1. The assessee who is the appellant in this appeal has challenged the order of the High Court by which the High Court has purported to clarify its earlier order passed in the assessee's writ petition on 21st May, 1993 [reported as Vijay Kumar Bhati v. CIT and Anr. Before considering the language of the order dt. 21st May, 1993, and the interpretation put thereon by the impugned decision, the background in which the order dt. 21st May, 1993, was passed is necessary.
2. The appellant had opened a Foreign Currency Non-Resident Account (FCNR)/SDR account in the Indian Overseas Bank, Tolstoy Marg, New Delhi, and had deposited in the same year a total amount of US $ 1,35,405. In September, 1985, the ITO sought to provisionally attach this account under the provisions of Section 281B of the IT Act, 1961, and called upon the appellant to file his return. The appellant filed a 'nil' return which was not accepted by the ITO. The assessment order was passed on 10th Sept., 1985, assessing the appellant's income at Rs. 10,28,928. The tax was levied thereon and penalty imposed and criminal proceedings initiated. The appellant's appeal was dismissed by the CIT(A). The ITO then withdrew the whole amount deposited in the appellant's account with the Indian Overseas Bank in two instalments namely, on 9th Jan., 1986, and 10th June, 1986.
In the meanwhile, the appellant's appeal before the Tribunal from the CIT(A)'s order had been filed. The appeal was allowed on 14th May, 1987. The Tribunal having set aside the assessment order, the appellant was entitled to refund of the amount withdrawn from his account. He claimed the same from the Revenue authorities. The Revenue authorities refused to refund the amount on the ground that they were withholding the same under Section 241 of the Act. In fact this refusal continued despite the fact that the Revenue's application under Section 256(1) of the Act had been rejected by the Tribunal and the High Court had also rejected its application under Section 256(2) of the Act. As against the refusal of the Revenue to refund the amount to the appellant, the appellant filed a writ application before the High Court of Delhi, in 1987. During the pendency of the writ application the ITO passed an order seeking to assess the appellant for the asst. yr. 1988-89 on the interest which had become due to the appellant under Section 244 of the Act. The AO found that a sum of Rs. 6,83,244 was payable by way of tax on the interest. Penalty proceedings were also initiated by the AO for non-filing of the return under Sections 271(1)(a), 273, 271(1)(c). The appellant amended his writ petition and prayed for '(a) restoration of his Non-Resident Indian Account in foreign currency with the Indian Overseas Bank which after attachment by the second respondent had been withdrawn on 11th Jan., 1986, and 12th June, 1986, and (b) for quashing all orders under Section 241 of the Act and assessment order for the asst. yr. 1988-89 creating a demand of tax and all other orders of levying penalty, etc. for the asst. yr. 1988-89.'
3. In this background the writ petition was allowed by the order dt. 21st May, 1993. It is not necessary to consider the reason why the High Court allowed the writ petition as the Revenue's special leave petition seeking to impugn the order dt. 21st May, 1993, has already been rejected by this Court.
4. The respondent deposited the principal amount and, subsequently, upon a contempt application being filed, also deposited the interest calculated at the rate of 15 per cent per annum. The appellant then filed an application before the High Court stating that the calculation of interest was wholly incorrect and that the appellant was entitled to interest at the rate which the appellant would have earned had the principal sum continued to be deposited in the appellant's account. The Court disposed of the appellant's application by the impugned judgment. In the impugned judgment, the Court has determined the period of interest for which the appellant is entitled as also the rate of interest. Leave has been granted only in respect of the rate of interest. We, therefore, need not be detained with the arguments which have been put forward as to the period for which the interest should have been calculated.
5. According to the appellant the order of the High Court dt. 21st May, 1993, in terms directed the appellant to be put back in the position that he was enjoying prior to the illegal orders passed by the respondent-authorities. Our attention has been drawn to the various findings of the High Court where the action of the respondent and the initial orders under Sections 241 and 245 of the Act were held to be illegal and without jurisdiction, According to the appellant, the language employed in the order of the High Court makes it quite clear that it was not directing refund in terms of or under any provisions of the IT Act but was directing restitution of the status quo ante.
