9911796707
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Issues:
- Withholding of refund amount by the respondent without providing reasons as to how it would adversely affect the Revenue. - Interpretation of Section 241 of the Income-tax Act, 1961 regarding conditions for withholding refund. - Requirement of a speaking order by the Assessing Officer when withholding a refund. Analysis: The petitioner, a public limited company, sought to challenge the order passed by the respondent withholding a refund amount of Rs. 11,49,345 due to the petitioner as a result of an assessment order dated January 23, 1992. The petitioner contended that the respondent's power to withhold the refund under Section 241 of the Income-tax Act, 1961, required specific conditions to be met. These conditions include the issuance of a notice under section 143(2), the order being subject to appeal or further proceedings, or the existence of any other pending proceeding under the Act. In this case, it was acknowledged that some proceedings were pending before the High Court for the assessment of the previous year. However, the mere existence of pending proceedings does not automatically justify withholding the refund. The Assessing Officer must also form an opinion that granting the refund would adversely affect the Revenue. The court noted that the order in question was a non-speaking order, lacking reasons for withholding the refund based on potential adverse effects on Revenue. The court emphasized the necessity of a speaking order when withholding a refund, requiring the Assessing Officer to provide clear reasons for believing that the refund could negatively impact Revenue. The absence of such reasoning rendered the order invalid and liable to be quashed. The court ruled in favor of the petitioner, setting aside the order withholding the refund amount and directing the respondent to pass a reasoned speaking order by a specified date. The respondent was given until November 15, 1992, to provide a detailed explanation for withholding the refund. The judgment clarified that the respondent could issue a new order with proper justification in accordance with the law. Ultimately, the court granted the petition, quashed the original order, and instructed the respondent to issue a reasoned order within the stipulated timeline, with no costs imposed on either party.
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