TMI Blog1993 (5) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... lications for early hearing of the petition. The petitioner said that under the Income-tax Act, 1961 (for short, "the Act"), the refund could be withheld only under the provisions of section 245 and inasmuch as there was no such order he was entitled to refund forthwith. The respondents did not dispute that the petitioner was entitled to the refund on his succeeding in appeal before the Income-tax Appellate Tribunal "the Appellate Tribunal", for short), but said that a petition under section 256(1) had been filed before the Appellate Tribunal for referring certain questions of law for the decision of the High Court. This application, they said, was filed on July 28, 1987, and was pending adjudication. They also said that the first respondent had passed orders under section 241 to withhold the refund until April 30, 1988. It is also mentioned that a criminal complaint under sections 276C and 277 of the Act had also been filed against the petitioner arising out of the same assessment year (assessment year 1986-87). In the order under section 241 filed with the reply affidavit it was stated that a refund of Rs. 18,98,440 had become due to the petitioner in the case. During the pende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) and 271(1)(a) of the Act were also imposed. All these penalties were imposed on May 1, 1991. The assessment order for the assessment year 1988-89 is dated January 29, 1990. The second respondent, on September 9, 1991, filed his counter-affidavit to the amended writ petition. The facts have not been disputed. It is now stated that a special leave petition against the order of the High Court dismissing the petition of the Revenue under section 256(2) of the Act had been filed in the Supreme Court and orders under section 241 of the Act are being validly made by the respondents withholding the refund. Adjustment of tax demands and penalties for the assessment year 1988-89 is, however, not claimed. The petitioner had remitted to India from abroad a certain amount of foreign currency equivalent to Rs. 17,16,928. For the assessment year 1986-87, the Assessing Officer held that out of this amount, a sum of Rs. 10,28,928 represented income of the petitioner from undisclosed sources. He taxed the petitioner on that. A penalty of Rs. 12,28,856 was also levied on February 24, 1986, under section 271(1)(c) of the Act. The petitioner appealed to the Commissioner of Income-tax (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time as the Chief Commissioner or Commissioner may determine." After. April 1, 1989, section 241 as substituted is as under : "241. Where refund of any amount becomes due to the assessee as a result of an order under this Act or under the provisions of subsection (1) of section 143 after a return has been made under section 139 or in response to a notice under sub-section (1) of section 142 and the Assessing Officer is of the opinion, having regard to the fact that- (i) a notice has been issued, or is likely to be issued, under subsection (2) of section 143 in respect of the said return ; or (ii) the order is the subject-matter of an appeal or further proceeding ; or (iii) any other proceeding under this Act is pending, that the grant of the refund is likely to adversely affect the Revenue, the Assessing Officer may, with the previous approval of the Chief Commissioner or Commissioner, withhold the refund till such time as the Chief Commissioner or Commissioner may determine. " Admittedly, after the success of the petitioner before the Appellate Tribunal whose order was made on May 14, 1987, he became entitled to the refund of the amounts which had been withdrawn by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel for the petitioner herein has notice of the case being mentioned so that he can also request the Supreme Court for expeditious hearing of the special leave petition. This is without prejudice to the petitioner's contention that pendency of the special leave petition is no ground for withholding of the refund." Nothing was done by the respondents in pursuance of this order. Then on December 2, 1991, this court again noticed that the question which arose in the petition was with regard to the refund of the tax which had been realised by the respondents in respect of the assessment year 1986-87 and money realised from the Non-Resident Indian account of the petitioner. It noticed that the Department had filed a special leave petition which had been pending since last two years and had not come up for preliminary hearing and in the meantime the order under section 241 had been passed. The court also noticed that it was evident that if the special leave petition was dismissed, the petitioner would be entitled to refund and the pendency of the petition and continuance of the order under section 241 was causing grave prejudice to the petitioner. A direction was issued to the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue because the assessee (petitioner) was a non-resident and if once refund was issued then the Department might not be able to recover the demand if it became due on account of the decision on the special leave petition before the Supreme Court. The first respondent, therefore, requested that necessary steps be taken to have the special leave petition fixed for an early date. A copy of the order of this court dated December 2, 1991, was also sent by the first respondent to the Chief Commissioner of Income-tax with an advance copy, of the letter to the Central Board of Direct Taxes. This is all about the special leave petition on the basis of which orders under section 241 of the Act had been issued one after the other. No further proceedings after the decisions in the appeals are pending under the Act. This court has not granted any certificate under section 261 of the Act that it is a fit case for appeal to the Supreme Court. After dismissal of the application under section 256(2) of the Act filed by the Revenue the matter ended at that. No other proceedings under the Act are also pending. The Revenue is interpreting the sentence "the order is the subject-matter of an appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n order under section 241 of the Act could be made withholding the amount refundable to the assessee on the ground that the appeal preferred by the Revenue against the judgment of the High Court was pending before the Supreme Court. From this judgment, it is not clear to us if the appeal in the Supreme Court was pending under section 261 of the Act. If this authority is for the proposition that where a special leave petition is filed in the Supreme Court under article 136 of the Constitution an order under section 241 of the Act can be made, we are in respectful disagreement with the same. When this matter was being adjourned from time to time on the request of the Revenue for giving us the particulars of the special leave petition and the stage in which it was, we have been giving our mind that perhaps section 241 was not applicable. When the arguments were finally heard on May 13, 1993, Counsel for the Revenue thrust into the hands of the petitioner a letter dated May 5, 1993, addressed to him by the Assessing Officer as if the Revenue had now come up with some trump card. This letter purportedly contains an order under section 245 of the Act and is as under: To Shri Vijay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of section 245 were complied with. For the purpose of any set off an intimation has to be given in writing to the assessee of the action proposed to be taken under this section. Earlier to this order it has never been the case of the Revenue to claim any set off. This order purporting to be under section 245 of the Act is neither fair, nor just, nor reasonable and has to be ignored. This order also shows scant respect by the authorities for the pendency of these proceedings in this court and this does not commend itself to us, to say the least. We have not been told by the Revenue any reason as to why assessments for years subsequent to the assessment year 1988-89 were not taken though interest was accruing all this period on the refund due to the petitioner. We are of the view that the assessment order for the assessment year 1988-89 and the penalties imposed on the petitioner have no meaning particularly when we are of the view that withholding of the refund by the respondents was illegal and all orders passed under section 241 of the Act, after dismissal of the application under section 256(2) of the Act by this court, were without jurisdiction and illegal. Rather ..... X X X X Extracts X X X X X X X X Extracts X X X X
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