Wp/18853/2007 Of Sri S.r. Kailash v. The Commissioner Of Income Tax

IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD(Special Original Jurisdiction) TUESDAY, THE TWENTY SECOND DAY OF JULYTWO THOUSAND AND EIGHT PRESENTTHE HON'BLE MR JUSTICE B.PRAKASH RAOand THE HON'BLE MR JUSTICE G. CHANDRAIAH WRIT PETITION NO: 14807 of 2004 Between: Shri S.r. Kailas S/o. Sri Bontaiah R/o. 607 Street No.3 Tarnaka, Secunderabad. ..... PETITIONER AND 1 Settlement Commission (IT & WT) Additional Bench Represented by its Secretary 640, Anna Salai NandanamChennai. 2 The Commissioner of Income Tax Circle 2 (1) Hyderabad. 3 The Deputy Commissioner of Income Tax Circle 2 (1) Hyderabad. 4 The Tax Recovery Officer Range-2, Hyderabad. 5 The Manager ICICI Bank, Habsiguda, Hyderabad. .....RESPONDENTS Petition under Article 226 of the constitution of Indiapraying that in the circumstances stated in the Affidavit filedherein the High Court will be pleased to issue a writ order ordirection more particularly one in the nature of writ ofmandamus to set aside the order Dt.26.2.2004 passed by the1st respondent and the consequential order dt.22.7.2004 forthe assessment years 1989-90 to 1993 - 1994 issued by the 3rdrespondent and pass. Counsel for the Petitioner: MR.B.CHANDRASEN REDDY Counsel for Respondents 1 to 4: Mr. S.R. Ashok Counsel for Respondent No.5: Mr. S. Niranjan Reddy WRIT PETITION NO : 18853 of 2007 Between: 1 Sri S.R. Kailash, S/o. Late Sri Bontaiah, R/o. 12-13-92, Street No. 3, Tarnaka, Secunderabad. 2 Ravi Shanker Kailash, S/o. S.R. Kailash, r/o. 12-13-92, street no.3, Tarnaka, Secunderabad. r/o. 12-13-92, street no.3, Tarnaka, Secunderabad. ..... PETITIONERS AND 1 The Commissioner of Income Tax, Aayakar Bhavan, Basheerbagh, Hyderabad. 2 The Deputy Commissioner of Income Tax, Circle -2(1), Room No. 508, 5th Floor, Aayakar Bhavan, Basheerbagh, Hyderabad......RESPONDENTS.....RESPONDENTS Petition under Article 226 of the constitution of Indiapraying that in the circumstances stated in the Affidavit filedherein the High Court will be pleased to issue a Writ, order ordirection, more particularly one in the nature of Writ ofMandamus declaring the action of the second Respondentproposing to adjust the Refund payable to the Petitionersagainst the tax arrears for other assessment years, which claimof the second Respondents is pending adjudication before thisHon'ble High Court in WP No. 14807 of 2004 and in respect ofwhich this Hon'ble High Court granted stay in WPMP NO. 19107of 2004 in WP NO. 14807 of 2004, as illegal and without anyauthority and consequently, direct the Respondents to issueconsequential orders along with the refund of Rs.1,84,12,856/-(Rupees one Crore Eighty Four Lakhs Twelve Thousand EightHundred Fifty Six Only) with interest payable to the Petitionersforthwith and pass such other order or orders as this Hon'bleCourt may deem fit and proper in the circumstances of the case. Counsel for the Petitioner: MR.B.CHANDRASEN REDDY Counsel for the Respondents: MR.S.R.ASHOK The Court made the following : THE HON'BLE MR JUSTICE B.PRAKASH RAOand THE HON'BLE MR JUSTICE G.CHANDRAIAH W.P.M.P.Nos.29666 of 2007 & 13182 of 2008inW.P.NO: 14807 of 2004ANDW.P.M.P.No.24247 of 2007InW.P.No.18853 of 2007 COMMON ORDER: (Per Hon’ble Sri Justice B. Prakash Rao) Heard Sri B. Chandrasen Reddy, learned counsel for thepetitioners, who filed W.P.M.P.No.13182 of 2008, and SriS.R.Ashok, learned Standing Counsel appearing for the IncomeTax Department. At their request only both the writ petitionsare taken up for disposal. Counsel for the Petitioner: MR.B.CHANDRASEN REDDY Counsel for the Respondents: MR.S.R.ASHOK The Court made the following : THE HON'BLE MR JUSTICE B.PRAKASH RAOand THE HON'BLE MR JUSTICE G.CHANDRAIAH W.P.M.P.Nos.29666 of 2007 & 13182 of 2008inW.P.NO: 14807 of 2004ANDW.P.M.P.No.24247 of 2007InW.P.No.18853 of 2007 COMMON ORDER: (Per Hon’ble Sri Justice B. Prakash Rao) Heard Sri B. Chandrasen Reddy, learned counsel for thepetitioners, who filed W.P.M.P.No.13182 of 2008, and SriS.R.Ashok, learned Standing Counsel appearing for the IncomeTax Department. At their request only both the writ petitionsare taken up for disposal. W.P.No.14807 of 2004 is filed seeking to set aside theorder dated 26.2.2004 passed by the first respondent and theconsequential order dated 22.07.2004 for the assessment years1989-90 to 1993-94, whereas W.P.No.18853 of 2007 is filed todeclare the action of the second respondent proposing to adjustthe refund payable to the petitioners against the tax arrears forother assessment years, which is