Wp(C)/28172/2004 Of S.baburajendra Prasad v. Asst.commr.of Income Tax, Kollam

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR THURSDAY, THE 24TH JULY 2008 / \ND SRAVANA 1930 WP(C).No. 28172 of 2004(D) -------------------------- PETITIONER: ------------ S.BABURAJENDRA PRASAD, ARUNODHAYAM, CHATHANNOOR, KOLLAM. BY ADV. SRI.S.SANTHOSH KUMAR RESPONDENTS: ------------- 1. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, MANNANIYYA COMPLEX, ANDAMUKKOM, KOLLAM. 2. THE SUB POSTMASTER, CHATHANNOOR POST OFFICE, CHATHANNOOR. BY ADV. SRI.P.K.R.MENON(SR.),SR.COUNSEL FOR IT FOR R1 SRI.GEORGE K. GEORGE, SC FOR IT FOR R1 SRI.P.PARAMESWARAN NAIR,ASST.SOLICITOR FOR R2 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 24/07/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: PETITIONER'S EXHIBITS: EXT.P1 TRUE COPY OF LETTER DATED 21.7.2004 OF THE FIRST RESPONDENT. EXT.P2 TRUE COPY OF NOTICE ISSUED BY GTHE 1ST RESPONDENT TO THE 2NDRESPONDENT. EXT.P3 TRUE COPY OF REPRESENTATION DATED2.8.2004 SUBMITTED BEFORE THE FIRSTRESPONDENT. 2ND RESPONDENT'S EXHIBITS: EXT.R2(a) TRUE COPY OF THE INSTRUCTIONS NO. 61-19/2003-SB DATED 10.11.2003 ISSUEDBY THE DIRECTOR GENERAL OF POSTS. TRUE COPY P.S. TO JUDGE. -------------------------------------------- W.P.C. NO. 28172 OF 2004 -------------------------------------------- Dated this the 24th day of July, 2008 JUDGMENT Heard counsel for the petitioner and standing counsel appearingfor the Income-tax Department and Asst. Solicitor General appearingfor the second respondent. The question raised is whether thedepartment was justified in demanding interest for belated payment oftax under section 220(2) of the I.T. Act, pursuant to block assessmentmade on petitioners after search conducted on 15.9.1995. Petitioner'scase is that in the course of search department recovered 65 numbers ofNSC of the face value of Rs. 1,23,000/- and with a maturity value ofRs. 2,46,000/-. The specific case of the petitioner is that afterassessment the department was bound to encash the NSC on maturityand adjust the amount received from the post office against taxdemands. Standing counsel for the Income-tax Department submittedthat petitioner has not requested or authorised the department to encashNSCs on maturity and consequently department could not do it.However, when this Writ Petition was admitted, this Court issued interim orders on 27.9.2004 directing encashment of NSCs bydepartment and pursuant to interim direction, amounts have beenrecovered and adjusted against tax demands. It is not known whetherNSCs could be encashed on presentation or whether authorisation isrequired from the person in whose name they were issued. Ifauthorisation is required, then nothing stopped the petitioner fromauthorising encashment and adjustment towards tax demand ifpetitioner wanted to avoid interest. I do not think there is any need toconsider the question whether department was justified in retainingNSCs without encashing it because the block assessment is taken upwith the Settlement Commission which has the power to orderreduction of interest. It is open to the petitioner to raise this questionbefore the Settlement Commission in the Settlement Case before it.Alternatively, if settlement is not granted, it will be open to thepetitioner to raise this question in an application filed for waiver ofinterest under Section 220(2A) of the Act. W.P. is closed with the above observation. (C.N. RAMACHANDRAN NAIR) Judge