Gujarat High Court
Ashwin D. Mehta (Huf) vs Commissioner Of Income-Tax And Anr. on 6 April, 1995
Equivalent citations: [1995]215ITR411(GUJ)
JUDGMENT C.K. Thakkar, J.
1. Rule. Mr. Mihir J. Thakore appears for the respondents and waives service of rule. In the facts and circumstances of the case, the matter is taken up for final hearing today.
2. This petition is filed by the petitioner for quashing and setting aside the order passed by the Income-tax Officer, Ward I(7), Surat, respondent No. 2, on February 8, 1995, by which he withheld refund of Rs. 7,57,660 on the ground that an order passed in favour of the petitioner was challenged by the Department and the appeal was pending.
3. It is the case of the petitioner that for the assessment years 1990-91 and 1991-92, he filed returns wherein substantial income earned by him was shown as agricultural income. The second respondent did not accept the said return and held that it was income from undisclosed sources. He, therefore, held that the petitioner was liable to pay income-tax thereon. The petitioner challenged that order by filing appeals before the Commissioner of Income-tax. It is not in dispute that the appeals were allowed and the petitioner was entitled to refund of the excess amount ordered to be paid by the Income-tax Officer. The payment is, however, not made invoking section 241 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). Section 241 provides that where refund of any amount becomes due to the assessee and the Assessing Officer is of the opinion that having regard to the fact that the order is the subject-matter of appeal or further proceedings, he may, with the previous approval of the Commissioner, withhold the payment of refund if the grant of refund is likely to adversely affect the Revenue.
4. Mr. Soparkar, learned counsel for the petitioner, does not dispute that the order is the subject-matter of appeal. He also stated that permission of the Commissioner has been obtained by the second respondent. But, according to him, the sine qua non or condition precedent for exercise of the power of withholding of payment is that the amount of the refund is likely to adversely affect the Revenue. Drawing our attention to the impugned order at annexure "A", he submitted that no such satisfaction has been arrived at by respondent No. 2. In these circumstances, the action of withholding of payment is clearly contrary to law and unlawful. Mr. Soparkar submitted that the point is squarely covered by the decision of the Division Bench of this court in the case of Consolidated Petrotech Industries Ltd. v. Asst. CIT [1993] 202 ITR 306. In the said case, the court observed as under (at page 308) :
". . . In the instant case, the order does not show that the Assessing Officer has formed such an opinion and that he has come to the conclusion that the grant of refund was likely to adversely affect the Revenue. In short, the order is a non-speaking order and no reasons are assigned for withholding the amount of refund . . . ."
5. Mr. Thakore, the learned advocate appearing for the respondents, also does not dispute that the point is covered by the decision in the case of Consolidated Petrotech Industries Ltd. v. Asst. CIT [1993] 202 ITR 306 (Guj).
6. For the foregoing reasons, in our opinion, the petition requires to be allowed and is accordingly allowed. The order dated February 8, 1995, at annexure "A", is hereby quashed and set aside. In the facts and circumstances of the case, no order as to costs.