2000 (11) TMI 71 - HC - Income Tax

High Court directs tax refund with interest, sets aside rejection, mandates reasoned decision within 3 months.

The High Court of Madras ordered the Central Board of Direct Taxes to refund Rs. 64,540 to the petitioner with interest. The court set aside the previous ... Refund of tax deducted at source - Section 119 discretionary power of the Board - speaking order requirement - personal hearing before administrative decision - judicial review of administrative action - remand for fresh consideration - time-bound direction for disposalRefund of tax deducted at source - Section 119 discretionary power of the Board - speaking order requirement - personal hearing before administrative decision - Validity of the Board's rejection of the petition under Section 119(2)(b) communicated without reasons or personal hearing and the consequent remedy. - HELD THAT: - The Court found that the communication from the Income-tax Officer that the Board had rejected the petition for Assessment Year 1985-86 did not disclose reasons and there was no indication that the petitioner was afforded a personal hearing. Relying on this Court's decision in R. Seshammal v. ITO, the Court held that the Board must exercise the discretionary power under Section 119 in a manner that renders justice, and it is incumbent on the Board to pass a reasoned, speaking order after giving the petitioner an opportunity of personal hearing. The absence of reasons and denial of an effective hearing rendered the earlier rejection arbitrary in the circumstances and warranted interference by quashing the communication and remitting the matter for fresh consideration. The Board was directed to take into account the R. Seshammal decision and its Circular No. 670 dated October 26, 1993, or any other relevant matter brought to its notice when passing the fresh order.The communication rejecting the petition was quashed and the matter remitted to the Central Board of Direct Taxes for fresh consideration after affording the petitioner a personal hearing and for passing a reasoned order.Remand for fresh consideration - time-bound direction for disposal - Whether the remitted matter required a time-bound direction for fresh disposal by the Board. - HELD THAT: - Given the pendency since 1990, the Court directed that the Central Board of Direct Taxes shall dispose of the remitted matter within three months from receipt of the copy of this order. The Board was also directed to consider the stated precedents and its circulars or any other material brought to its attention while passing the fresh reasoned order.The matter was remitted with a direction to the Board to pass a speaking order after personal hearing within three months.Final Conclusion: The Board's communicated rejection was quashed; the matter is remitted to the Central Board of Direct Taxes for fresh, reasoned consideration after affording the petitioner a personal hearing, with the Board to consider the cited authorities and circular and to decide the matter within three months. The High Court of Madras directed the Central Board of Direct Taxes to refund Rs. 64,540 to the petitioner with interest, as the Board had arbitrarily rejected the petitioner's request for refund. The court quashed the previous order and remitted the matter for fresh consideration, instructing the Board to pass a reasoned order within three months. The decision was based on the case of R. Seshammal v. ITO [1999] 237 ITR 185 and Circular No. 670 dated October 26, 1993.