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Issues:
1. Claim for interest for two periods in a writ petition. 2. Refund vouchers issued to the petitioner and encashment stopped due to a third party claim. 3. Claim of interest under section 244(1) and 244(2) for two different periods. 4. Interpretation of section 244(1) and section 244(2) regarding the payment of interest on refunds. 5. Determination of whether proceedings taken on the basis of a third-party claim are under the Income Tax Act. 6. Application of section 241 and section 237 in the context of refund proceedings. 7. Entitlement to interest under section 244(2) for the period of withholding refund. Analysis: The petitioner, a partner in a partnership firm, sought interest for two periods in a writ petition, namely from June 28, 1967, to September 8, 1972, and from April 25, 1974, to October 6, 1978. The petitioner paid penalties imposed for the assessment years 1957-58 and 1958-59, which were later set aside by the Tribunal. Refund vouchers were issued to the petitioner, but encashment was halted due to a third party's claim. The petitioner claimed interest under section 244(1) for the first period and under section 244(2) for the second period. Regarding the first period, section 244(1) entitles the petitioner to interest from July 1, 1967, as the Assessing Officer did not grant the refund within the stipulated time frame. The petitioner is owed interest for the period July 1, 1967, to September 7, 1972, as confirmed by the court. For the second period, the court analyzed whether the proceedings based on the third party's claim fell under the Income Tax Act. Section 241 and section 237 were examined to determine if the Assessing Officer had the authority to investigate such claims. The court concluded that the proceedings arising from the third party's objection were under the Act, triggering the application of section 244(2) for interest payment. Section 244(2) mandates interest payment from the expiry of three months from the order under section 241 until the refund is granted. The court directed the Income-tax Officer to verify the date of the order stopping the refund and pay interest accordingly till October 6, 1978. The judgment allowed the writ petition in part, providing specific directions for the payment of interest and ordered the Income-tax Officer to act promptly on the decision.
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