Court dismisses suit for lack of jurisdiction under Income Tax Act Section 293; plaintiff's failure to challenge order led to dismissal.

The Court dismissed the suit as it lacked jurisdiction under Section 293 of the Income Tax Act, following the precedent set in Commissioner of Income Tax, Bhubaneswar vs. Parmeshwari Devi Sultania and Others (1998) 3 SCC 481. The plaintiff's failure to challenge the computation order under Section 245(D)(6) led to the claim merging with the order dated 20.9.2005/27.9.2004. The Court held that the express bar under Section 293 rendered the suit non-maintainable, resulting in its dismissal with each party bearing its own costs.

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Issues Involved:
1. Entitlement of the plaintiff to interest on the amount claimed.
2. Entitlement of the plaintiff to a decree for the sum prayed in the suit.
3. Jurisdiction of the Court in view of Section 293 of the Income Tax Act, 1961.

Detailed Analysis:

1. Entitlement of the Plaintiff to Interest:
The plaintiff sought recovery of Rs. 29,22,692/- from the defendants with interest, arising from a search and seizure operation conducted by the Income Tax Department on 4.2.1995, during which 7003.859 kgs of silver and Rs. 49,86,500/- in cash were seized. The plaintiff had filed a writ petition (CWP No. 4767/1998) for the return of the silver bars, resulting in a court order dated 08.10.1998 directing the release of the silver upon payment of its value. The plaintiff made payments in installments, but the dispute centered around three pay orders totaling Rs. 30,50,000/- deposited on 05.04.2000, which were not encashed by the defendants. The plaintiff claimed interest on these amounts from the date of deposit until their encashment in June/August 2004.

2. Entitlement to Decree for the Sum Prayed:
The plaintiff discovered the non-encashment of the pay orders through a letter dated 12.09.2003 from the Indian Overseas Bank. Upon further inquiry, it was confirmed that the pay orders totaling Rs. 30,50,000/- were lying dormant in the bank's suspense accounts. The plaintiff encashed these pay orders in June/August 2004 and subsequently filed the suit claiming interest on the dormant amount.

3. Jurisdiction of the Court:
During the final hearing, a legal issue arose regarding the Court's jurisdiction to try the suit due to the bar under Section 293 of the Income Tax Act, 1961. Although this issue was not initially framed, it was considered crucial as it questioned the Court's inherent jurisdiction. Section 293 states, "No suit shall be brought in any civil court to set aside or modify any proceeding taken or order made under this Act." The Supreme Court's judgment in Commissioner of Income Tax, Bhubaneswar vs. Parmeshwari Devi Sultania and Others (1998) 3 SCC 481 was referenced, which established that civil suits against the Income Tax Department regarding dues claimed under the Act are barred.

The Court examined whether the suit was barred under Section 293. It was noted that the plaintiff's dues were determined by the Income Tax Settlement Commission's order dated 7.7.2003, followed by the computation of income by the Income Tax Officer under Section 245(D)(6) on 20.9.2005. This order included all amounts payable and refundable, including interest. The plaintiff was aware of the non-encashment of the pay orders by June/August 2004 and could have claimed interest under the proceedings of Section 245(D)(6). The plaintiff did not raise this claim or challenge the computation order, leading to the conclusion that the claim merged with the order dated 20.9.2005/27.9.2004.

The Court emphasized that under Section 9 of the Code of Civil Procedure, 1908, a suit is not maintainable if there is an express or implied bar. Section 293 of the Income Tax Act was deemed an express bar to the present suit based on the Supreme Court's judgment in Parmeshwari Devi Sultania's case.

Conclusion:
The Court concluded that it lacked inherent jurisdiction to try the suit due to the bar under Section 293 of the Income Tax Act. Consequently, the suit was dismissed, with each party bearing its own costs.

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