V.K.Singhal, J. - (1.) IN the present writ petition, the petitioner has challenged the action of the INcome-tax Department in not issuing advice to the bank for refund of the amount of Rs. 33,67,369 for which refund voucher No. 519850 was issued on April 26, 1994. A prayer has further been made that the amount of refund may not be given to the Excise Department.
(2.) THE brief facts of the case are that Messrs. Sher Mohammad Faizu Khan and party filed a return of its income for the year 1991, showing 49 persons as members of the association. THE petitioner is one of such members having a five per cent. share. THE assessment order which was passed was modified in appeal, as a result of which Rs. 33,67,369 was refundable. THE said amount was withheld under Section 241 of the Income-tax Act, 1961, till March 31, 1994, or till the decision in second appeal by the Department before the Income-tax Appellate Tribunal, whichever is earlier. THE second appeal was not decided by the Tribunal and therefore after expiry of the aforesaid period, i.e., March 31, 1994, a request for refund of the said amount was made and accordingly the refund voucher for Rs. 33,67,369 was issued. Before issuing the advice, a letter was received by another member of the association of persons, namely, Faizukhan, that the power of attorney of Shri G.M. Mehta, chartered accountant, who has moved for refund has been withdrawn, vide letter dated April 26, 1994. On April 27, 1994, Shri Faizukhan informed that the refund should not be given to Shri Bhandari or any person including his chartered accountant or authorised representative. THE Chief Commissioner of Income-tax telephonically advised the Deputy Commissioner (Assessment) for withholding the refund/advice. It appears that the Excise Department of the State of Rajasthan issued the attachment order on May 2, 1994, and Shri Sher Mohammad and Faizukhan have written to the Income-tax Department to make the payment to the Excise Department. An order under Section 241 of the Income-tax Act was passed on July 26, 1994, for withholding the refund till the decision of the Income-tax Appellate Tribunal. THE Excise Department was also impleaded as a party. In respect of the Nimkathana Group of shops for the year 1992-93, the Jhunjhunu-Chirawa Group of shops for the years 1989-90 and 1990-91 and the Udaipur City Group of shops for the year 1992-93 certain dues are said to be outstanding against which the attachment orders were issued by the Excise Department. Mr. Rathore, on behalf of the Excise Department, has submitted that the petitioner is only one of the members of the association of persons and when the other members have given in writing for adjustment of the refund against the liability ; he alone cannot have any objection and the amount should be directed to be refunded to the Excise Department. I have considered over the matter. As a matter of fact, after passing of the order under Section 241 of the Income-tax Act, the present writ petition has become infructuous. The order passed by the Commissioner of Income-tax has not been challenged. The various other contentions which have been raised by learned counsel need not be decided in view of the provisions of Section 241 of the Act which are as under : "241. Power to withhold refund in certain cases.--Where an order giving rise to a refund is the subject-matter of an appeal or further proceeding or where any other proceeding under this Act is pending, and the Assessing Officer is of the opinion that the grant of the refund is likely to adversely affect the Revenue, the Assessing Officer may, with the previous approval of the Chief Commissioner or Commissioner withhold the refund till such time as the Chief Commissioner or Commissioner may determine." The provisions of Section 241 of the Act authorising the Assessing Officer where the assessment order is the subject-matter of appeal and the refund is likely to adversely affect the Revenue, the officer may, with the previous approval of the Chief Commissioner, withhold the refund till such time as the Commissioner/Chief Commissioner may determine. The Commissioner of Income-tax in this case had earlier withheld the refund till March 31, 1994. The second appeal was also pending before the Income-tax Appellate Tribunal. Therefore, it was proper for the assessing authority to move for approval again before March 31, 1994. The present situation has arisen because timely action was not taken till March 31, 1994, and one of the members of the association got a chance of refund of the said amount. Section 237 even empowers to examine the claim as to who is entitled for the refund. Under Section 241, the power could be exercised if any of the three conditions in the said section mentioned above is existing. In the present case, the order is the subject-matter of appeal and, therefore, the conditions stand fulfilled. That the satisfaction of the Assessing Officer for grant of refund is likely to adversely affect the Revenue is duly established by the order passed by the Commissioner of Income-tax on July 26, 1994. Therefore, no direction for refund of the said amount to the petitioner or even to the Excise Department or any other person can be made in view of the approval given by the Commissioner under Section 241. The only thing which could be observed here is that the Income-tax Department should have been prompt in passing the order before March 31, 1994. In a case where there is dispute between the members of the association of persons, even the further recovery by the Income-tax Department of its dues which may become payable on account of the order which may be passed by the Income-tax Appellate Tribunal, may be in jeopardy. Therefore, when the amount involved is of such high magnitude and the number of the association of persons is also 49, the proper course was to have the extension before March 31, 1994. In any case since the approval has already been given under Section 241 of the Act and the said order has not been challenged, no directions can be given for refund of the amount to the petitioner or the Excise Department or any other person. It would be open to the Assessing Officer after the decision of the Income-tax Appellate Tribunal, as to what amount is refundable and who are the persons entitled for the refund and whether the said amount is refundable to the Excise Department or not. An objection was taken that the petitioner has no right to file the writ petition as the association of persons has come to an end and he alone is not entitled to file the writ petition for claiming the entire amount of refund payable to all the members of the association of persons. This point itself involves the right of a member of an association of persons. If the association of persons has come to an end, then the ex-member thereof has the right to challenge the action of tbe Income-tax Department, and, as such, a writ petition could be filed by an ex-member of the association of persons which affect his rights. The writ petition is, therefore, held maintainable, though on the merits, the petitioner is not entitled for the relief claimed on account of the discussions made above in this judgment. The submission that the power of withholding the refund cannot be exercised after the refund advice so issued has no substance. The bank who is making the refund is acting only as an agent of the Income-tax Department and beside the refund voucher which is submitted, advice has to be sent to the bank before making the payment. In a normal case, the issue of advice should be simultaneous with the issue of refund voucher but, till the advice is issued, the bank has no power to refund the amount. The Income-tax Department may withhold the advice if there are sufficient reasons. In such a case, it is proper that even the association is informed that the advice is not being sent to the bank for the reason to be mentioned in such letter. The power to withhold the refund would embarrass the entire process of refund which would include issue of the refund advice as well. In these circumstances, the action of the Income-tax Department in not issuing the refund advice cannot be considered to be without authority of law.
(3.) THE question as to whether the petitioner alone could have moved for grant of refund or the refund order could have issued only on his application when the other members of the association have taken a contrary stand and are of the view that the amount of refund should be adjusted against the liability of the Excise Department need not be adjudicated as under Section 237 of the Act, the Assessing Officer shall have the power to determine as to who is the person entitled for refund as well. THE question as to whether the account opened in the name of the association of persons by the petitioner is a fraud on the other members of the association of persons and the said account was opened without their consent is also not being adjudicated for the reason that the writ petition itself is found to have become infructuous. The writ petition having become infructuous is accordingly dismissed.;