Existing tax liability requirement controls refusal of a section 230A certificate; unsupported departmental assertions were insufficient.

A certificate under section 230A of the Income-tax Act could not be refused merely on departmental assertions of search proceedings, non-filing of returns, or possible exposure to other taxes unless an existing tax liability was actually shown. The Andhra Pradesh HC held that the decisive requirement was proof of a subsisting liability, and on the material before it no such liability was established. Refusal of the certificate on that basis was therefore improper, and the assessee was entitled to the certificate under section 230A.

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Issues: Whether a certificate under section 230A of the Income-tax Act could be refused on the ground of an alleged existing liability when the assessee had not been shown to have any subsisting tax liability.

Analysis: The refusal was founded on departmental assertions regarding search proceedings, alleged non-filing of the return, and possible exposure to wealth-tax and capital gains. The decisive question, however, was whether there was any existing liability within the meaning of section 230A. On the material before it, the Court found that no such existing liability was established, and that refusal of the certificate could not be justified on that basis.

Conclusion: The refusal of the certificate was improper. The assessee was entitled to the certificate under section 230A.

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