Existing liability under section 230A means assessed unpaid tax, not pending assessment proceedings, for certificate refusal.

For grant of a certificate under section 230A of the Income-tax Act, 1961, "existing liability" was construed to mean an assessed and unpaid tax liability, not a mere pending assessment proceeding. The court read clauses (a) and (b) of section 230A(1) with the statutory scheme and held that the provision protects recovery of dues already crystallised by assessment. Refusal of the certificate on the ground that assessments were incomplete, or because the assessee had not cooperated in the assessment process, was irrelevant to the statutory condition. The certificate could not be withheld on that basis, and relief was available against the impugned refusal.

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Issues: Whether, for grant of a certificate under section 230A of the Income-tax Act, 1961, the expression "existing liability" includes pending assessment proceedings or is confined to tax already assessed and outstanding.

Analysis: Section 230A forms part of the machinery for collection and recovery of taxes and the certificate is intended to protect recovery of dues already determined. Reading clauses (a) and (b) of section 230A(1) together and in the context of the surrounding scheme, "existing liability" was construed to mean a liability that had crystallised under an assessment order and remained unpaid. Pending assessments, by themselves, did not amount to an existing liability for the purpose of refusing the certificate. Refusal based on lack of co-operation in completing assessments was held to be irrelevant to the statutory condition.

Conclusion: The refusal to issue the certificate was unjustified; the Income-tax Officer was required to consider only outstanding assessed tax liabilities, not pending assessments, and the impugned order was liable to be quashed.

Final Conclusion: The certificate under section 230A could not be withheld merely because assessments were pending, and the petitioners were entitled to relief.

Ratio Decidendi: Under section 230A of the Income-tax Act, 1961, "existing liability" means an assessed and outstanding tax liability, not a mere pending assessment proceeding.

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