CAWNPORE CHEMICAL WORKS PRIVATE LIMITED Vs. ASST CIT

JUDGEMENT

(1.) THIS petition furnishes a revealing instance of how an assessee has been kept deprived of his legitimate claim for interest admittedly due to him under Sections 214 and 244(1A) of the Income-tax Act, 1961. The petitioner has had to fight for his claim at every step and it was not until the court intervened that the authorities moved in the matter. It is sad that the authorities responsible for refund of the amounts due to the petitioner as a direct consequence of orders passed by the Income-tax Appellate Tribunal denied the refund and the interest thereon without even a semblance of justification.

(2.) THESE are the facts. For the assessment year 1979-80, the petitioner was assessed to tax on a total income of Rs. 32,50,140. An appeal against the assessment order filed by the assessee having been dismissed by the Commissioner of Income-tax (Appeals), the assessee preferred a further appeal before the Income-tax Appellate Tribunal, Allahabad, which by its order dated November 29, 1985, allowed the same and held that the order of assessment suffered from a manifest error which the Income-tax Officer was bound to rectify. The Tribunal worked out the refund, as a consequence from the rectification ordered by it, at Rs. 64,923. The petitioner was, thereafter, paid the refund of the aforesaid amount and was also granted interest thereon under Section 243 of the Income-tax Act, 1961. As no interest was allowed to the petitioner by the Assessing Officer under sections 214 and 244(1A), the petitioner filed an objection under Section 154 for the rectification of the order. The Assessing Officer did not decide the application whereupon the petitioner was constrained to file a petition in this court, being Writ Petition No. 338 of 1987, which was allowed on November 6, 1989. The petition was disposed of with a direction to the Assessing Officer to consider and dispose of the petitioner's application. By an order dated December 4, 1989, the application was dismissed. Thereupon the petitioner filed an appeal which was allowed by the Commissioner of Income-tax (Appeals) by an order dated October 15, 1990, directing the Assessing Officer to decide the petitioner's application afresh for the grant of interest payable on refund under Sections 214 and 244(1A), The Assessing Officer was unmoved. He again rejected the claim of the petitioner but, fortunately for the petitioner, his claim for interest was allowed by the Commissioner of Income-tax (Appeals) by his order dated December 18, 1984, holding that the petitioner was clearly entitled to interest under those provisions and directing the Assessing Officer to compute the interest thereon and pay the same to the petitioner. There was still no end to the petitioner's troubles. The Assessing Officer, finding that the Department had gone up in appeal before the Income-tax Appellate Tribunal, Delhi Bench, against the order of the Commissioner of Income-tax (Appeals), sought and was granted approval of the Commissioner to withhold the refund for two months after the decision of the appeal by the Tribunal.

(3.) SRI Bhupeshwar Dayal, learned counsel for the respondent, could not, and in our opinion rightly so, dispute the claim of the petitioner for payment of interest under Sections 214 and 244(1A) accruing as a direct consequence of the order passed by the Income-tax Appellate Tribunal whereunder the petitioner became entitled to the refund of Rs. 9,64,923. The only submission advanced by him in opposition to the petition was that this court had no jurisdiction to entertain this petition under Article 226 of the Constitution as the direction prayed for by the petitioner is against the Assistant Commissioner of Income-tax (Central Circle-25), New Delhi, who is an authority based outside the jurisdiction of this court. To support his contention, learned counsel placed reliance on a few decisions of this court and of the Supreme Court which we shall presently advert to.