Competent Authority-cum-Chief Administrator, Patiala Urban Planning and Development Authority, Patiala V. Deputy Commissioner of Income Tax, Circle-1 (Exemptions), Chandigarh

CWP/2009/2019

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The case revolves around the wrongful attachment and retention of funds belonging to the Patiala Urban Planning and Development Authority by the Deputy Commissioner of Income Tax, Circle-1 (Exemptions), Chandigarh. Initially, the funds were wrongly attached due to a tax recovery against a different entity, leading to a legal challenge (CWP No. 16162 of 2014) which resulted in the refund of the amount but not the interest. The petitioner sought interest for the period the funds were wrongfully retained, arguing that the general principles of equity and fairness should apply, despite the absence of specific provisions in the Income Tax Act for such a scenario. The court agreed with the petitioner's stance, emphasizing that the wrongful retention of funds justified the payment of interest.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 670925 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 23-07-2019
• Assessment Year: misc
• Other Referred Cases: CWP No. 16162 of 2014
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: DENESH GOYAL
• Assessee Lawyers: REETA KOHLI; CHAHAT AGGARWAL
• Keywords: Equity and Fairness; Illegal Attachment; Interest on Refund; Wrongful retention
• Section: 244(A)

Judgement Text

"CWP No. 2009 of 2019 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP No. 2009 of 2019 Date of Decision: 23.7.2019 M/s Competent Authority-cum-Chief Administrator, Patiala Urban Planning and Development Authority, Patiala .......Petitioner Vs. Deputy Commissioner of Income Tax, Circle-1 (Exemptions), Chandigarh and others .......Respondents CORAM: HON’BLE MR. JUSTICE AJAY TEWARI HON'BLE MR. JUSTICE HARNARESH SINGH GILL Present: - Ms. Reeta Kohli, Senior Advocate with Ms. Chahat Aggarwal, Advocate for the petitioner. Mr. Denesh Goyal, Senior Standing Counsel for the respondent-revenue. ***** AJAY TEWARI , J (ORAL) 1. This petition has been filed against the action of the respondents in rejecting the representation wherein the petitioner had prayed for interest for wrongful retention of its amount. 2. The admitted facts are that there was a tax recovery against Patiala Development Authority. However, the attachment was made of the amount belonging to the petitioner. 3. The petitioner had challenged that attachment in this Court by way of CWP No. 16162 of 2014. The said petition was allowed vide order dated 17.3.2015 and this Court held that the amount was wrongly GURPREET SINGH 2019.07.26 13:38 I attest to the accuracy and authenticity of this document chandigarh CWP No. 2009 of 2019 -2- attached and directed the Revenue to refund the same. The Revenue has refunded the amount but rejected the plea of the petitioner for interest forcing the petitioner to file this petition. 4. The precise claim of the petitioner is that once the money which belonged to it was wrongly attached and retained by the Revenue and was duly refunded, then it was entitled to interest for the period during which the money was wrongly retained. 5. In the written statement, it has been accepted by the respondents that the money was wrongly attached and retained but the plea taken to justify non-payment of interest is that there is no provision for grant of interest on any excess income tax which may be recovered. 6. Learned senior counsel appearing for the petitioner has argued that she would have no objection with this proposition of law which has been sought to be advanced by the Revenue but the present is not a case of recovery of excess tax but a case where attachment and retention of money was made which did not belong to the defaulter but belonged to a different person. As per her, this wrongful attachment and retention could never be envisaged under the Income Tax Act and, consequently, this attachment and retention cannot be related to any provision of the Income Tax Act and the interest which has now been sought is on the general grounds of equity and fairness. As per her, the claim which has now been made at the rate of less than 10% for wrongful retention of money for a period of about 15 months, cannot be said to be excessive by any standards. 7. In our opinion, the arguments of the petitioner must prevail. The provision of interest in Section 244-A of the Income Tax Act would have no applicability in the present case because it is a case of illegal GURPREET SINGH 2019.07.26 13:38 I attest to the accuracy and authenticity of this document chandigarh CWP No. 2009 of 2019 -3- attachment and retention. In the written statement, the Revenue has accepted that the money was wrongly attached and retained. There can be no escape from the payment of interest. The rate of interest claimed also cannot be said to be excessive by any standards. 8. The petition is allowed. The interest of Rs. 3.68 crores be now paid to the petitioner within two months from the date of receipt of certified copy of this order, failing which there would be further interest applicable thereafter @ 9% per annum on this amount. (AJAY TEWARI) JUDGE (HARNARESH SINGH GILL) July 23, 2019 JUDGE Gurpreet Whether speaking /reasoned : Yes Whether Reportable : No GURPREET SINGH 2019.07.26 13:38 I attest to the accuracy and authenticity of this document chandigarh "