N.K.JAIN, J. - (1.) IT is alleged that the petitioner-company is a regular income-tax assessee. The petitioner-company filed the income tax return for the asst. yr. 1992-93 declaring a loss. Assessment was complete and a demand was created on 31st March, 1995 vide Annexure-3 and the same has been partly allowed by the CIT(A) vide order dt. 13th Sept., 1995 vide Annexure-4 and in pursuance thereof he moved an application for rectification under S. 154 of the IT Act and the same was accepted and it was ordered to refund the amount which is payable to the extent of Rs. 1,27,242 along with interest vide Annexure-5.
(2.) THE grievance of the petitioner is that the refund amount of the year 1994-95 was adjusted against the demand for the asst. yr. 1992-93. The main ground of the petitioner is that when the demand for the asst. yr. 1992-93 was found to be 'nil' then refund for the asst. yr. 1994-95 should have been granted. More particularly when the alleged demand has already been set aside and, therefore, detaining the refund is illegal and without jurisdiction. In response to the show-cause notice, reply was filed and not disputed the facts stated above that the refund has been detained invoking S. 241 of the Act which has been approved by the CIT, within his competence, as the company is doing Hawala business as per admission of managing director of the petitioner-company but submits that against the order of CIT, dt. 24th March, 1995 which was allowed partly, the Department has preferred an appeal before the Tribunal and the same is pending. I have heard the learned counsel for the parties and perused the material on the record.
(3.) ADMITTEDLY , no stay has been granted in the pending second appeal before the Tribunal. Under the circumstances, detention of the refund for the asst. yr. 1994-95 on the basis of earlier demand, which has been set aside, cannot be detained (sic) on the basis of pending appeal/assessment. Petitioner is entitled to get the same. However, to safeguard the interest of Revenue and in the interest of justice, the respondents are directed to refund the amount claimed by the petitioner for the asst. yr. 1994-95 uptodate within a period of two months provided the petitioner-company furnishes a solvent security for the said amount to the satisfaction of respondent No. 2 with an undertaking that in case the pending appeal before the Tribunal is allowed, it will deposit the said amount with the respondents along with the interest. The undertaking shall be filed within a period of two weeks from today along with the copy of this order. The writ petition is accordingly allowed as indicated above.;