S.padmapriya v. The Income Tax Officer, Non Corporate Ward 2(5), Chennai

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 14.06.2021 CORAM THE HONOURABLE DR. JUSTICE ANITA SUMANTH W.P. Nos.16363, 18782, 16365 & 18773 of 2020 &W.P.Nos.9888 & 9892 of 2021 S.Padmapriya ...Petitioner in WP.16363/2020 S.Rukmani ...Petitioner in WPs.18782 & 18773/2020 S.Padmapriya ...Petitioner in WP.16365/2020S.Yashwanthi ...Petitioner in WPs.9888 & 9892/2021 Vs. 1. The Income Tax Officer, Non Corporate Ward 2(5), Chennai. 2. The Branch Manager, Indian Overseas Bank, East Mada Street Branch, Chennai....Respondents in all WPs Prayer in W.P.16363/2020: Writ Petition filed under Article 226of the Constitution of India praying to issue Writ of Mandamusdirecting the First Respondent to give no objection forwithdrawal of the amount from capital gains account scheme withIndian Overseas Bank in Account Number 231100002 and countersign the Form G submitted by the Petitioner. Prayer in WP No.18782 of 2020 : directing the second Respondentto refund the monies in capital gains account scheme with IndianOverseas Bank, Mylapore East Mada Street Branch in AccountNumber 231400001 along with interest at prevailing rates tilldate. Prayer in WP No.16365 of 2020 : Directing the Second Respondentto refund the monies in capital gains account scheme with IndianOverseas Bank, Mylapore, East Mada Street Branch in AccountNumber 231100002 along with interest at prevailing rates tilldate. Prayer in WP No.18773 of 2020 : directing the 1st Respondent togive no objection for withdrawal of the amount from capitalgains account scheme with Indian Overseas Bank in Account Number 231400001 and counter sign the Form G submitted by thePetitioner. Prayer in WP No.9888 of 2021 : Directing the First Respondent togive no objection for withdrawal of the amount from capitalgains account scheme with Indian Overseas Bank in Account Number231400003 and renewal deposit number 231200003 and counter signthe Form G submitted by the petitioner. Prayer in WP No.9892 of 2021 : Directing the Second Respondentto refund the monies in capital gains account scheme IndianOverseas Bank, Mylapore, East Mada Street Branch in AccountNumber 231400003 and renewal deposit number 231200003 along withinterest at prevailing rates till date. ******** COMMON ORDER These writ petitions have been filed by mother and her twodaughters seeking a mandamus as against the Assessing Authorityin one group of writ petitions and the Branch Manager of IndianOverseas Bank, East Mada Street Branch, Chennai (Bank) in thesecond group of writ petitions to refund the monies lying in theCapital Gains Account Scheme (CGAS) with the bank along with in-terest at prevailing rates. 2. The facts are common to all writ petitions. The IncomeTax Act, 1961 (in short Act) provides for a scheme of investmentof capital gain in terms of Section 54/54F thereof. Thepetitioners had sold a property (asset) on 11.09.2007 and haddeposited part of the sale proceeds in an account bearingAccount No.231100002 with R2 bank under the CGAS Scheme. 3. Having invested part of the sale consideration, thepetitioners rested quiet and did nothing further thereaftereither by way of further investments or filing of a return ofincome to offer the gain to tax. The asset had been transferredfor a sum of Rs.34,00,000/- (Rupees thirty four lakhs only).Part of the sale consideration had been invested in RuralElectrification Bonds in respect of which the petitioners hadproposed to claim deduction under Section 54EC. 3. Having invested part of the sale consideration, thepetitioners rested quiet and did nothing further thereaftereither by way of further investments or filing of a return ofincome to offer the gain to tax. The asset had been transferredfor a sum of Rs.34,00,000/- (Rupees thirty four lakhs only).Part of the sale consideration had been invested in RuralElectrification Bonds in respect of which the petitioners hadproposed to claim deduction under Section 54EC. 4. The investment made by them in the bank account has notbeen utilised in any way thereafter. The fact that thepetitioners had sold the asset, filed no returns of income orinvested only part consideration in the CGAS, has escaped theattention of the Income Tax Department and no action has beentaken to call upon the petitioners to file returns, eitheroriginal or revised within the timelines stipulated underStatute. 5. On 31.03.2018, the first respondent received anapplication from the petitioners seeking no objection for therefund of the monies invested under the scheme. This is in linewith scheme requirements that require the depositor to fileForm-G with the Manager of the concerned bank seeking closure ofthe account. The Form has to be approved and endorsed by thejurisdictional assessing authority. 6. Evidently, R2, when approached, did not entertain therequest of the petitioners for closure of the accounts andrefund of the balances. It was at this juncture that thepetitioners had executed Form-G and had approached the assessingauthority seeking no objection for the same. There was noresponse, driving the petitioners to approach this Court seekingmandamus in the present writ petitions. 7. Heard Mr.N.V.Narayanan, learned counsel for thepetitioners, Mrs.Hema Muralikrishnan, learned Senior StandingCounsel for R1 and Mr.K.K.Sivashanmugam, learned counsel for R2bank. 8. As regards the taxability of the transaction of sale,there is nothing to be said in so far as, admittedly, the timelines for bringing capital gains, if any, to tax, have longelapsed. The allegation of the revenue to the effect that thepetitioners have timed the request for closure well after theexpiry of the statutory timelines may well be correct, but theDepartment has missed the bus in this regard. What remains isthe closure of the account and refund of the amounts to thepetitioners. 9. The operation of the account in question is a matter ofcontract qua the petitioners and R2 and the petitioners are atliberty to give such instructions to R2 as they may wish to, inthis regard. Form-G which is to be approved by the assessingauthority will have no application in this case since thetransaction giving rise to capital gains has not been capturedby the Department. In any event, today, R1 does not have anyclaim towards the amounts in the bank accounts. Thus, thepetitioners are at liberty to issue suitable instructions to R2in regard to their bank accounts and such request, including request for closure of and refund of balances, shall be honouredby R2 in accordance with the terms of the contract governing theparties and without insistence upon Form-G of the CGAS Scheme. 10. These writ petitions are disposed in the aforesaidterms. No costs. Sd/- Assistant Registrar(CS VII) //True Copy// vs To Sub Assistant Registrar 1. The Income Tax Officer, Non Corporate Ward 2(5), Chennai.2. The Branch Manager, Indian Overseas Bank, East Mada Street Branch, Chennai. +1CC to Mrs.Hema Muralikrishnan, Advocate, Sr.No.27878+2CCs to M/s.N.V.Balaji, Advocate, Sr.Nos.27988, 27989 W.P. Nos.16363, 18782, 16365 & 18773 of 2020 & W.P.Nos.9888 & 9892 of 2021 SKY (CO)K.RK. (04.08.2021)