Combined Engineering Industries and Agencies (P.) Ltd. vs Income Tax Officer and Others

N. V. Balasubramanian J.

The above writ petition is filed for the issue of a writ of mandamus, directing the respondents to refund a sum of Rs. 64,540 being the amount

deducted by W. S. Insulators of India Limited and paid to the Income Tax Department out of the amounts due and payable to the petitioner

together with interest at 15 per cent, per annum thereon from the date of deduction till the date of refund. Though the main prayer in the writ

petition is for a direction to grant refund of the tax, the sum and substance of the affidavit filed in support of the writ petition is that the writ

petitioner is aggrieved by the order passed by the Central Board of Direct Taxes, i.e., the fifth respondent.

The Income Tax Officer, by his letter dated December 3, 1990, intimated the petitioner that the petition filed by the petitioner on December 18,

1989, u/s 119(2)(b) of the Income Tax Act, 1961, before the Central Board of Direct Taxes has been rejected by the Board for the assessment

year 1985-86. The communication by the Income Tax Officer, Headquarters, Madras, to the petitioner docs not disclose the reason given by the

Board for the rejection of the petition filed u/s 119(2)(b) of the Income Tax Act.

This court in R. Seshammal Vs. Income Tax Officer and Another, held as follows (page 187):

This is hardly the manner in which the State is expected to deal with the citizens, who in their anxiety to comply with all the requirements of the Act

pay monies as advance tax to the State, even though the monies were not actually required to be paid by them and, thereafter, seek refund of the

monies so paid by mistake after the proceedings under the Act are dropped by the authorities concerned. The State is not entitled to plead the

hypertechnical plea of limitation in such a situation to avoid return of the amounts. Section 119 of the Act vests ample power in the Board to render

justice in such a situation. The Board has acted arbitrarily in rejecting the petitioner''s request for refund.

I am of the view that the Central Board of Direct Tax should pass a speaking order after hearing the petitioner and the order should be a

reasoned order. Hence, the order dated December 3, 1990, communicated by the Income Tax Officer is quashed. The result is that the matter is

remitted to the Central Board of Direct Taxes, New Delhi, for fresh consideration of the earlier matter after giving personal opportunity to the

petitioner.

Since the matter is pending from 1990, the fifth respondent is directed to pass order within three months from the date of receipt of copy of this

order. The fifth respondent is also directed to take into account, the decision of this court in R. Seshammal Vs. Income Tax Officer and Another,

and also its own Circular No. 670, dated October 26, 1993 Commissioner of Income Tax Vs. Kesoram Industries and Cotton Mills Ltd., or any

other matter which may be brought to its attention at the time of passing of the order. The writ petition is disposed of accordingly.