Vinoda B.Jain vs Jt.Commissioner Of Income Tax ...
2023 Latest Caselaw 9608 Bom

   2023:BHC-OS:9948-DB
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          SHAMBHAVI
SHAMBHAVI NILESH
NILESH    SHIVGAN
SHIVGAN   Date:
          2023.09.15                IN THE HIGH COURT OF JUDICATURE AT BOMBAY
          10:39:30
          +0530                         ORDINARY ORIGINAL CIVIL JURISDICTION

                                                WRIT PETITION NO.2386 OF 2022

                         Vinoda B. Jain                                               ...Petitioner
                               Versus
                         Jt. Commissioner of Income-tax Special Range
                         33, Mumbai & Ors.                                            ...Respondents


                         Mr. N. M. Porwal, for Petitioner.
                         Mr. Akileshwar Sharma, for Respondents/Revenue.
                         Mr. Shambu Narayan Ranjan, ITO, 20(3)(1), Mumbai is present in
                         person.


                                                      CORAM:      K. R. SHRIRAM &
                                                                  DR. N. K. GOKHALE, JJ.

                                                      DATED:      13th September 2023
                         PC:-

1. Petitioner has approached this Court due to the inaction of the

Revenue in not even obeying and complying with the orders and

directions passed by the Income Tax Appellate Tribunal ("ITAT") as

well as the Principal Commissioner of Income Tax ("PCIT").

2. The facts in brief are that during the relevant period to

Assessment Year 1991-92 the Central Excise Department

apprehended one late Bharat Kumar Jain whose legal heir is

Petitioner and seized gold items weighing 1545.200 gms. and cash of

Rs.2,60,000/-. The gold and cash seized were taken over by the

Income-tax Department under Section 132A of the Income-tax Act,

1961 ("Act") and order under Section 132(5) of the Act was passed

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on 9th July 1996 retaining the said assets. Subsequently, the case was

scrutinized under Section 143(3) of the Act and an assessment order

came to be passed. The assessee challenged the order before the

Commissioner of Income-tax (Appeals) [CIT(A)]. Thereafter, the

order of the Assessing Officer ("AO") was challenged before the ITAT.

By an order dated 24th September 2014, the ITAT decided the issue in

favour of assessee. No further appeal under Section 260A of the Act

was filed by the Department. Therefore, the order dated 24 th

September 2014 of the ITAT attained finality. The AO had further

submitted that there is no outstanding demand against assessee. In

view of the Revenue not following the order of the ITAT, an

application was filed by Petitioner before the Principal Commissioner

of Income Tax (PCIT). By an order dated 31 st December 2019 passed

under Section 132B of the Act, the PCIT directed as under:

"On the basis of the report submitted by the Assessing Officer, Jt. C.I.T. Range-20(3), Mumbai, the above mentioned seized gold items weighing 1545.200 gms. Of gold and cash of Rs.2,60,000/- is hereby released to the Smt. Vinoda B Jain, Legal Heir of Late Shri Bharat Jethmal jain."

It is Petitioner's case that even prior to PCIT passing this order,

innumerable applications/communications have been made to which

there was not even a response. The seized gold were handed over

but the cash of Rs.2,60,000/- was not returned. Hence, the Petition

came to be filed.

3. Petitioner is seeking a direction to the Revenue to return the

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amount of Rs.2,60,000/- together with interest for pre-assessment

period as well as post-assessment period until the date of payment.

4. On 3rd January 2023, time was sought by Revenue's Counsel to

file an affidavit-in-reply. Six weeks were granted. On 25 th April 2023

further period of six weeks was granted. On 5 th September 2023

again no affidavit-in-reply had been filed and matter was stood over

to 12th September 2023.

5. An affidavit-in-reply of one Shambhu Narayan Ranjan, Income

Tax Officer affirmed on 12th September 2023 is filed. According to

the affiant, the case pertains to a period when the records were

maintained manually and as per the current practice processing of

refund is done by system maintained by system and a manual order

for processing refund of the principal amount and interest thereon

has been passed on 6th September 2023. He further says, after the

refund is processed, the same was transmitted to the Centralised

Processing Unit ("CPC") on 7th September 2023 for verification of

computation and generation of system enabled refund intimation and

payment of refund. Finally, he throws his hands up and says the

refund with interest has been processed by Jurisdictional Assessing

Officer ("JAO") and now it is for the CPC to refund. Very graciously,

he also expresses deep regret for the "inadvertent delay" in

processing the cash refund. There is no explanation whatsoever why

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the Department sat over the order passed by the ITAT on 25 th

September 2014 and later by the PCIT on 31 st December 2019. Over

nine years have passed since the order by ITAT and three and half

years have passed since order of the PCIT. Mr. Sharma tendered an

income-tax computation form prepared by the same Shambu N.

