IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE TWENTY SECOND DAY OF JULY TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE B.PRAKASH RAO and THE HON'BLE MR JUSTICE G. CHANDRAIAH WRIT PETITION NO: 14807 of 2004 Between: Shri S.r. Kailas S/o. Sri Bontaiah R/o. 607 Street No.3 Tarnaka, Secunderabad. ..... PETITIONER AND 1 Settlement Commission (IT & WT) Additional Bench Represented by its Secretary 640, Anna Salai Nandanam Chennai. 2 The Commissioner of Income Tax Circle 2 (1) Hyderabad. 3 The Deputy Commissioner of Income Tax Circle 2 (1) Hyderabad. 4 The Tax Recovery Officer Range-2, Hyderabad. 5 The Manager ICICI Bank, Habsiguda, Hyderabad. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Aﬃdavit ﬁled herein the High Court will be pleased to issue a writ order or direction more particularly one in the nature of writ of mandamus to set aside the order Dt.26.2.2004 passed by the 1st respondent and the consequential order dt.22.7.2004 for the assessment years 1989-90 to 1993 - 1994 issued by the 3rd respondent and pass. Counsel for the Petitioner: MR.B.CHANDRASEN REDDY Counsel for Respondents 1 to 4: Mr. S.R. Ashok Counsel for Respondent No.5: Mr. S. Niranjan Reddy WRIT PETITION NO : 18853 of 2007 Between: 1 Sri S.R. Kailash, S/o. Late Sri Bontaiah, R/o. 12-13-92, Street No. 3, Tarnaka, Secunderabad. 2 Ravi Shanker Kailash, S/o. S.R. Kailash, r/o. 12-13-92, street no.3, Tarnaka, Secunderabad. ..... PETITIONERS AND 1 The Commissioner of Income Tax, Aayakar Bhavan, Basheerbagh, Hyderabad. 2 The Deputy Commissioner of Income Tax, Circle -2(1), Room No. 508, 5th Floor, Aayakar Bhavan, Basheerbagh, Hyderabad. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Aﬃdavit ﬁled herein the High Court will be pleased to issue a Writ, order or direction, more particularly one in the nature of Writ of Mandamus declaring the action of the second Respondent proposing to adjust the Refund payable to the Petitioners against the tax arrears for other assessment years, which claim of the second Respondents is pending adjudication before this Hon'ble High Court in WP No. 14807 of 2004 and in respect of which this Hon'ble High Court granted stay in WPMP NO. 19107 of 2004 in WP NO. 14807 of 2004, as illegal and without any authority and consequently, direct the Respondents to issue consequential orders along with the refund of Rs.1,84,12,856/- (Rupees one Crore Eighty Four Lakhs Twelve Thousand Eight Hundred Fifty Six Only) with interest payable to the Petitioners forthwith and pass such other order or orders as this Hon'ble Court may deem fit and proper in the circumstances of the case. Counsel for the Petitioner: MR.B.CHANDRASEN REDDY Counsel for the Respondents: MR.S.R.ASHOK The Court made the following : THE HON'BLE MR JUSTICE B.PRAKASH RAO and THE HON'BLE MR JUSTICE G.CHANDRAIAH W.P.M.P.Nos.29666 of 2007 & 13182 of 2008 in W.P.NO: 14807 of 2004 AND W.P.M.P.No.24247 of 2007 In W.P.No.18853 of 2007 COMMON ORDER: (Per Hon’ble Sri Justice B. Prakash Rao) Heard Sri B. Chandrasen Reddy, learned counsel for the petitioners, who ﬁled W.P.M.P.No.13182 of 2008, and Sri S.R.Ashok, learned Standing Counsel appearing for the Income Tax Department. At their request only both the writ petitions are taken up for disposal. W.P.No.14807 of 2004 is ﬁled seeking to set aside the order dated 26.2.2004 passed by the ﬁrst respondent and the consequential order dated 22.07.2004 for the assessment years 1989-90 to 1993-94, whereas W.P.No.18853 of 2007 is ﬁled to declare the action of the second respondent proposing to adjust the refund payable to the petitioners against the tax arrears for other assessment years, which is subjudice before this Court in the above W.P.No.14807 of 2004 in respect of which, this Court