2013 (11) TMI 1441 - HC - Income Tax

Interest on amount in P.D. account Held that - The amount adjusted was lying in P.D. Account of Commissioner of Income Tax (Appeals), Jaipur - There is statutory provisions that interest shall be payable on such amount then that cannot be ignored on the ground that it will cast an extra burden of the Government - There is nothing on record to suggest that the petitioner was responsible for unreasonable delay. On the other hand seizure of the money of the petitioner was held as illegal as such he was illegally harassed and his money was blocked for his no fault as such statutory liability for payment of interest of the Revenue cannot be absolved on the so called extra burden - The respondents are directed to pay the interest on the remaining amount u/s 244A of the Income Tax Act, 1961 to the petitioner Decided in favour of petitioner.

Summary

Issues:
1. Quashing of order rejecting application for interest payment
2. Mandamus for rectifying order and allowing interest under Section 244A of the Income Tax Act, 1961

Analysis:
1. The petitioner filed a writ petition seeking to quash the order rejecting the application for interest payment and for a mandamus directing the respondents to rectify the order dated 23.04.2010 and allow interest under Section 244A of the Income Tax Act, 1961. The petitioner's income was assessed by the Assessing Officer, resulting in a demand raised against him. The petitioner requested to adjust the income tax amount from his seized money, which was partially refunded along with interest. The petitioner's subsequent appeals led to a Tribunal order declaring the authorization for seizure as illegal, making the seizure proceedings void. The petitioner then applied for refund of the remaining amount, which was granted, but his application for interest under Section 244A was rejected by respondent-4, leading to the filing of this writ petition.

2. The petitioner argued that since the Tribunal deemed the seizure illegal, the income tax deducted from the seized money was essentially paid by him, entitling him to interest under Section 244A. On the other hand, the Senior Standing Counsel contended that no interest was payable on the amount adjusted towards income tax as it was in the P.D. Account of the Commissioner of Income Tax (Appeals), Jaipur. The Counsel further argued that Section 244A does not apply as the income tax was not voluntarily paid, and the seized amounts were governed by Section 132B. However, the Division Bench held that Section 132B and 244A operate in different fields, with no overlap between the two provisions.

3. The Court noted that the Assessing Officer had held the petitioner's undisclosed income for the block period, assessed income tax, and raised a demand against the petitioner. The petitioner's application led to the adjustment of the income tax amount, making the arguments against the applicability of Section 244A invalid. Additionally, the Court dismissed the arguments regarding the delay before the Tribunal and the burden on the Revenue, emphasizing that statutory provisions cannot be ignored based on potential extra burdens without evidence of petitioner responsibility for delays.

4. Consequently, the Court allowed the writ petition, setting aside the order rejecting the application for interest payment. The respondents were directed to pay interest on the remaining amount under Section 244A of the Income Tax Act, 1961 to the petitioner within one month from the date of producing a certified copy of the order before respondent-4.