2015 (3) TMI 1363 - HC - Income Tax

Refund of amount seized u/s 226(3) - Administrator of respondent No.4-PUDA was also appointed as the competent authority to recover the regularization dues in respect of the unauthorized colonies on behalf of the State of Punjab - Respondent No.1 contends that it never sought to receive amounts due to the petitioner-State of Punjab towards satisfaction of the fourth respondent s tax dues - HELD THAT - The petition is disposed of by setting-aside the order passed by respondent No.1 in so far as the same relates to the dues of the petitioner kept in the escrow or other accounts opened by the Administrator of respondent No.4 but for and on behalf of the petitioner- State of Punjab. The impugned order passed by respondent No.1 will not operate in respect of any other accounts maintained in any name which are for the benefit of the petitioner-State of Punjab. Further, the order passed by respondent No.1 shall also not operate in respect of any accounts, fixed deposits or other investments made out of the accounts which belonged to the petitioner-State of Punjab. The order shall also not operate in respect of any accretion to the amounts. The amounts shall be refunded by respondent No.1 within 12 weeks from the receipt of a communication by the petitioner specifying the details of the accounts kept by respondent No.4 on behalf of the petitioner and in the name of the petitioner itself. We would not express any opinion regarding the question of interest including as to whether or not the interest is payable or not to the petitioner and if payable as to which of the respondents is liable to pay the same. The petitioner is given liberty to adopt appropriate proceedings for interest. Mere furnishing of PAN Number of respondent No.4 would not be determinative as to whether the amounts belonged to the petitioner or respondent No.4.

Summary

Issues:
1. Writ of mandamus to refund seized amount under section 226(3) of the Income Tax Act, 1961.
2. Order to restrain banks from releasing funds.
3. Dispute over dues between petitioner and respondent No.4.
4. Ownership of amounts in escrow accounts.
5. Setting aside the order passed by respondent No.1.
6. Refund of amounts by respondent No.1.
7. Question of interest payment.
8. Determination of ownership based on PAN number.

Analysis:

1. The petitioner sought a writ of mandamus to direct respondent No.1 to refund the amount seized under section 226(3) of the Income Tax Act, 1961, and to restrain respondent Nos. 1 and 2, Oriental Bank of Commerce and ICICI Bank Ltd., from releasing the funds.

2. Respondent No.1 issued an order under Section 226(3) of the Act regarding the alleged dues of respondent No.4, causing confusion as the petitioner was not concerned with respondent No.4's dues.

3. The confusion arose due to the Administrator of respondent No.4-PUDA being appointed as the competent authority to recover regularization dues for unauthorized colonies on behalf of the State of Punjab. The amounts in escrow accounts belonged to the State of Punjab, not respondent No.4.

4. The court set aside the order passed by respondent No.1 concerning the dues of the petitioner kept in escrow or other accounts for the benefit of the State of Punjab. The order would not apply to any other accounts maintained for the State of Punjab's benefit.

5. Respondent No.1 was directed to refund the amounts within 12 weeks upon receiving communication from the petitioner specifying the account details held by respondent No.4 on behalf of the State of Punjab.

6. The judgment did not address the question of interest payment, leaving it open for the petitioner to pursue appropriate proceedings. Mere furnishing of PAN Number of respondent No.4 was not conclusive in determining ownership of the amounts.

7. The petition was disposed of, clarifying the ownership of funds and directing the refund while leaving the issue of interest payment open for further proceedings.