Ranjan, but was unable to explain the reason why it was not annexed

to the affidavit-in-reply. According to the Income-tax computation

form, which is taken on record and marked 'X' for identification, an

amount of Rs.8,10,983/- has to be paid to Petitioner. The interest

component is Rs.5,50,983/- and the working is given as under:

Particulars Amount(Rs.) A. Pre-assessment period 10.01.1997 to 24.09.2014

1. 10.01.1997 to 31.05.2002 @ 15% for 65 months 211250

2. 01.06.2002 to 07.09.2003 @ 8% for 16 months 27733

3. 01.10.2003 to 24.09.2014 @ 6% for 132 months 171600 Total 410583 B. Post-assessment period 25.09.2014 to 06.09.2023 01.10.2014 to 06.09.2023 @ 6% for 108 months 140400 C. GROSS TOTAL INTEREST U/S 132(4)(b) 550983

6. Mr. Porwal submitted that Section 244A(1A) inserted by the

Finance Act, 2016 with effect from 1 st June 2016 provides that

assessee shall be entitled to receive, in addition to the interest

payable under Sub-section (1) of Section 244A, an additional interest

of such amount of refund calculated @ 3% p.a., i.e., a total of 9% p.a.

Therefore, Petitioner should be paid interest @ 12% p.a. at least

instead of 6% for the post-assessment period, i.e., from 25 th

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September 2014 the date on which the order of the ITAT was passed.

7. Mr. Sharma for the Revenue submitted that Sub-section (1A) of

Section 244A applies only to refund arising as a result of giving effect

to an order under Section 250 or Section 254 or Section 260 or

Section 262 or Section 263 or Section 264 of the Act and does not

apply to amounts to be returned as against return of seized amounts

under Section 132A of the Act. He further stated that Petitioner has

admitted in the Petition that Petitioner's case is covered under

Section 132B(4) and not 244A and, therefore, today Mr. Porwal

cannot improvise on his case and seek more interest or the additional

3% interest under Sub-section (1A) of Section 244A.

8. We do not agree with Mr. Sharma because in the Petition itself

Petitioner has stated that Petitioner is also entitled to interest during

the period 25th September, 2014 to the date of actual payment during

the post-assessment period; that there is inordinate delay in releasing

the seized cash of Rs. 2,60,000/- which till date has not been released

although more than seven (now 9 plus) years have already expired

since the time Tribunal passed the order in favour of Petitioner on

24th September, 2014, Petitioner approaches this Hon'ble Court to

direct the Revenue to pay interest @ 12% on account of inordinate

delay in releasing the seized cash of Rs. 2,60,000/- from 25 th

September, 2014 to the date of actual payment; In respect of post-

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assessment period, i.e., from the day next following the day of

completion of assessment till the principal amount is actually

released to Petitioner, no interest has been provided u/s. 132B(4) of

the Income-tax Act, 1961; and various high courts have allowed

interest @ 12% p.a. on account of inordinate delay in releasing the

seized amount during the post-assessment period.

Therefore, if one reads the entire Petition, it is Petitioner's case

that Petitioner is entitled to interest @ 12% p.a. on account of

inordinate delay in releasing the seized amount during the post-

assessment period and Petitioner in effect is claiming compensation.

9. One thing is certain and it cannot be denied that Petitioner is

deprived of its justifiable money of Rs.2,60,000/- from 25 th

September 2014 solely due to the inaction of the Revenue. Such

inaction on the part of the Revenue is certainly contrary to the

provisions of the Act and on general principles Petitioner ought to be

compensated for such deprivation. Petitioner's money has been

unjustifiably withheld by the Department for almost nine years

without any rhyme or reason. Even this refund order has been

passed as stated in the affidavit-in-reply only after the matter was

listed at least four times and repeated adjournments were taken by

the Revenue and after the Court put pressure on the Revenue. The

refund is being given with interest after a substantial lapse of time

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and, in our view, Petitioner should be entitled to compensation for

the inordinate delay.

