TMI Blog1990 (7) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... . The appeals for the first two years were disposed of by the appellate order, exhibit P-4, dated September 15, 1972, and that of the year 1970-71 by the order, exhibit P-5, dated October 24, 1973. It is sufficient to notice at this juncture that, under the above orders, the assessments had been cancelled. A reassessment was directed. In due course, that exercise was undertaken and completed by the assessing authority. Exhibits P-6 to P-8 evidence the resultant assessment orders for the three years 1968-69 to 1970-71. The proceedings resulted in a refund of Rs. 7,004, Rs. 12,222 and Rs. 75,547, respectively, for the three years in question. There was a consequential direction for refund of the interest and penalty already levied. The assessee claimed interest for the entirety of the period subsequent to the disposal of the appeals by the Appellate Assistant Commissioner. The order of the Income-tax Officer, exhibit P-9, dated November 30, 1977, declined that request. The revisional jurisdiction of the Income-tax Commissioner was invoked by the petitions, exhibits P-10 to P-12. The revisions were ultimately disposed of by the Commissioner under exhibit P-15 order dated January 27, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can law equiparate (sic) damages and interest." The English Court declared the law in a case in which the President of India was a party. The reason for interest payment was explained thus: "....when money is owing from one party to another and that other is driven to have recourse to legal proceedings in order to recover the amount due to him, the party who is wrongfully withholding the money from the other ought not in justice to benefit by having that money in his possession and enjoying the use of it, when the money ought to be in the possession of the other party who is entitled to its use." (See observations of Lord Brandon of Oakbrook in President of India v. La Pintada Compania Navigacion S. A. [1984] 3 WLR 10 (HL). These general principles underlying the right to claim in one case, and liability to pay in the other, interest could be useful in giving a proper perspective of the problem even beyond the confines of the statutory framework. At times when the society was somewhat static, and when inflationary spiral was a rare phenomenon, interest may not have been of much significance. It is not so in modern times. This has heightened the obligation of party who had had t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essary to consider hypothetical cases where, for technical reasons, an assessment has been set aside, but has been restored with, an equal measure of tax on the recomputation or reassessment. In the present case, it cannot be overlooked that the ultimate position is one where the assessee was entitled to considerable amounts by way of refund. A projection of this state of affairs to an anterior point of time would also, therefore, not make any difference in the situation. The other ingredients of the section had been satisfied, in the background of the above factual position and the legal interpretation we have placed on the two sections. If there be any lingering doubt, that too vanishes when a reference is made to section 241 of the Income-tax Act. That section visualises a situation where an order giving rise to refund is the subject-matter of an appeal or further proceedings or, where any other proceedings under the Act is pending. Parliament has sought to make art equitable provision between the Revenue on the one hand and the citizen on the other. To protect the interest of the Revenue, it is necessary that the realisation of the legitimate tax is not in jeopardy. "A bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter the assessment order is set aside. In such cases, the Incometax Officer can, with the approval of the Commissioner of Income-tax, withhold the refund till the remand proceedings are over. The Legislature has taken care that if the refund is withheld, the assessee is not deprived of the interest on such refund to which he may be ultimately found entitled." The fact that, as soon as an assessment order is set aside, the tax paid by the assessee under the assessment order becomes refundable to him, subject to the restrictions indicated above is also emphasised in the judgment. The Division Bench of the Bombay High Court, Madon and Sujata V. Manohar JJ., approvingly referred to the Allahabad judgment in CIT v. S. C. Shah [1982] 137 ITR 287. The court observed (at p. 292) : "The Allahabad High Court in this case has observed that as soon as the assessment order is set aside, the tax paid by the assessee under the assessment order becomes refundable to him. No doubt, the Income-tax Officer is entitled to withhold the refund with the previous approval of the Commissioner during the pendency of remand proceedings under the provisions of section 241 of the Income-tax Act. But even ..... X X X X Extracts X X X X X X X X Extracts X X X X
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