subjudice before this Court inthe above W.P.No.14807 of 2004 in respect of which, this Courtalready granted stay in WPMP No.19107 of 2004 in the laterwrit, as illegal and arbitrary and for a consequential directionto refund Rs.1,84,12,856/- with interest payable to thepetitioners. There is no dispute with regard to the fact that thepetitioners are entitled to waiver of interest under section 234-A of the Act only for the Assessment year 1992-93 and not forthe assessment year 1993-94. The Income Tax Departmentdetermined the tax amount payable by the petitioners for theassessment years 1989-90 to 1993-94 and proposed to adjustthe refund amount of Rs.1,84,12,856/- towards the tax arrearsdue from the petitioners pursuant to the order of the SettlementCommission dated 26.02.2004. Admittedly, the petitioners areentitled to refund of Rs.1,84,12,856/-, whereas according to the respondents certain arrears have been found payable by thepetitioners and therefore they are entitled to adjust the amountunder Section 245(d) of the Income Tax Act. This Court on earlier occasion granted interim direction inW.P.M.P.o.33743 of 2007 dated 21.02.2008 directing refund ofamount to a tune of Rs.60,00,000/- subject to condition of thepetitioners offering security to the extent of Rs.53,00,000/-. Now another application in WPMP No.13182 of 2008 isfiled by the first petitioner seeking to release a further amountof Rs.1,24,12,856/- out of the total amount refundableRs.1,84,12,856/- to the petitioner as admitted by the secondrespondent, whereas the department filed WPMP No.29666 of2007 seeking to permit the Income Tax Department to adjustthe refundable amount of Rs.1.84 crores towards the taxes duefrom the petitioner pursuant to the order of the SettlementCommission dated 26.02.2004. Having heard the counsel on either side, the questionsthat arise for consideration are whether the writ petitioners areentitled to refund of amount and whether the request made bythe respondent-department to adjust the refund against thearrears can be allowed. There is no dispute with regard to the fact that thepetitioner became entitled to refund of an amount ofRs.1,84,12,856/- and later fell in arrears of taxes for thesubsequent years. Therefore, the said refundable amount issought to be adjusted towards taxes subsequently fell due. By taking into account the dual position and the facts andcircumstances of the case, the interest of justice can be servedby allowing the refund on furnishing security, so that theinterests of both sides can be ably safeguarded. However, thesame shall be subject to the decision finally on the intricatequestions of law, which are pending consideration before theCourts. Accordingly, W.P.M.P.No.29666 of 2007 is dismissed and There is no dispute with regard to the fact that thepetitioner became entitled to refund of an amount ofRs.1,84,12,856/- and later fell in arrears of taxes for thesubsequent years. Therefore, the said refundable amount issought to be adjusted towards taxes subsequently fell due. By taking into account the dual position and the facts andcircumstances of the case, the interest of justice can be servedby allowing the refund on furnishing security, so that theinterests of both sides can be ably safeguarded. However, thesame shall be subject to the decision finally on the intricatequestions of law, which are pending consideration before theCourts. Accordingly, W.P.M.P.No.29666 of 2007 is dismissed and W.P.M.P.No.13182 of 2008 and W.P.M.P.No.24247 of 2007 areallowed directing the respondents to refund the amount ofRs.1,24,12,856/- out of the actual amount of Rs.1,84,12,856/-as per their entitlement subject to condition of the petitionersgive security to the satisfaction of the authorities concerned. Itis always open for the respondent-authorities to takeappropriate steps in accordance with law consequent upondisposal of the case and ultimate decision on the questions. Subject to the above directions both the Writ Petitionsare disposed of. No costs. ____________________ (B. PRAKASH RAO, J.) ___________________ (G. CHANDRAIAH, J.) 22[nd] July, 2008Js. ASSISTANT REGISTRAR // TRUE COPY // SECTION OFFICER To1 Settlement Commission (IT & WT) Additional Bench Represented by its Secretary 640, Anna Salai NandanamChennai. 2 The Commissioner of Income Tax Circle 2 (1) Hyderabad.3 The Deputy Commissioner of Income Tax Circle 2 (1)Hyderabad.3 The Deputy Commissioner of Income Tax Circle 2 (1)Hyderabad. 4 The Tax Recovery Officer Range-2, Hyderabad. 5 The Manager ICICI Bank, Habsiguda, Hyderabad. 6 2 CD copies.