10. A Division Bench of this Court in Sanjeevkumar v. Union of

India1, after following principles and law laid down by the Apex

Court in the case of Sandvik Asia Limited, Pune v. CIT 2, held that 'it

is not the case of interpretation of 132B(4)(b) of the Act or under the

said provision, the Courts would restrict obligation and liability of the

Revenue to pay interest or compensation up to the date of payment.

The question for consideration of the Court raised by Petitioner is

whether Respondents can refuse to compensate the Petitioner for

wrongfully withholding the cash amount of Petitioner though by the

assessment order the liabilities of Petitioner's were declared as NIL

beyond the date of the assessment order .' The Court held that

Petitioner in that case, where the facts were almost similar to the case

at hand, were entitled to compensation'. Paragraphs 32 to 40 read as

under:

"32. There is no doubt that the said section 132B(4)(b) provides that, interest shall run from the date immediately following the expiry of the period of one hundred and twenty days from the date on which the last of the authorisations for search under section 132 or requisition under section 132A was executed to the date of completion of the assessment under section 153A or under Chapter XIV-B. In our view the said provision does not indicate any bar from awarding payment of interest or compensation in a situation where Court finds any delay on the part of the revenue in releasing the amount within time specifically prescribed under the provisions of law for no fault of the assessee.

1. 2022 (140) taxmann.com 598 (Bombay).

2. 2006 (150) Taxman 591 SC.

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33. The Hon'ble Supreme Court in a case of Sandvik Asia Ltd. (supra) while dealing with the claim for payment of interest under section 214 of the Act, 1961 made by the petitioner whether there was gross delay on the part of the revenue ranging from 12 to 17 years held that, there is no question of the delay being 'justifiable' as is argued and in any event if the revenue takes an erroneous view of the law, that cannot mean that the withholding of monies is 'justifiable' or 'not wrongful'.

34. The Hon'ble Supreme Court considered the issue that, this Act provided for payment of compensation for delayed payment of amounts due to an assessee in a case where these amounts include interest? It is held that, the Act recognizes the principle that a person should only be taxed in accordance with law and hence where excess amounts of tax are collected from an assessee or any amounts are wrongfully withheld from an assessee without authority of law the revenue must compensate the assessee. The Hon'ble Supreme Court in that matter directed the revenue to pay interest at the rate of 9% p.a. from the date it became payable till the date it was actually paid holding the revenue solely responsible for the delayed payment.

35. Mr. Sharma, learned counsel for the revenue strongly relied upon the observations made by the Hon'ble Supreme Court in paragraph no. 26 of the said judgment and would submit that, the award of interest on the refunded amount is as per the statutory provisions of law. When a specific provision has been made under the statute, such provision has to govern the field.

36. In our view the principles laid down by the Hon'ble Supreme Court of India in a case of Sandvik Asia Ltd. (supra) would apply to the facts of this case. The respondents were solely responsible for the gross delay in not releasing the cash amount of the petitioners under section 132B(4)(b) of the Act, 1961 and thus cannot refuse the payment of compensation to the petitioners for wrongfully withholding the said amount from the date of assessment order till payment.

37. Delhi High Court in a case of Ajay Gupta (supra) has held that, since the payment was made after the outer limit of the period prescribed under section 132B(4)(b) of the Act, 1961, the Petitioner would be entitled to compensation on account of delay for the subsequent period. The Delhi High Court followed the judgment of the Hon'ble Supreme Court in a case of Sandvik Asia Ltd. (supra) and directed the revenue to pay compensation/damages to the assessee on the balance sum for the subsequent period at the rate of 9% p.a. In our view, the principles laid down by the Delhi High Court in a case of Ajay Gupta (supra) after adverting to the judgment of Sandvik Asia Ltd. (supra) applies to the facts of this case. We are in respectful agreement with the view expressed by the Delhi

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High Court in the said judgment.

