Law: Income Tax Act, 1961

Section: 241

Income-tax----Refund---Power to withhold refund---Conditions precedent---Assessing Officer must form opinion that grant of refund is likely to adversely affect Revenue---Proceeding pending under Act---Refund withheld under non¬ speaking order---Order liable to be quashed---Income Tax Act, 1961, S.241--¬Constitution of India, Art.226. Section 241 of the Indian Income Tax Ad, 1961, prescribes three conditions and on fulfilment of any of the three conditions, power under section 241 to withhold refund could be exercised. The conditions are: (i) a notice has been issued, or is likely to be issued, under subsection (2) of section 143 in respect of the said return; or (ii) the order is the subject-matter of an appeal or further proceedings: or (iii) any other proceeding under this Ad is pending. On the existence of any one of the aforesaid three conditions, power under section 241 could be exercised. However, existence of such condition only empowers the Assessing Officer to invoke the powers under section 241. The existence of such condition does not relieve the Assessing Officer from forming an opinion that the grant of refund is likely to adversely affect the Revenue. Held. that, in the instant case, it was an admitted position that some proceedings were pending before the High Court in respect of the assessments of prior years. However, the order withholding refund was a non-speaking order and no reasons were assigned for such action. The order was, therefore, liable to be quashed. It was clarified that it would be open to the income-tax authority to pass a speaking order in accordance with law. JUDGMENT A.P. RAVANI, J: -- Rule.--- Mr. M.R. Bhatt waives service of rule on behalf of the respondent. Having regard to the facts and circumstances of the case, the petition is ordered to be heard today. The petitioner is a public limited company having two factories in the State of Gujarat and one in the State of West Bengal and having its registered office at Baroda. The petitioner prays that the order passed by the respondent withholding the refund amount of Rs.11,49,345 (Rupees eleven lakh forty-nine thousand three hundred and forty-five) which is due to the…

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