2003 (1) TMI 11 - SC - Income Tax

Provisional Attachment - Whether the direction by High Court to deposit back in a FCNR account in a particular bank is a directive under section 244(1) or (2) or section 244A - Held that direction to deposit back in a FCNR account in a particular bank is certainly not a directive under section 244(1) or (2) or section 244A of the Act.

Summary

Issues:
Challenging High Court's order clarification, refund of withdrawn amount, interest calculation, interpretation of High Court's order dated May 21, 1993, restoration of status quo ante, rate of interest determination.

Analysis:
The appellant challenged the High Court's order clarifying its earlier order passed in the appellant's writ petition on May 21, 1993. The appellant had opened a Foreign Currency Non-Resident Account (FCNR)/SDR account and deposited a total amount of US $ 1,35,405. The Income-tax Officer provisionally attached the account under section 281B of the Income-tax Act, 1961, and assessed the appellant's income at Rs. 10,28,928, imposing tax, penalty, and initiating criminal proceedings. The appellant's appeal was dismissed, and the amount deposited in the account was withdrawn by the Income-tax Officer. The appellant claimed refund after the Tribunal set aside the assessment order. The Revenue authorities refused to refund, leading to a writ application before the High Court in 1987. The High Court allowed the writ petition on May 21, 1993, directing the deposit of principal and interest back in the appellant's account. The appellant challenged the interest calculation, seeking interest at a rate reflecting what would have been earned if the principal sum remained deposited.

The main issue was the relief granted by the High Court's order dated May 21, 1993. The High Court's order directed the deposit of principal and interest in the appellant's account to restore the appellant to the position enjoyed before the illegal orders by the Revenue authorities. The court considered the appellant's prayer for restoration and construed it as seeking orders to restore the account with interest accrued. The High Court's order was to grant the appellant the dues unlawfully deprived by the Revenue authorities, not in compliance with the Revenue's interest computation under the Act. The appeal was allowed, adjourning the matter for determining the actual payable amount as per the High Court's order, with the appellant's calculation to be considered in case of default by the respondent.

Despite the court's order, no calculation was filed by the respondent within the prescribed period. The default became operative, and the figures provided by the appellant were taken as correct, making the respondent liable to pay the difference. The appeal was disposed of accordingly, emphasizing the importance of complying with court orders and calculations in legal proceedings.