38. The Delhi High Court in a case of G. L. Jain (supra) after adverting to its earlier judgment in case of Ajay Gupta (supra) and judgment of the Hon'ble Supreme Court in case of Sandvik Asia Ltd. (supra) has held that there is no justification in refusing to pay compensation/damages for the delay caused by the respondents revenue in releasing the payment within the time prescribed due and payable to the petitioners and such interpretation cannot be accepted which would devoid the rights of the assessee. The Delhi High Court accordingly directed the revenue to pay interest at the rate of 12% p.a. on the balance amount for the subsequent period i.e. from the date of assessment order till the payment. In our view, the said judgment also would apply to the facts of this case. We are in respectful agreement with the view expressed by the Delhi High Court in a case of G. L. Jain (supra).

39. Insofar as judgment of the Hon'ble Supreme court in a case of Dilip Kumar & Co. (supra) relied upon by the learned counsel for the revenue is concerned, the Hon'ble Supreme Court in the said judgment had considered the question as to what interpretative rule to be applied while interpreting a tax exemption provision/notification when there is an ambiguity as to its applicability with reference to the entitlement of the assessee or the rate of tax to be applied. In paragraph no. 19 of the said judgment it is held by the Hon'ble Supreme Court that, when the words in statute are clear, plain and unambiguous and only one meaning can be inferred, the Courts are bound to give effect to the said meaning irrespective of consequences. If the words in the statute are plain and unambiguous, it becomes necessary to expound those words in their natural and ordinary sense.

40. In this case, it is not the case of interpretation of section 132B(4)(b) of the Act, 1961 or under the said provision, the Courts would restrict obligation and liability of the revenue to pay interest or compensation upto the date of payment. The question for consideration of this Court raised by the petitioners is whether the respondents can refuse to compensate the petitioners for wrongfully withholding the cash amount of the petitioners though by the assessment order the liabilities of the petitioners were declared as nil beyond the date of assessment order. The judgment of the Hon'ble Supreme Court in a case of Dilip Kumar & Company (supra) thus would not advance the case of the revenue."

(emphasis supplied)

In this case also there has been an inordinate delay.

Notwithstanding the order of the ITAT which attained finality on 25 th

September 2014, the Revenue did not consider it fit to return the Shivgan

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cash of Rs.2,60,000/- that was seized on or about 9 th July 1996.

Moreover, even after the PCIT passed the order on 31 st December

2019 under Section 132B of the Act, the Revenue did not consider it

fit to process and refund the amount. Even after the Petition was

filed and served and the lawyer appeared for the Revenue, still the

Revenue did not consider it fit to return the money. Therefore, in our

case this is nothing but a clear case of high handedness on the part of

the officers of the Revenue.

11. In our view, this is a fit and proper case in which action should

be initiated against all the officers concerned who were all in charge

of this case at the appropriate and relevant point of time and

particularly after 25th September 2014 and in any case after 31 st

December 2019 and most certainly after the Petition was filed and

because of their inaction, Petitioner was made to suffer both

financially and mentally. Admittedly, the amount of Rs.2,60,000/-

was to be refunded to Petitioner when the order dated 25 th

September 2014 passed by the ITAT attained finality. A copy of this

judgment be forwarded to the Prime Minister's office and to Hon'ble

Minister for Finance for perusal and further appropriate action

against erring officials on whose lethargic and adamant attitude the

Department has to suffer financially. According to the computation

of income tendered by Mr. Sharma, interest amount payable was

Rs.5,50,983/-. The Interest as on 24 th September 2014 payable was Shivgan

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Rs.4,10,583/-. Any amount that is payable to Petitioner in excess of

Rs.4,10,583/- towards interest may be recovered from the erring

officials together with interest thereon at 12% p.a. by the

Government of India.

12. Petitioner, therefore, will be entitled to interest at 12% p.a. for

the post-assessment period, i.e., from 25th September 2014 until

payment/realization. This amount shall be processed and the

amount shall be credited to Petitioner's account within two weeks of

this order being uploaded. Failure to comply, Petitioner is at liberty

to approach this Court for issuance of notice for contempt against the

officers of Respondents.

13. Petition disposed.

14. At this stage, Mr. Sharma states that amount will be paid by

30th September 2023. Time to make payment by 30th September

2023 is granted.

  (DR. N. K. GOKHALE, J.)                             (K. R. SHRIRAM, J.)




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