The main legal point established in the judgment is the entitlement of the appellant to refund and interest as directed by the High Court's order, and the non-compliance of the revenue authorities with the order.

ORDER :

Ruma Pal, B.N. Srikrishna, JJ.

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. Before considering the language of the order dated 21st May, 1993, and the interpretation put thereon by the impugned decision, the background in which the order dated 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.

3. 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 installments namely, on 9th Jan., 1986, and 10th June, 1986.

4. 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 The Tribunal having set aside the assessment order, the appellant was entitled to refund of the amount withdrawn from his account.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.

5. 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).

6. 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."

7. In this background the writ petition was allowed by the order dated 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 dated 21st May, 1993, has already been rejected by this Court.

8. 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 o