Research › Search › Judgment

Kerala High Court · body

2013 DIGILAW 1007 (KER)

C. B Koyakutty v. Income-Tax Officer

2013-11-19

A.V.RAMAKRISHNA PILLAI

body2013
JUDGMENT A.V. Ramakrishna Pillai, J. 1. The petitioner challenges Ext.P14 insofar as it refuses to grant interest on the amount of Rs.57,0 62/- which was withheld by the respondents and also for a direction to the respondents to grant interest on the aforesaid amount from 25.10.1998 till 8.3.2002 together with interest till the date of payment. 2. A sum of Rs.1,09,400/- was seized from the petitioner on 27.9.1986 relevant to the assessment year 1987-88 by the customs authorities. This was subsequently handed over to the Enforcement Director, Calicut. The aforesaid amount together with interest of Rs.9,907/- totaling to Rs.1,19,307/- was taken over by the respondent department on 25.10.1988. The aforesaid amount was deposited in the P.D.Account of the 2nd respondent. Later on 17.2.89, Ext.Pl order was passed appropriating the entire amount towards tax, interest and penalty. 3. Assessment proceedings were initiated for the year 1987-88 and it was completed resulting in a demand of Rs.62,245/- which was adjusted against the P.D.Account. The appeal preferred by the petitioner against the assessment order before the Commissioner of Income Tax (Appeals) was allowed and the second appeal before the Income Tax Appellate Tribunal was dismissed. Consequently by order dated 26.7.99, the entire amount adjusted from the P.D Account i.e. Rs.62,245/- together with interest of Rs.83,969/- were found to be refundable to the petitioner and accordingly refund order was issued. 4. After adjustment of the aforesaid amount of Rs.62,245/- on completion of the assessment, an amount of Rs.57,062/- was found as excess payment and the excess payment had to be paid back to the petitioner/assessee. Accordingly, it was paid. Now, the petitioner claims interest on the said amount of Rs.57,062/-, alleging that the amount was unauthorisedly with held by the respondents. 5. In the counter filed by the respondents, the stand taken by the department was that since it was not an amount refundable to the petitioner on completion of the assessment proceedings as per the provisions of the Income Tax Act, no interest is liable to be paid. 6. I have heard the learned counsel for the petitioner and the learned Senior Standing Counsel for the respondent department. 7. 6. I have heard the learned counsel for the petitioner and the learned Senior Standing Counsel for the respondent department. 7. While the learned counsel for the petitioner alleged that the aforesaid amount of Rs.57,062/- was illegally withheld by the respondent department and, therefore, the petitioner is entitled to get interest over the same, the learned Senior Standing Counsel for the respondents would argue that the aforesaid amount was the amount releasable and not refundable to the petitioner/assessee which was lying in a P.D Account of the 2nd respondent. It was pointed out that the same was not utilised by the respondent department and no interest is due on this amount. 8. It was further argued that as per Section 132B(4)(b) interest payable to the assessee shall run from the date immediately following the expiry of the period of six months from the date of the order under sub section (5) of Section 132 to the date of regular assessment or re-assessment referred to in clause (1) of sub section (1) or as the case may be, to the date of last of such assessment or reassessment. 9. According to the learned Senior Standing Counsel, in this case, the assessment has been completed within six months from the date of order under Section 132(5) as per law. Therefore, the respondent department cannot give any interest on the aforesaid amount to the petitioner/assessee. The learned Senior Standing Counsel also invited my attention to the decision of a Division Bench of this Court in Kurumber Betta Estate v. Income-Tax Officer and Others, (2002) 257 ITR 328 wherein it was held that there is no provision in the Income Tax Act which requires the revenue to pay interest kept in personal deposit account. 10. This Court is not inclined to accept the said argument; because, as soon as appropriation is made by the department the P.D status ends. Though, initially, the entire amount was deposited in P.D Account, later it was appropriated as per Ext.PI order. This was followed by the completion of the assessment for the assessment year 1987-88 resulting in demand. Therefore, the amount which was found excessive and came to the hands of the department would fetch interest. The stand taken by the respondent department that no interest is liable to be paid on the aforesaid amount is not convincing. 11. This was followed by the completion of the assessment for the assessment year 1987-88 resulting in demand. Therefore, the amount which was found excessive and came to the hands of the department would fetch interest. The stand taken by the respondent department that no interest is liable to be paid on the aforesaid amount is not convincing. 11. The stand taken by the respondents that the assessment has been completed within six months from the date of order under Section 132(5) and, therefore, no interest is payable also will not stand. The petitioner sustained a loss on account of the aforesaid amount to the petitioner from 17.2.89 i.e. the date of Ext.PI appropriation order till 8.3.2002, However, the request for interest on the interest so awarded is hereby disallowed. The respondents shall make the payment within three months from the date of receipt of a copy of this judgment.