Refund withholding pending appeal upheld where section 241 power was already exercised validly

Refund due after the Commissioner of Income-tax (Appeals) order was withheld pending disposal of the revenue appeal under section 241 of the Income-tax Act, 1961. As the Commissioner had already passed an order withholding the refund until the appeal was decided, the Court found the action supported by the statutory power and found no illegality in the impugned withholding. The challenge to the refund withholding therefore failed.

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Issues: Whether the withholding of refund under section 241 of the Income-tax Act, 1961, pending disposal of the appeal, was valid.

Analysis: The refund had become due pursuant to the order of the Commissioner of Income-tax (Appeals), but the Commissioner had already passed an order withholding the refund till the decision of the appeal. In view of the statutory power under section 241 and the existing order withholding refund, no illegality was found in the impugned action.

Conclusion: The withholding of refund was held to be lawful and the challenge failed.

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