already granted stay in WPMP No.19107 of 2004 in the later writ, as illegal and arbitrary and for a consequential direction to refund Rs.1,84,12,856/- with interest payable to the petitioners. There is no dispute with regard to the fact that the petitioners are entitled to waiver of interest under section 234- A of the Act only for the Assessment year 1992-93 and not for the assessment year 1993-94. The Income Tax Department determined the tax amount payable by the petitioners for the assessment years 1989-90 to 1993-94 and proposed to adjust the refund amount of Rs.1,84,12,856/- towards the tax arrears due from the petitioners pursuant to the order of the Settlement Commission dated 26.02.2004. Admittedly, the petitioners are entitled to refund of Rs.1,84,12,856/-, whereas according to the respondents certain arrears have been found payable by the petitioners and therefore they are entitled to adjust the amount under Section 245(d) of the Income Tax Act. This Court on earlier occasion granted interim direction in W.P.M.P.o.33743 of 2007 dated 21.02.2008 directing refund of amount to a tune of Rs.60,00,000/- subject to condition of the petitioners offering security to the extent of Rs.53,00,000/-. Now another application in WPMP No.13182 of 2008 is ﬁled by the ﬁrst petitioner seeking to release a further amount of Rs.1,24,12,856/- out of the total amount refundable Rs.1,84,12,856/- to the petitioner as admitted by the second respondent, whereas the department ﬁled WPMP No.29666 of 2007 seeking to permit the Income Tax Department to adjust the refundable amount of Rs.1.84 crores towards the taxes due from the petitioner pursuant to the order of the Settlement Commission dated 26.02.2004. Having heard the counsel on either side, the questions that arise for consideration are whether the writ petitioners are entitled to refund of amount and whether the request made by the respondent-department to adjust the refund against the arrears can be allowed. There is no dispute with regard to the fact that the petitioner became entitled to refund of an amount of Rs.1,84,12,856/- and later fell in arrears of taxes for the subsequent years. Therefore, the said refundable amount is sought to be adjusted towards taxes subsequently fell due. By taking into account the dual position and the facts and circumstances of the case, the interest of justice can be served by allowing the refund on furnishing security, so that the interests of both sides can be ably safeguarded. However, the same shall be subject to the decision ﬁnally on the intricate questions of law, which are pending consideration before the Courts. Accordingly, W.P.M.P.No.29666 of 2007 is dismissed and W.P.M.P.No.13182 of 2008 and W.P.M.P.No.24247 of 2007 are allowed directing the respondents to refund the amount of Rs.1,24,12,856/- out of the actual amount of Rs.1,84,12,856/- as per their entitlement subject to condition of the petitioners give security to the satisfaction of the authorities concerned. It is always open for the respondent-authorities to take appropriate steps in accordance with law consequent upon disposal of the case and ultimate decision on the questions. Subject to the above directions both the Writ Petitions are disposed of. No costs. ____________________ (B. PRAKASH RAO, J.) ___________________ (G. CHANDRAIAH, J.) 22nd July, 2008 Js. ASSISTANT REGISTRAR // TRUE COPY // SECTION OFFICER To 1 Settlement Commission (IT & WT) Additional Bench Represented by its Secretary 640, Anna Salai Nandanam Chennai. 2 The Commissioner of Income Tax Circle 2 (1) Hyderabad. 3 The Deputy Commissioner of Income Tax Circle 2 (1) Hyderabad. 4 The Tax Recovery Officer Range-2, Hyderabad. 5 The Manager ICICI Bank, Habsiguda, Hyderabad. 6 2 CD copies.