1990 (8) TMI 48 - HC - Income Tax

Summary

Issues: Challenge to order by Commissioner of Income-tax withholding payment of Rs. 49,03,000 to petitioners.

Analysis:
The case involved a challenge to an order passed by the Commissioner of Income-tax withholding payment of Rs. 49,03,000 to the petitioners. The dispute arose from pay orders totaling Rs. 50,40,000 issued by an individual, which were deemed seized by the Deputy Commissioner of Income-tax under section 132(1). The petitioners contended that a portion of the amount belonged to them, as they had issued pay orders to sister concerns of the individual who issued the pay orders in question. The Commissioners of Income-tax accepted the petitioners' contention in separate orders, vacating the restraint order. However, the money was not refunded, leading to the impugned order by the Commissioner of Income-tax on March 1, 1990, assessing the amount in the name of the individual who issued the pay orders.

The petitioners argued that the Commissioner of Income-tax lacked the power to review and challenged the legality of the seizure under the second proviso to section 132(1). The court noted the lack of diligence in investigating the transactions, highlighting discrepancies in the handling of funds and the involvement of a non-existing person. The court emphasized the need for thorough examination of accounts and transactions in such cases to prevent unjust outcomes. Despite the petitioners' arguments and the earlier orders in their favor, the court held that since a regular assessment had been conducted in the name of the individual who received the pay orders, there was no basis to direct payment to the petitioners. The court emphasized the importance of upholding assessment orders and dismissed the petition, stating that the petitioners had already availed their appeal rights under section 132(11) and that the court should not intervene when a regular assessment had been completed and upheld.

In conclusion, the court dismissed the petition, highlighting the completion of a regular assessment in the name of the individual who received the pay orders and emphasizing the need to respect assessment orders unless set aside. The court found no grounds to direct payment to the petitioners, considering the assessment of the amount as undisclosed income of the individual. The court declined to intervene through article 226 of the Constitution, stating that as long as the assessment remained valid, the petitioners were not entitled to the withheld amount.