VIDIT KUMAR AGARWAL V. SRI ARUN KUMAR AND 2 OTHER ASSISTANT COMMISSIONER INCOME TAX RANGE -2(1)(1)

CAPL/5268/2022

AI Insights

The case revolves around a contempt application filed by Vidit Kumar Agarwal against Sri Arun Kumar and others, alleging willful disobedience of a court order regarding the payment of interest on a seized amount. The original order dated 06.10.2021 entitled Agarwal to interest on a seized amount of Rs. 32,34,600, which was later corrected to specify a 120-day period for interest calculation instead of 20 days. The correction did not alter the interest rate, which remained at 1.5% per month. The applicant contended that the payment received was based on simple interest, contrary to the court's intention of compound interest. However, the court clarified that the interest was to be calculated as simple interest under the relevant sections of the Income Tax Act, and thus the payment made was compliant with the court's order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 671341 (HC-ALLAHABAD)
• Appeal Type: Others
• Pronouncement Date: 29-04-2025
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: GAURAV MAHAJAN
• Assessee Lawyers: SUYASH AGARWAL
• Keywords: Compound Interest; Contempt Application; Interest calculation; Simple Interest; Willful disobedience
• Section: 244A(1)(b); 132B(4)(b)

Judgement Text

"Neutral Citation No. - 2025:AHC:67350 Court No. - 1 Case :- CONTEMPT APPLICATION (CIVIL) No. - 5268 of 2022 Applicant :- Vidit Kumar Agarwal Opposite Party :- Sri Arun Kumar And 2 Other Assistant Commissioner Income Tax Range -2(1)(1) Counsel for Applicant :- Suyash Agarwal Counsel for Opposite Party :- Gaurav Mahajan Hon'ble Salil Kumar Rai,J. The present contempt application has been filed pleading willful disobedience of the order dated 06.10.2021 passed in Writ Tax No. 988 of 2018. The relevant part of the order dated 06.10.2021 is reproduced below:- Keeping in mind the provisions of Section 132 B (4) (b) read with Section 244A (1) (b), the petitioner is further found entitled to interest at the rate of 1 and 1/2 per cent per month from the expiry of 20 days from the last authorization issued against him, arising from the seizure/detention of Rs.32,34,600/- made by the police authorities, on 03.06.1998. Thus the petitioner would be entitled to a refund of Rs. 16,00,000/- together with interest as above. The interest at that rate would be applied from that start date, up to the date of actual payment made to the petitioner, on the amount of 16,00,000/- only. As to the balance amount of the other persons namely Sri Ram Kirshna Agarwal (vis-a-vis for seizure of Rs. 8,00,000/-) and Sri Deepak Kumar Agarwal (vis-a-vis for seizure of Rs. 8,34,600) they may remain similarly entitled. We find that interest of justice has been met in the present case inasmuch as the block assessment order arising from the seizure, was made in the status of A.O.P. While that finding may have been erroneous, the Tribunal quashed the entire assessment proceedings, without allowing the revenue authorities to make a regular reassessment. Hence we do not find it a fit case to award any further amount to the petitioner, by way of cost or compensation. The writ petition is thus allowed. No order as to costs. Subsequently the order dated 06.10.2021 was corrected by an order dated 18.11.2022 passed on an application filed for correction of the order dated 06.10.2021 numbered as Civil Misc. Correction Application No. 3 of 2022. The application was filed by the opposite parties in Writ Tax No. 988 of 2018. The order dated 18.11.2022 is reproduced below:- Re: C.M. Correction Application No. 3 of 2022 1. Heard Sri Gaurav Mahajan, learned counsel for the applicant and Shri Rakesh Ranjan Agrawal, Senior Advocate, assisted by Shri Suyash Agarwal, learned counsel for the assessee. 2. In the first place, there is a typographical error while specifying the period from which interest is to be computed in view of the clear language of Section 132B(4)(b) of the Income Tax Act, 1961. That period is 120 days. 3. Typographical error mentioning of the period '20' days appearing in fourth line of the second paragraph of the page number 3 of the order dated 06.10.2021 is corrected to read '120' days. 4. As to the second correction prayed to correct the rate of interest 1.5%, the same is declined. 5. Keeping in mind the interest liabilities that arise under Section 132B(4)(b) read with Section 244A(1)(b) of the aforesaid Act, in exercise of jurisdiction under Article 226 of the Constitution of India, the Court had provided for interest payment at the rate of 1 and 1/2 per cent (cumulatively). That being the exercise on merits, no error is shown to exist on the face of record as may require correction. 6. Accordingly, application is disposed of. It is on record and admitted by the parties that Rs. 42,32,000/- has been paid to the applicant. The opposite parties, i.e., alleged contemners and the officers of the Revenue plead that the aforesaid payment is in compliance of the order passed by this Court. The applicant pleads that the aforesaid payment is not in full compliance of the order passed by this Court as the amount paid to the applicant has been computed after giving only simple interest to the applicant even though as a consequence of the order dated 06.10.2021, corrected by the order dated 18.11.2022, the applicant was entitled to compound interest on the principal amount. The contention of the applicant is not accepted. A perusal of the order dated 06.10.2021 extracted above shows that the interest was awarded to the applicant under Section 244 A (1) (b) read with Section 132 B (4) (b) of the Income Tax Act which provides only for payment of simple interest. The observation of the Court in the order dated 18.11.2022 that it had provided for interest payment at the rate of one and a half percent (cumulatively) is not a part of the order dated 06.10.2021. The order dated 18.11.2022 was passed on an application filed by the opposite parties for correction of the order and the Court in its order dated 18.11.2022 states that the order does not require any correction on the aforesaid count. No provision under the Income Tax Act has been brought to the notice of the Court showing the formula for computing cumulative interest. It is the plea of the applicant that cumulative interest means compound interest. There is no statutory provision from which any inference can be drawn that cumulative interest means compound interest. In any case, the lack of any statutory provision regarding payment of cumulative interest or the formula to calculate the same leads to the conclusion that the opposite parties cannot be held liable for willful disobedience of the order of this Court. As the order passed by the Writ Court has been complied by the opposite parties, no further orders are required to be passed in the present contempt application. The application is disposed of and consigned to records. Order Date :- 29.4.2025 Vipasha Digitally signed by :- VIPASHA MUKHERJEE High Court of Judicature at Allahabad "