesses and create confidence in the minds of the taxpayers, which is very much essential for smooth administration of tax law, the IT authorities must act in a fair and legal manner. 10. The other aspect of the case is that, the AO issued intimation dt. 29th Nov., 1995 u/s 143(1) of the Act. Sub-section (1) of Section 220 envisages that any amount otherwise by way of advance tax specified or payable in notice of demand u/s 156 shall be paid within 30 days of service of the notice on the assessee. As per Sub-section (2) of Section 220, if the amount specified in any notice of demand u/s 156 is not paid within the period limited under Sub-section (1), the assessee shall be liable for interest for the period commencing from the day immediately following the end of the period mentioned in Sub-section (1) and ending with the date on which the amount is paid. In the present case, interest u/s 220(2) of the Act amounting to Rs. 67,950 is levied for the first time in the order dt. 31st March, 2006 passed u/s 154 of the Act at the instance of the petitioner. The said order dt. 31st March, 2006 has been annexed to the writ petition as Annex. 12. Surprisingly, in the said order, the AO has not assigned any reason why all of a sudden he is charging interest to the tune of Rs. 67,950 u/s 220(2) of the Act which he did not impose during last eight years. No computation has also been given to show how such amount is arrived at. In the said order, Rs. 67,950 has been mentioned against the words "add: interest u/s 220(2)". This also does not say for which period interest u/s 220(2) has been charged. 67,950 u/s 220(2) of the Act which he did not impose during last eight years. No computation has also been given to show how such amount is arrived at. In the said order, Rs. 67,950 has been mentioned against the words "add: interest u/s 220(2)". This also does not say for which period interest u/s 220(2) has been charged. Only in para 44 of the writ petition it is averred that interest u/s 220(2) has been levied for the period from 31st Dec, 1996, i.e., 30 days from the assessment order u/s 143(1) till 5th Jan., 1998 when the entire dues were cleared. Interestingly, no order imposing interest u/s 220(2) of the Act was levied after 5th Jan., 1998 till it is levied on 30th March, 2006 even though in the meantime, more than eight years had passed, to which no explanation is coming from opposite parties. On the other hand, prior to the said order dt. 31st March, 2006, several other orders were passed after issue of intimation u/s 143(1) on 29th Nov., 1995 and the AO exercising his discretion did not levy interest u/s 220(2) of the Act. Those orders are order of rectification dt. 19th Dec, 1997 passed u/s 154 of the Act (Annex. 5), reassessment order dt. 25th Feb., 2002 passed u/s 143(3)/251 of the Act (Annex. 6) and the appeal effect order dt. 2nd Aug., 2004 giving effect to the order of the Tribunal (Annex. 7). The AO should have taken immediate steps within reasonable time for levy of interest u/s 220(2) of the Act soon after 5th Jan., 1998 when the entire dues were cleared by the petitioner. He should not have levied such interest in an order passed on 31st March, 2006 u/s 154 of the Act at the instance of the petitioner. There is a gap of more than eight years between 5th Jan., 1998 and 31st March, 2006 when the AO did not bother to levy interest u/s 220(2) of the Act. Only when the petitioner filed reminders before him and a grievance petition and complaint before the CIT to get its rectification petition disposed of, the AO while disposing of the rectification petition vide order dt. 31st March, 2006 u/s 154 of the Act, levied interest amounting to Rs. 67,950 u/s 220(2) of the Act. Only when the petitioner filed reminders before him and a grievance petition and complaint before the CIT to get its rectification petition disposed of, the AO while disposing of the rectification petition vide order dt. 31st March, 2006 u/s 154 of the Act, levied interest amounting to Rs. 67,950 u/s 220(2) of the Act. This type of arbitrary and whimsical action of the AO is not permissible under the law. 11. Now another important aspect of the case is whether the AO assumes jurisdiction to levy interest u/s 220(2) of the Act in a proceeding u/s 154 of the Act, that too initiated at the instance of the assessee for its benefit. In the present case, as stated above interest u/s 220(2) of the Act has been levied for the first time on 31st March, 2006 in an order passed u/s 154 of the Act, pursuant to a petition moved by the petitioner on 5th Jan., 2005 for rectification of mistake apparent from the appeal effect order dt. 2nd Aug., 2004 (which was served on assessee on 7th Dec, 2004). Such a levy of interest u/s 220(2) is wholly illegal. In case of Birla Cotton Spinning & Weaving Mills Ltd. v. ITO and Ors. (supra) the Calcutta High Court held that a levy of interest u/s 220(2) of the Act in rectification proceeding u/s 154 of the Act is in excess of jurisdiction and is liable to be declared invalid. In order that Section 154 of the Act may be invoked there must exist a mistake apparent from the record which can be rectified. A mistake apparent on the record must be an obvious and patent mistake. In the present case, interest u/s 220(2) has not been levied by any order passed suo motu by the Department prior to 31st March, 2006. The same was levied by the AO for the first time in an order passed u/s 154 of the Act at the instance of the assessee. The order of rectification u/s 154 was passed at the instance of the petitioner, who moved a petition on 5th Jan., 2005 to rectify the appeal effect order since rebate of Rs. 4,553 u/s 88 of the Act was not allowed and credit was not given to the tax paid and refunds created u/s 245 for other assessment years for its benefit. 4,553 u/s 88 of the Act was not allowed and credit was not given to the tax paid and refunds created u/s 245 for other assessment years for its benefit. In such a proceeding, the AO cannot be permitted to impose interest u/s 220(2) of the Act which he had chosen not to impose during past eight years, i.e., from 5th Jan., 1998 when the entire dues were cleared. 12. The other aspect of the case is that interest amounting to Rs. 67,950 u/s 220(2) has been levied for the first time on 31st March, 2006 in an order passed u/s 154 of the Act (Annex. 