9911796707
TMI Blog1990 (6) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner, by a letter dated May 31, 1985, addressed to the Commissioner of Income-tax, requested that refund of Rs. 4,26,706 be granted to him forthwith and the pendency of the assessment for the year 1983-84 should not delay handing over to him of the said amount. However, the refund was not given to him and, therefore, he filed Writ Petition No. 1318 of 1985 (Suresh B. Jain v. A. N. Shaikh [1987] 165 ITR 151) on July 8, 1985, invoking the writ jurisdiction of this court under article 226 of the Constitution. The said writ petition was heard by Pendse J. who, by his judgment and order dated March 7, 1986, allowed it and directed the respondents to refund the amount of Rs. 4,26,090 to the petitioner within two weeks. Feeling aggrieved by the judgment of Pendse J., the respondents preferred an appeal bearing No. 252 of 1986 (A. N. Shaikh v. Suresh B. Jain [1987] 165 ITR 86), which was heard by a Division Bench (S. K. Desai and N. K. Parekh JJ.) who, by a judgment and order dated March 27, 1986, summarily dismissed the same. Ultimately, the respondents refunded to the petitioner the said excess income-tax amount of Rs. 4,26,090. It also appears that action was taken against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust it against the interest due to him for the assessment year 1982-83 against this demand. It was further clarified that the said letter be treated as an intimation under section 245. Feeling aggrieved, the petitioner again invoked the writ jurisdiction of this court under article 226 of the Constitution by filing this writ petition and prayed that the respondents be directed to forthwith refund and pay to him a sum of Rs. 1,95,295 on account of interest and they be refrained from adjusting and setting off the said amount against his outstanding tax liability for the assessment year 1983-84. A further prayer was made that writ in the nature of mandamus be issued against the respondents ordering and directing them to forthwith deposit with the petitioner's bankers, viz. Syndicate Bank, New Marine Lines, Bombay, thirty drafts duly revalidated or alternatively to pay to the petitioner a sum of Rs. 1,24,558 being the value of the said drafts. In support of the petition, Mr. Mistry made three submissions for my consideration. Thus, learned counsel urged that the word "refund" in section 245 of the Income-tax Act will not apply to "interest" and as such the amount of interest cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng an intimation in writing to such person of the action proposed to be taken under this section." The argument of Mr. Mistry is that a careful reading of this provision of law shows that the set-off and adjustment towards the remaining tax liability of an assessee could be made only against the amount of "refund" due to an assessee and any amount of "interest" payable to such an assessee which does not form part of "refund" cannot be adjusted against the tax liability. In order to substantiate his argument, Mr. Mistry submitted that the word "refund" is not defined in the Income-tax Act but its meaning as found in the Oxford English Dictionary, Second Edition, Vol. XIII, at pages 493-494 are : (1) to pour back, pour in or out again (2) to give back, restore (3) to put back into something antecedent (4) to make return or restitution of (a sum received or taken) ; to hand back, repay, restore (5) to reimburse, repay (6) to make repayment." Mr. Mistry also referred to Webster's Third New International Dictionary, at page 1910, in which the meaning of the word "refund" is given as "(1) to pour back, give or put back, (2) to return (money) in restitution, repayment or b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e statute aimed at levy and collection of the net tax liability of an assessee in which different operations are involved such as payment or receipt of interest, levy of penalty, waiver of interest or penalty which should not be treated as separate and independent activity but only as a part of an integrated scheme to levy and collect income-tax. 1, therefore, find a lot of substance in the argument of Dr. Balasubramaniam that interest paid on refunds should not be treated in isolation and that the concept of the word "refund" does not admit of a limited meaning but must be held to mean any amount payable by the Department to an assessee whether as and by way of "refund" or "interest". After all, the amount of interest payable to an assessee under section 244(lA) is also an amount that is refunded by the Department to an assessee and if the same is not permitted to be adjusted under section 245, almost absurd, if not ridiculous, results may ensue inasmuch as the Income-tax Department would be required to pay a certain sum of money to an assessee on account of interest with one hand and take back the same amount as tax liability with the other. This may not only be inconvenient and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pril 5, 1985, but exhibit-K to the petition which is the impugned letter dated July 21, 1986, shows that the Income-tax Department was claiming it to be an intimation under section 245 after fifteen months which is not permissible either in law or under the circular issued by the Central Board of Direct Taxes. It is no doubt true that the amount of interest was payable to the petitioner on or before April 5, 1985, whereas the impugned letter (exhibit-K to the petitioner) was addressed to the petitioner only on July 21, 1986, but that would be only a technical lapse on the part of the Income-tax Department. After all, what is required under section 245 is prior intimation to an assessee of the proposed action on the part of the Department that they will set off and adjust a certain sum of money payable to an assessee against the sum, if any, remaining payable by him to the Income-tax Department. The letter dated July 21, 1986, makes it amply clear that the record of the Department showed that tax liability of Rs. 7,47,755 was outstanding against the petitioner for the assessment year 1983-84 and, therefore, it was proposed to adjust the amount of interest due to him for the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the possession of the bankers of the petitioner under section 132 of the Income-tax Act. The said drafts could be appropriated towards the existing tax liability of the petitioner under section 132 read with section 132B of the said Act. Initially, I was impressed by the argument of Mr. Mistry that, for no rhyme or reason, the Income-tax Department withheld the drafts of the petitioner and did not return the same to him with the result that they became invalidated and, therefore, the respondents should be directed to get the said drafts revalidated or, in the alternative, pay to the petitioner a sum of Rs. 1,24,558 being the value of the drafts. However, at a later stage, return was filed on behalf of the respondents by Syed Abdul Hai, lst Income-tax Officer, Ward 25, Bombay, who made it clear in his affidavit that the record showed that the drafts in question of the value of Rs. 1,22,058 (Rs. 1,24,558 minus Rs. 2,500) were revalidated and encashed, 13 drafts prior to November 25, 1986, and 10 drafts after November 25, 1986 and a sum of Rs. 74,200 was credited to the petitioner's bank account and other amounts were adjusted as under : Against assessment year " (i) Challan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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