Hasmukhalal vs Income Tax Officer and Others

A.M. Sapre, J.—The decision rendered in this petition shall also govern the disposal of another connected petition being W. P. No. 918 of 2000. as in both these petitions, a common question of law is involved. The facts in brief that led to the filing of the writ need mention. The petitioner is an assessee within the meaning of Section 2(7) of the Income Tax Act, 1961. He is being assessed as an individual. He is engaged in the business of jewellery and money-lending.

That for the assessment years 1986-87, 1988-89 to 1992-93. the petitioner was assessed for his income by the Assessing Officer u/s 143(3) of the Act. Since some of the orders were against the petitioner, he filed appeals to the appellate authority (Commissioner of Appeals). The appellate authority by its orders (annexures P-1 to P-6) partly allowed these appeals. As a result of these appellate orders, the petitioner became entitled to receive some amount by way of refund. It is not in dispute that these appellate orders became final as the same were not questioned in further appeal to the Tribunal by the Revenue, nor the petitioner took them in further appeal. The petitioner then on May 1, 1999, made an application to the Assessing Officer (annexures P-7 to P-12) praying for refund amount which has become payable to him as a consequence of the appellate orders. By letter dated June 28, 1999 (annexure P-13), the Assessing Officer declined to refund the amount to the petitioner on the ground that since the Department has to recover a total outstanding of Rs. 37,49,406 from the deceased father of the petitioner for the assessment years 1982-83 to 1990-91 and since, the petitioner has become or in other words is a legal representative of his late father u/s 159(1) of the Act and hence, the refund amount payable to the petitioner be not adjusted against the dues of the late father. It is against this letter/order, the petitioner has felt aggrieved and filed this writ.

The Revenue has supported the impugned rejection by filing a return.

Heard Shri G. M. Chaphekar, learned senior counsel with Shri S. S. Samvatsar, learned counsel for the petitioner, and Shri A. P. Patankar, learned counsel for respondents.

Having heard learned counsel for the parties and having perused the entire record of the case in the light of relevant legal provisions applicable to the issue, I find merit in this writ and it deserves to be allowed thereby resulting in quashing of the impugned order.

In my considered opinion, the Assessing Officer was not right in adjusting the refund amount payable to the petitioner against the outstanding dues of his late father by relying on Section 159(4) of the Act. The refund which has become payable to the petitioner is out of his personal case having no connection or/and nexus with that of the case of his late father. It is not the case of the Department that the refund which has become payable to the petitioner does not belong to the petitioner but in fact belongs to his late father which the petitioner is now claiming in his capacity as a legal representative of his late father.

In order to make the petitioner liable to pay the outstanding dues of his late father, it is necessary, rather obligatory upon the Revenue (income tax Department) to first prove that what is being paid or payable to the petitioner by the Department is in fact the dues of his late father and secondly, the Department is also entitled to recover the outstanding dues of the petitioner''s late father only out of an estate belonging to the petitioner''s late father which has devolved upon the petitioner as a legal representative. In other words, the Department can only recover the outstanding dues of the late father of the petitioner out of the assets belonging to the late father which by virtue of law of inheritance or by testamentary succession have gone in the hands of the petitioner, i.e., son.

As held supra, neither is it the case of Department nor were efforts made to show that the refund which the petitioner is claiming belongs to his father. On the other hand, it clearly appears that what is being claimed by the petitioner is his own money out of his individual assessment cases having no connection with the assets of his father.

In view of the aforesaid discussion, the petition succeeds and is hereby allowed. The impugned order dated June 28, 1999 (annexure P-13), passed by respondent No. 1 is hereby set aside. However, it is made clear that the Department is always free to recover the outstanding dues standing in the name of the late Dayalji Mulji Bagadia, the father of the petitioner out of any property, movable or immovable belonging to Dayalji Mulji and now devolved on any of his legal representatives including the petitioner. No costs.