12). However, Annex. 12 does not show that any notice of demand as provided u/s 156 of the Act has been issued in respect of the amount of interest levied for the first time u/s 220(2) of the Act on the petitioner assessee. In course of hearing the learned Counsel also submitted that pursuant to the order passed under Annex. 12, no demand notice has been served on the assessee. In the absence of service of notice of demand as provided u/s 156 of the Act for the amount of interest levied u/s 220(2), the said amount is not enforceable. Notice u/s 156 is mandatory before initiating recovery proceeding. For ready reference, Section 156 is reproduced hereinbelow: 156. Notice of demand- When any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under this Act, the AO shall serve upon the assessee a notice of demand in the prescribed form specifying the sum so payable. The Hon'ble Supreme Court in the case of Sri Mohan Wahi Vs. Commissioner, Income Tax, Varanasi and Others, held that Section 156 provides for a vital step to be taken by the AO without which the assessee cannot be termed a defaulter. The use of the term "shall" in Section 156 implies that service of the notice of demand is mandatory before initiating recovery proceedings and constitutes the foundation of subsequent recovery proceedings. This Court in the case of Income Tax Officer, Ward-E Vs. Manmohanlal and Others, held that no recovery proceeding can be initiated against an assessee unless and until a demand notice is served upon him. This Court in the case of Income Tax Officer, Ward-E Vs. Manmohanlal and Others, held that no recovery proceeding can be initiated against an assessee unless and until a demand notice is served upon him. Sub-section (6) of Section 154 of the Act also casts an obligation on the AO to serve on the assessee a notice of demand in the prescribed form specifying the sum payable where any such amendment has the effect of enhancing the assessment or reducing the refund already made and such notice of demand shall be deemed to be issued u/s 156 and the provisions of the IT Act shall apply accordingly. In the present case, even though interest to the tune of Rs. 67,950 has been levied u/s 220(2) of the Act for the first time in an order passed u/s 154 of the Act on 31st March, 2006, the said order does not indicate that the provision of Section 154(6) of the Act has been complied with. Moreover, since interest u/s 220(2) of the Act has been levied for the first time in an order passed u/s 154 affecting adversely the interest of the petitioner, principles of natural justice demand that the petitioner should have been given an opportunity of being heard, which has been violated in the present case. Such an opportunity of being heard has been contemplated in Sub-section (3) of Section 154 where an amendment has the effect, of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee. This Court in the case of Commissioner of Income Tax Vs. Gangaram Chapolia and Co., while dealing with the question of maintainability of an order passed u/s 154 of the Act on the point of limitation, inter alia, held that any order passed without following the principles of natural justice is a nullity. 13. Apart from this, the petitioner in para 44 of the writ petition has 'averred that interest u/s 220(2) has been levied from 29th Dec, 1996 [i.e., 30 days from the assessment order u/s 143(1) till 5th Jan., 1998] when the entire dues were cleared. Its averment in para 58 of the writ petition is that due to the genuine difficulties the tax demanded could not be paid in time. Para 58 of the writ petition is quoted below: 58. Its averment in para 58 of the writ petition is that due to the genuine difficulties the tax demanded could not be paid in time. Para 58 of the writ petition is quoted below: 58. That it is humbly submitted that the petitioner had to suffer from chronic renal failure from 1995 and both his kidneys were damaged, and he had to undergo kidney transplantation surgery in October, 1999, for which he had to spend huge amounts of money and his earning capacity also suffered drastically. He has still not recovered and is suffering several complications relating to his kidneys and other related problems, and has to reside at Visakhapatnam for proper medical care and attention. Abundant amounts of money are still being spent and the petitioner was in no position to pay interest on tax. He was therefore unable to pay the tax from the period of 29th Dec, 1996 [i.e., 30 days from the assessment order u/s 143(1A) till 5th Jan., 1998], which resulted in levy of the interest u/s 220(2). The copies of the medical records are enclosed herewith marked as Annex. 31. Similarly, the petitioner's assertions in para 59 of the writ petition are that the petitioner had paid all the admitted taxes amounting to Rs. 1,40,116 and had fully co-operated with the Department. The assertions made in paras 44, 58 and 59 of the writ petition have not been specifically controverted by the opposite parties in their counter-affidavit. Section 220(2A) deals with the provisions for reduction/waiver of amount of interest payable by the assessee u/s 220(2) of the Act. Section 220(2A) is reproduced below: Section 220(2A): Notwithstanding anything contained, in Sub-section (2), the Chief CIT or CIT may reduce or waive the amount of 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; (ii) default in the payment of the amount on which interest (has been paid or) was payable under the said sub-section was due to circumstances beyond the control of the assessee; and (iii) the assessee has co-operated in any inquiry relating to the assessment or any proceeding for the recovery of any amount due from him. The conditions stipulated in Section 220(2A) are more or less complied with. The conditions stipulated in Section 220(2A) are more or less complied with. For the reasons stated in paras 10 to 14, levy of interest u/s 220(2) in the present facts and circumstances of the case is not legally permissible. 14. In the result, we hold that levy of interest under Sections 234B and 234C is justified and warrants no interference. But, such levy u/s 220(2) of the Act cannot be held to be justified. The writ petition is, therefore, allowed to the extent indicated above. No costs. Final Result : Allowed