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Case Law Details

Case Name : PCIT Vs Shahaji Bhanudas Bhad (Bombay High Court)
Appeal Number : Interim Application No. 33 of 2021
Date of Judgement/Order : 18/01/2024
Related Assessment Year :

PCIT Vs Shahaji Bhanudas Bhad (Bombay High Court)

Bombay HC Orders Deposit of Income Tax Refund with Prothonotary and Senior Master

The recent ruling by the Bombay High Court in the case of PCIT Vs Shahaji Bhanudas Bhad sheds light on the intricacies of Income Tax refund management. Let’s delve into the details of this significant legal development.

  • Interim Applications and ITAT Order Stay: The interim applications sought a stay on the order issued by the Income Tax Appellate Tribunal (ITAT) regarding the grant of a refund. Concerns were raised about the accumulation of interest against the Department and the potential use of public funds to pay interest.
  • Department’s Response and Refund Amount: Mr. Manwani, representing the Department, referred to a letter from the Deputy Commissioner of Income Tax, indicating a refund amount of approximately Rs.22,99,20,828, inclusive of interest under Section 244A of the Income Tax Act, 1961. The Department assured the court of filing an affidavit explaining the calculation methodology within two weeks.
  • Deposit with Prothonotary & Senior Master: It was proposed that the refund amount would be deposited with the Prothonotary & Senior Master of the High Court, Mumbai, for investment in fixed deposits with a nationalized bank. This arrangement would allow the court to pass appropriate orders for release upon the disposal of appeals, preserving the Department’s rights and contentions.
  • Assessee’s Liberty to Withdraw: The assessee was granted liberty to withdraw the amount by filing a suitable application, subject to the court’s consideration after hearing the Revenue.
  • Deposit and Investment Procedure: Mr. Manwani assured the court that the amount payable, slightly exceeding Rs.22,99,20,828, would be deposited within two weeks and invested initially for 12 or 13 months with a nationalized bank. Subsequent renewal would be subject to court orders.
  • Disposition of Interim Applications: All interim applications were disposed of, with the Income Tax Appeals scheduled for final hearing on 16th February 2024.
  • Conclusion of Writ Petitions: Following a separate order, the Writ Petitions were deemed disposed of.

The subsequent developments highlighted challenges in the deposit process, including dishonored cheques due to PAN number issues. However, the Revenue’s compliance with the court’s order was eventually achieved through the submission of Demand Drafts.

This ruling underscores the importance of efficient management of Income Tax refunds and adherence to court directives, ensuring equitable treatment of taxpayers and governmental interests alike.

FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT

1. These Interim Applications are for stay of the order passed by the Income Tax Appellate Tribunal (“ITAT”) to grant refund.

2. When the Department was informed that interest is accumulating against the Department and public money would be used to pay interest, Mr. Manwani relying on a letter dated 27th December 2023 from the Deputy Commissioner of Income Tax (“DCIT”), Circle-2, Pune to the Principal Commissioner of Income Tax-2, Pune states that the amount of refund due would be approximately Rs.22,99,20,828/- which would include interest under Section 244A of the Income Tax Act, 1961 (“Act”). Mr. Manwani states that an affidavit giving the working as to how this amount was arrived at, will be filed and copy served on assessee through his advocate within two weeks. Statement accepted.

3. Manwani relying on the said letter dated 27th December 2023 states that the Department would deposit this amount of Rs.22,99,20,828/- with the Prothonotary & Senior Master, High Court, Mumbai, who can invest the amount in fixed deposit with a nationalised bank and at the end when the Appeals are disposed, the Court can pass appropriate orders for release of the amount. Mr. Manwani adds that this is without prejudice to Department’s rights and contentions in the Appeals filed.

4. Samal states that liberty should be given to assessee to withdraw the amount. Assessee may take out a suitable application and the Court will consider the application on merits after hearing the Revenue.

5. Manwani further states that within two weeks the amount as payable on that date, which will be marginally more than Rs.22,99,20,828/-, will be deposited with the Prothonotary & Senior Master, High Court, Mumbai. On such deposit being made, the Prothonotary & Senior Master, High Court, Mumbai shall invest the amount with a nationalised bank initially for a period of 12 or 13 months to ensure better rate of interest to be renewed for a like period subject to further orders from this Court.

6. All Interim Applications stand disposed.

7. Income Tax Appeals be listed for final hearing on 16th February 2024.

1. Samal states, in view of separate order passed today in Interim Application No.33 of 2021 with connected applications, these Writ Petitions won’t survive.

2. Petitions disposed.

1. By an order dated 18th January, 2024 read with order dated 23rd January, 2024, this Court recorded Revenue’s undertaking to deposit a sum of Rs.22,99,20,828/- with the Prothonotary & Senior Master, High Court, Bombay within a period of two weeks.

2. Manwani relying on an affidavit of one Shashikant M. Kulkarni, Assistant Commissioner of Income Tax, Circle-2, Pune, affirmed on 4th March, 2024, states, Revenue had handed over cheques totalling to sum of Rs.23,05,13,504/- based on the interest calculated upto 31st January, 2024 with the Prothonotary & Senior Master, High Court, Bombay but the cheques came to be dishonoured by the State Bank of India (“SBI”) on the ground that the PAN Number of the Prothonotary & Senior Master, High Court, Bombay was not made available to the SBI.

3. Manwani states, Revenue has handed over six Demand Drafts (“DDs”) all dated 2nd March, 2024 issued by the SBI, Pune in favour of the Prothonotary & Senior Master, High Court, Mumbai for Shivgan a total sum of Rs.23,05,13,504/-. Mr. Manwani states, the forwarding letter dated 2nd March, 2024 with the six DDs have been submitted in the Registry today. Statement accepted. The order dated 18th January, 2024 read with the order dated 23rd January, 2024 is taken to have been complied with.

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