6. According to the respondent, the appellant became entitled to the refund because of the Tribunal's order under Section 240 of the Act. The appellant became entitled to interest after the rejection of the application under Section 256(2) by the High Court under the provisions of Section 244(1) of the Act which provides for payment of simple interest on refund at the rate of 15 per cent per annum. According to the respondent the appellant was, therefore, entitled only to interest at the rate of 15 per cent per annum and nothing more.
7. In this case, we are not concerned with whether the appellant was entitled to the reliefs claimed by him. That would be reopening the issue which has been culminated by the dismissal of the special leave petition from the order dt. 21st May, 1993. The appellant in his application before the High Court which was disposed of by the impugned order merely sought implementation of the order dt. 21st May, 1993.
8. The only issue before us is, therefore, what was the relief granted by the High Court by its order dt. 21st May, 1993?
The operative portion of the High Court's order reads as follows:
'This petition is allowed. The amounts of US $ 35,000 (Rs. 4,44,000) and US $ 99,995 (Rs. 12,99,935) along with interest accrued thereon be deposited back by the respondents in the FCNR/SDR accounts of the petitioner in the Indian Overseas Bank, Rohit House, 3, Tolstoy Marg, New Delhi, within one month from today. If any permission is required for crediting the amount of interest in the accounts of the petitioner, a non-resident Indian as aforesaid, from the Reserve Bank of India or any other authority under the provisions of the Foreign Exchange Regulations Act, 1973, or any other law the same shall be obtained by the Indian Overseas Bank.'
9. We are of the view that the appellant is correct in his submission that the order dt. 21st May, 1993, clearly indicates that the Court had directed the payment of interest in a manner so as to restore the appellant to the position that the appellant enjoyed on and from at least the dismissal of the application under Section 256(2) of the Act. The High Court in its order dt. 21st May, 1993, has considered the prayer of the appellant seeking restoration and construed the prayer to mean that the appellant wanted orders enabling him 'to have his Non-resident Indian account in foreign currency with interest accrued thereon in foreign currency restored ante.' Therefore, when the Court allowed the petition directing restoration, it had acceded to the prayers in terms made and as understood by the Court. Besides, a direction to 'deposit back' in a FCNR account, in a particular bank is certainly not a directive under Section 244(1) or (2) or Section 244A of the Act. Were it such a direction there would also have been no occasion to direct the Indian Overseas Bank to obtain the permission from the Reserve Bank of India under the FERA, 1973, for 'crediting the amount on interest in the account of the petitioner.' The High Court, in the impugned judgment appears to have proceeded on the basis as if what was in issue was what the Court ought to have held or at least could have held by its order dt. 21st May, 1993. This was not what was retired.
10. We, however, make it clear that we are not deciding any issue as to the rate of interest which would be applicable when an application is allowed under Article 226 in respect of a particular assessment. For the purpose of this judgment, we are satisfied that the decision of the Court dt. 21st May, 1993, was clearly to grant the appellant the dues from which he had been, according to the High Court, unlawfully deprived by the Revenue authorities. The computation of interest in terms of Section 244 or 244A of the Act by the Revenue authorities is clearly not in compliance with the order dt. 21st May, 1993 .
11. The appeal must, in the circumstances, be allowed. However, in order to cut down on the litigation between the parties, which is benefiting neither the appellant nor the respondent, we adjourn the matter for a period of six weeks in order to finally determine the actual amount which would be payable in terms of the High Court's order by the respondent to the appellant. It is recorded that as far as appellant is concerned, he has already given his calculation to the CIT as far back as in March, 1994, and a copy thereof is on record. The Department shall take action within six weeks and intimate this Court its decision on the calculation submitted by the appellant. In default, the figures as mentioned by the appellant will be taken to be correct and the respondent will be liable to pay the difference to the appellant.