Facts of the Case

The petitioner, Anil Kumar Jain, filed a writ petition being aggrieved by the failure of the Revenue to refund a sum of ₹3,09,520/-, which according to him was illegally retained after adjustment of tax and penalty liabilities from the seized amount of ₹1,13,50,000/-. The petitioner also sought interest on the retained amount.

The matter was taken up for final disposal with consent of parties at the initial stage itself.

Issues Involved

  1. Whether the petitioner is entitled to refund of the excess amount retained by the Revenue after adjustment of dues.
  2. Whether the writ petition is maintainable or the petitioner should have availed remedy under Section 154 of the Income Tax Act, 1961.
  3. Whether the matter should be remitted to the Assessing Officer for fresh consideration.

Petitioner’s Arguments

  • The Revenue has illegally retained ₹3,09,520/- even after adjusting tax and penalty liabilities.
  • The petitioner is entitled to refund along with interest on the said amount.
  • The non-refund amounts to unjust enrichment by the department.

Respondent’s Arguments

  • The petitioner ought to have filed an application for rectification under Section 154 of the Income Tax Act, 1961.
  • Considering the lapse of several years since adjustment, the appropriate course would be to remit the matter to the Assessing Officer for passing a speaking order on the petitioner’s grievance.

Court’s Findings / Order

The Delhi High Court observed that, given the circumstances, remitting the matter to the Assessing Officer would be the most appropriate course.

Directions Issued:

  1. The writ petition shall be treated as the petitioner’s representation/application.
  2. The Assessing Officer shall pass a speaking order after granting hearing to the petitioner or his authorized representative.
  3. The exercise shall be completed within 6 weeks from receipt of the order.
  4. The petitioner shall file a copy of the writ petition along with annexures before the Assessing Officer.
  5. Prior notice of hearing shall be given, and proceedings may be conducted via video conferencing.
  6. If the order is adverse, the petitioner is at liberty to take appropriate legal remedies.

Important Clarification by Court

  • The Court did not adjudicate the merits of the refund claim.
  • It emphasized procedural fairness by directing a reasoned (speaking) order from the Assessing Officer.
  • Availability of alternative statutory remedy under Section 154 was acknowledged but balanced with practical considerations of delay.

Sections Involved

  • Section 154 of the Income Tax Act, 1961 (Rectification of Mistake)
  • Principles relating to refund of excess tax retained by Revenue 

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2021:DHC:3241-DB/TWS08102021CW110452021_160811.pdf

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